Template-Type: ReDIF-Paper 1.0
Author-Name: Christian Chacua
Author-Workplace-Name: Harvard's Growth Lab
Author-Name: Shreyas Gadgin Matha
Author-Name: Matte Hartog
Author-Email: matte_hartog@hks.harvard.edu
Author-Workplace-Name: Center for International Development at Harvard University
Author-Name: Ricardo Hausmann
Author-Email: ricardo_hausmann@harvard.edu
Author-Workplace-Name: Harvard's Growth Lab
Author-Person: pha552
Author-Name: Muhammed A. Yildirim
Author-Workplace-Name: Center for International Development at Harvard University
Title: Innovation Policies Under Economic Complexity
Abstract: Recent geopolitical challenges have revived the implementation of industrial and innovation policies. Ongoing discussions focus on supporting cutting-edge industries and strategic technologies but hardly pay attention to their impact on economic growth. In light of this, we discuss the design of innovation policies to address current development challenges while considering the complex nature of productive activities. Our approach conceives economic development and technological progress as a process of accumulation and diversification of knowledge. This process is limited by the tacit nature of knowledge and by countries’ binding constraints to growth. Consequently, effective innovation policies should be place-based and multidimensional, leveraging countries’ existing capabilities and addressing countries’ current problems. This contrasts policies that lead to economic efficiencies, such as copying other countries’ solutions to problems that countries do not currently have.
Creation-Date: 2024-09
Classification-JEL: O25, O30, O38, F60
Keywords: innovation policy, industrial policy, economic complexity, knowhow
Number: 234
Handle: RePEc:glh:wpfacu:234
File-Url: https://growthlab.hks.harvard.edu/sites/projects.iq.harvard.edu/files/2024-09-glwp-234-innovation-policies-under-complexity.pdf
File-Format: application/pdf