Directed Technological Change and Total Factor Productivity. Effects and Determinants in a Sample of OECD Countries, 1971 – 2001

Cristiano Antonelli and Francesco Quatraro

Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio Carlo Alberto. WP series from University of Turin

Abstract: Technological change is far from neutral. The empirical analysis of the rate and direction of technological change in a significant sample of 10 OECD countries in the years 1971-2001 confirms the strong bias of new technologies and its effects on the actual levels of total factor productivity. This is not surprising for two reasons. First, because the introduction of new and biased technologies can be considered as the result of a clear inducement mechanism exerted by the characteristics of factor markets. Second, because the introduction of radical innovations, such as new information and communication technologies, provides innovators with a strong competitive advantage and feeds the creative destruction of old incumbents. Imitators, especially if based in other factor markets, can try and resist the decline by means of the systematic effort to adapt them to the structure of local endowment. The bias effect is the ultimate result of their creative adoption.

Pages: 26 pages
Date: 2007-07
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