Programme of Coursework

Updated: November 25, 2008

The objectives of the courses are:

• To familiarize the student with the main theoretical perspectives on the role of technological change in economic growth and development.
• To introduce the student to a wide variety of hypotheses and puzzles in industrial dynamics and innovation trajectories;
• To provide the student with skills and experience in critical evaluation of the assumptions, modeling, empirical evidence and the validity of the policy and other recommendations derived from existing theories and models.
• To lay the foundation for original research in the field of innovation studies by solving existing puzzles and paradoxes, critiquing and modifying existing models, identifying ways to obtain more relevant empirical evidence, developing new models and deriving new policy implications.
  

The courses for the first stage of study are based on intensive 6-week modules over a 28-week programme beginning in September. Students are expected to devote eight to ten hours per day (including class time) to their studies, and weekend work will often be necessary. The course modules outlined below should be viewed as intensive workshops in which students will be expected to cover an extensive reading list and to interact intensively with classmates and faculty members. Throughout the course work, UNU-MERIT will organize weekly research seminars. Invited speakers will include distinguished academics in the area of innovation studies and policy analysts from international organisations.

The first period of 15 weeks, which will be followed by all students participating in the programme, consists of five basic modules of 6 weeks each, which are compulsory for all students. After the basic modules, students will must take and pass at least two of the extension modules, comprising a further 6 weeks. Since the extension modules are scheduled sequentially, students do have the possibility to follow all of them. In the spring several methods workshops, including one on writing a literature review and one on proposal writing, are organized to help students prepare their PhD proposals. Extension modules change from year to year, and upper year students are encouraged to sit in on courses that are of interest to their research. Extension modules offered in 2008-2009 will be drawn from the list below.

I. Required modules

I.1 The economic analysis of innovation and technological change

Instructor: Bart Verspagen

This first module provides an introduction to the field of the economics of technological change. It both introduces a number of theoretical concepts which will be elaborated in the rest of the programme, and explains the key concepts necessary to study this field.

Although nowadays it might seem as if modern society is becoming increasingly 'technology-oriented', technological development has been crucial for the wellbeing of mankind since its earliest history. The industrial revolution, although certainly not solely a technological event, slowly re-shaped agriculture and trade-based societies into manufacturing-oriented economies. The disciplines of the history of technology and economic history teach us how these changes came about, and why they took the specific shape known to us today. From this, we learn to understand present-day technological change and its impact on the economy better, by seeking historic similarities, analogies, and, certainly also, differences as compared to the present.

One important topic emerging from the history of technology, as covered in this introductory module, is the interaction between science and technology. This interaction has been subject to significant historical change, and, in the present, provides difficult and interesting challenges to all those concerned with the further development of technological knowledge. The discussion of this issue will be linked to different conceptualizations of technology (e.g., innovation vs diffusion, major vs incremental innovation, product vs process innovations, exogenous vs endogenous innovation, etc.), and the way in which science and technology is institutionalized into the system of Research and Development (R&D) and the system of Intellectual Property Rights (e.g., patent system). This also links up closely to the different ways in which technology and science can be measured in a quantitative way, using knowledge from fields such as bibliometrics, scientometrics, innovation surveys, and patent statistics.

Many of these issues appear in a somewhat different light in the context of developing countries which have generally been recipients of technology from the more industrialised countries. The issue of technological change in the technologically weaker economies will be the main focus of the second half of this module.

I.2 Technical Change and Economic Growth

Instructor: Dr. Adriaan van Zon

The purpose of this course is to understand the role of technology in the process of industrialisation of a typical developing country. In achieving this objective, the course is divided into two parts. The first part will focus on the conceptual and policy issues with respect to technology development in developing countries. The second part will concentrate on illustrating the case of two developing countries that have followed two different paths of technology development with significant differences in the final outcomes. The two cases are India and Korea, which started with the same level of per capita in the early 1950s, but have grown at a rate and pace significantly different from each other.

The course commences with an exercise mapping the various developing countries according to their technological trajectories. This, we hope, will enable the participants to gain a snapshot view of the role of technology in the growth process of a typical developing country. Subsequently, the course will focus on the various modes of acquiring technology pursued by firms in developing countries. These modes or routes can be divided into two: first, acquiring technology from abroad, and second, the local or indigenous development of technology. The former route can be subdivided into three sub-routes, not necessarily mutually exclusive. The first is the embodied technology route, which takes place through the import of capital goods in which the technology is embodied. Historically, this has been one of the dominant routes through which technology is acquired. But with the import substitution strategy followed by most developing countries and the consequent high tariff walls erected by most developing countries, this has paled into insignificance. As tariffs fall, following the subscription to WTO norms, this route is once again on the rise. The second route is the technology licensing or the disembodied route, where firms in developing countries sign a technology collaboration agreement with technology-supplying firms in the developed world. The course will focus on the direct and indirect economic costs of acquiring technology through these collaboration agreements. The third route through which technology can be acquired (again in the disembodied form) is the Foreign Direct Investment route. This is the dominant route for acquiring technology from abroad now and in the years to come. Developing countries across the world are competing with each other to attract substantial inflows of FDI. One of the reasons this is so is the belief that this is one way of acquiring state-of-the-art technology from abroad. The course will pay particular attention to the empirical literature testing out the validity of this belief.

After having seen the issues with respect to import of technology from abroad, the course will pay attention to the issues concerning the local development of technology and the role of public innovation policies in stimulating local R&D activities. The components of public innovation policies can be broadly classified into those supporting institutional arrangements for aiding the local development of technology (for instance technology standards), resource endowments (for instance financing arrangements and human resources), and finally those supporting proprietary functions (product development, networking and development of vendor/distribution channels).

Finally (i.e., in the first part), the course will examine the literature that seeks to unravel (often econometrically) the relationship between the import of technology and its local development. In very specific terms we will study whether such a relationship is complementary or substituting. Particular attention will be given to the methodology and data used in such exercises.

The second part on the contrary illustrates the cases of India and Korea, which were roughly on the same level of per capita GDP in the early 1950s. Korea has by the late 1990s acquired the status of a developed country and is an important player in certain areas of high technology. India, on the contrary, is a laggard despite possessing very many necessary conditions for successful growth. Students will use specially written case material on these two countries as background material and will be required to make presentations that will be a part of their evaluation.

I.3 Technology and Industrial Development in Developing Countries

Instructor: Prof. Adam Szirmai

This course focuses on the empirical analysis of the dynamics technological change and industrial development in developing countries. The aim is to discuss the position of developing countries with regard to technological progress and in the global economy. Thus, it brings into discussion some critical issues such as technology diffusion, technology gaps, absorptive capacities, catching up and leapfrogging. In the second half of the course there is a special focus on the role of inflows of foreign direct investment (FDI) as channels of technology transfer from the developed to the developing world, and more specifically on the role of affiliates of multinational corporations (MNCS) as actors in the innovation systems and capability building in the host economies.

The course opens with a discussion of industrialization as a (potential) engine of growth and development and charts long-run trends in industrialization in developing countries since 1950 (lectures 1 and 2). This is followed by a discussion of country case studies in the third and fourth lectures. In lectures 4 and 5, we focus on the measurement and analysis of productivity and technological change in manufacturing, with a special emphasis on the measurement of capital stocks and flows. Lecture 6 discusses the role technological capabilities and capability building in the absorption of technology, both macro of economies and the micro level of firms. The last three lectures deal more specifically with the role of multinational companies in the diffusion of technology to developing countries. Previous contributions to these issues (like the dependence school) as well as more recent debates on the globalization of R&D by MNCs and host countries' policies will be addressed.

I.4 Economics and Econometrics of Industrial Organization and Innovation

Instructor: Prof. Bronwyn Hall and Prof. Pierre Mohnen

This module starts with and introduction and overview: goals and methodologies for empirical micro studies, connecting theory to empirical work. The module continues with productivity measurement and R&D; production functions and production frontiers; measuring TFP correcting for scale effects and non-optimal input holding. Then we estimate the returns to R&D using production functions, including R&D capital in production functions; estimation using static and dynamic panel data models. Estimating R&D externalities, Inter- and intra-industry spillovers; international spillovers; notions of rent and knowledge spillovers; measurements of proximity; geographical spillovers. Measurement and estimation of determinants of innovation, Innovation survey data; qualitative indicators; accounting for innovation. Then we look at complentarities in innovation and the effectiveness of R&D tax incentives with next estimating the returns to R&D using market value. Intellectual property and incentives for innovation are also important in this course which we conclude with Using patents as economic indicators hours.

I.5 Economics of Networks

Instructor: Prof. Dr. Geert Duysters and Prof. Dr. Robin Cowan

In the last decade, social network analysis has become one of the dominant approaches in the analysis of technical change, innovation and diffusion. Virtually unseen two decades ago, papers using network analysis now appear in every journal concerned with innovation and development. We see this in the theory of network formation and performance; strategic alliances and industry networks; networks for micro-finance trust networks among traders in developing countries; networks of inventors and patents; citation networks in science, and many more.

This course explores the role of networks in innovation and development. We start with an introduction to the concepts of social network analysis: how to describe networks, what are the statistical measures of network properties; what does each measure, and what are its properties. From there the course has two parts. In the first part we discuss the nature of network analyses of the economy, and in particular as it pertains to knowledge. Social networks provide the infra-structure over which knowledge is diffused. Why is this the case, and how does it work. In this section we are particularly interested in the relationship between network architecture or structure and performance. Concretely, are some networks better at producing and diffusing knowledge than others. Both in the European context, and in the context of developing countries, policy-makers are interested in knowledge diffusion, and in Europe especially, have explicitly network-based policy programmes to support it. What types of networks should policy be aiming to produce with these programmes in order to achieve its goals? This is a major question to be addressed here. A second issue to be addressed in this part of the course is the nature of network emergence and evolution. All networks change as time passes and agents form and break links with each other. How does this happen? What are the micro-economics underlying this evolution? What network structures will emerge, and exhibit some sort of stability? What types of networks will emerge and be efficient? All of these questions are addressed here. The techniques used in the literature to examine them include formal theory, simulation, and empirical studies of existing networks. The empirical examples to be studied are drawn from a broad selection, including knowledge networks in both developed and developing regions.

The second part of the course picks up one specific aspect of network analysis and explores it in depth. Today, many firms are engaged in strategic alliances as part of their R&D strategies. In recent decades innovative firms have more and more often been faced with the need for knowledge that they do not possess in house. They meet this challenge by forming alliances with firms having complementary knowledge. This has become a major locus of innovative activity in today's economy. From these alliances, industry networks form in which knowledge flows from firm to firm. When a firm forms an alliance, though, it must consider both the immediate effects on innovation, and effects on its position in the overall network, and a strong debate exists in the literature about just what is the right “network strategy” for a firm to follow. This part of the course addresses these issues using a wide literature and a variety of analytical and empirical techniques. 

II. Elective Modules (to be announced)

II.1 Technology and International Trade

Instructor: Dr. Thomas Ziesemer

The first section of the course gives first, oversimplified answers to the following questions: What are the consequences of being better in everything? Why are some sectors exporters and others import-competing? Which trade patterns will two countries have if they differ only in wealth per head, technologies or preferences? Do simple results change if we consider many goods, factor-intensity reversals or factor movements? What is the role of sector specific factors like land, public factors or qualifications? Can countries specialize in the wrong way if there is learning?

The second section deals with technical change. Having learned in growth theory that technical progress may be the major driving force of welfare increases, the question arises whether or not problems come up when technical progress is unequally strong across sectors or occurs in the form of reduced transport costs. This leads to issues such as the occurrence of wage inequality across skills and sectors, immizerising growth, and the consequences of globalization. Another set of question comes from the fact that innovation is unequally distributed across countries: what are the consequences of technology transfer and imitation; what are the consequences of faster innovation for welfare in North and South; are there (clusters of) strategic industries which a country should ensure to have? How does growth affect trade and how does trade affect growth (linking up to the course by Adriaan van Zon)?

II.2 Intellectual Property Rights (IPR)

Instructor: Anthony Arundel

This module provides an overview of the legal status, data sources, economic theory, and empirical aspects of IPR. The course covers patents, plant breeders' rights, copyright, industrial design registration, trademarks, and trade secrecy. Evaluation is based on a seminar presentation in either the fourth or fifth seminar that discusses a key paper and on a short paper (approximately 3,000 words with a 5,000 word maximum) of a relevant topic chosen by the student. The first three seminars will largely consist of lectures while the last two will consist of a short lecture followed by presentations.

Theme 1: The first lecture will provide the nuts and bolts of IP issues: legal regulations for different types of IP, differences by countries (US and EPO), TRIPS, the application process for a patent, infringement dispute mechanisms, IP costs, data sources for academic research, the type of information contained in a patent, trademark and design registration, etc.\

Theme 2: The second lecture will cover the theory of IP, with a focus on patents (patent length, width and breadth) and the tradeoffs made by firms in their decision to either patent an invention or use other means of appropriation (secrecy, lead time advantages, etc). The lecture will also evaluate infringement issues, such as the need for firms to signal their willingness to sue infringers.

Theme 3: The third lecture, and part of the fourth, will focus on empirical analyses using survey and other data sources to evaluate issues in IP over patents, patent databases, industrial design, trademarks etc. The theme will also evaluate IP issues in biotechnology, including the use of patents or plant breeders' rights in agriculture, and patenting by universities.

II.3 Evolutionary Perspectives on Technology and Economics

Instructor: Gerald Silverberg

This module will begin by introducing students to the basic concepts and methods of dynamical systems in economic analysis and model building. A "hands-on" approach will be emphasized using microcomputers and special software with interactive graphics (no previous familiarity with computer programming will be assumed, although that certainly would be helpful). The basic properties of discrete and continuous time dynamical systems will be reviewed, first in the linear, then in the more interesting nonlinear domain. Students will be guided through the stages of model building using both analytical techniques and computer simulation.

These principles will be illustrated using simple and well-known economic applications. The course will then concentrate on technical change proper by adopting an evolutionary perspective in which new techniques are regarded either as incremental advances along known technological trajectories or as innovations leading to a destabilisation of the original dynamic structure. The modelling of this approach will introduce students to non-equilibrium vintage and pseudo-vintage formulations of the growth process on the one hand, and problems of evolutionary selection and diffusion on the other. At the applied level the estimation of (multiple) logistic replacement curves over long time periods will be examined, as well as the stochastic properties of innovation time series.

If time remains, and depending on students' interests and level, a number of advanced topics can be discussed: chaotic dynamics and nonlinear time series analysis, path dependence, and genetic and other mutation/selection learning algorithms as applied to economic growth and behavioural coordination.
Students should be able to take away from the course the ability to formulate and understand dynamic models, as well as a critical understanding of the evolutionary economics literature.

II.4 Capabilities and Institutions

Instructor: Dr. Mulu Grebreeyesus

Technological capabilities are at the center of the new theories of economic growth which focus on technology and human capital as engines of growth (Romer 1990; Grossman and Helpman, 1991; Young 1991) and becoming even more critical in the face of increasing globalization. Biggs et al., (1995) define technological capabilities as the information and skills (technical, managerial and institutional) that allow productive enterprises to utilize equipment and technology efficiently. The ability to learn depends on the stock of previously accumulated knowledge. The stock of knowledge seems to be a major source of difference in income levels across regions. For example almost 60% of the difference in income level between SSA countries and the industrialized countries can be attributed to the difference in the stock of knowledge (UNIDO, Industrial Report 2005).

It is well recognized that developing countries undertake little R&D expenditure. Technology is more or less adopted or transferred from developed countries in the form of machinery and equipment, licensing arrangement, FDI, and export participation among others. The process by which private enterprises upgrade their production technologies is far more complex and demanding. Hence, adopting and benefiting from existing technology requires capability to absorb and collective effort at firm, industry and national level. Institutions and policies play central role in enhancing absorptive capacity. This takes us to another related concept known to be innovation systems. Edquist (1997) defined innovations systems as a network that encompasses all important economic, social, political, organizational, and other factors that influence the development, diffusion and use of innovations.

The aim of the course is to understand the role of institutions in promoting technological capability and competitiveness. The main approach in the course is micro-economics; hence deals with firm level innovation activities, incentive to undertake innovation activities, and the environment that facilitates innovative activity and learning. The module will begin with an overview of growth theories focusing on role of technology change. Then it discusses conceptual issues such as technological capability, innovation systems, institutions and competitiveness. The module will also discuss in depth on the role of institutions and policies on technological learning. This part will provide cases particularly from Africa and Asian on the competitiveness gap and technological capabilities and institutional difference. The course will also cover issues related to micro and small enterprises (MSEs) and system of innovations, and efficacy of support programs.

II.5 Environmentally Sustainable Growth, Human Capital and Health

Instructor: Dr. Theophile Azomahou

Since the pioneering works of G. Becker (1964), Nelson and Phelps (1966) and Lucas (1988), the concept of human capital became central to the economic analysis, as economies are increasingly knowledge-based with important role devoted to R&D and innovation. Human capital is often referred as to formal educational attainment and training, with the implication that education is an investment whose returns are in the form of wage, salary, or other compensation. The individual and collective skills and abilities of people contribute to organizational performance and productivity. Then, any expenditure in training, development, health and support, is an investment, not just an expense.

The first part of the syllabus will be devoted to the study of investments in human capital, and their relation to growth.

i) Investment in education and learning by doing: The main question here is whether growth primarily driven by 'human capital accumulation' or by the 'stock of human capital'.
ii) Investment in health: The channel though which health expenditures will operate is to extend life expectancy. This comes mainly through the well-known Ben-Porath mechanism according to which shorter lives imply shorter schooling times and therefore lower labor productivity.

The second part of the syllabus will focus on the issue of sustainability in growth, in particular the 'induced innovation mechanism' (Jaffe et al., 2003). In the last decade, discussions of environmental economics and policy have become increasingly permeated by issues related to technological change. Induced technological change refers to the idea that changes in relative factor prices affect the rate and direction of innovation (Hicks, 1932). An understanding of this process is important for two reasons:

i) The environmental impact of social and economic activity is deeply affected by the rate and direction of technological change. New technologies may create or ease increased pollution, or may mitigate or replace existing polluting activities. Further, because many environmental problems and policy responses are evaluated over long time horizons the cumulative impact of technological changes is likely to be large.

ii) Environmental policy interventions themselves create new constraints and incentives that affect the process of technological change. These induced effects of environmental policy on technology may have substantial implications for the analysis of policy decisions.

ii.6 Innovation Systems and Industrial Dynamics

Instructor: Dr. Can Huang

II.7 Innovation Policy and Industrial Development in Developing Countries

Instructor: Dr. Michiko Iizuka

II.8 Thesis topic discussions

Instructor: Prof. Dr. Luc Soete

In this course students are expected to begin thinking about thesis research topics. Each student is expected to present his (preliminary) ideas about the research he or she plans to do in the thesis. The purpose of these meetings is to get feedback from senior researchers about feasibility and how different ideas can be linked together to form a good solid research plan.

II.9 Course in writing

Instructor: Prof. Robin Cowan

The purpose of this course is to encourage students to continue thinking carefully about their thesis research. The main task of the course is to write a literature review on a topic of the student's choosing. We meet several times to discuss what goes into a literature review, how to structure such a document, and how to create a focus for further research. Later in the course we meet again to discuss each student's draft. The final document serves as important input into the student's thesis proposal.