Economics of Innovation and Technology


The Economics of Innovation and Technology Unit at UNU-MERIT ranks among the leading research groups working in the field of innovation studies. The research unit contributes to academic and policy debates on the economics of innovation and technology, providing a bridge between academic and policy communities by addressing real-world problems through societally relevant research grounded in academic excellence. Through our research, we aim to be driven by and contribute to international agendas such as the UN´s 2030 Agenda.

The breadth and scale of pressing global societal challenges are immense, with the extent of these challenges encapsulated by the UN’s Sustainable Development Goals (SDGs), a set of 17 goals, 169 targets, and 232 unique indicators that identify and measure progress towards sustainable socio-economic development. While the extent of such challenges is great, the usefulness of economics in addressing them and the role of innovation and technology in driving positive change is increasingly questioned. Perennial concerns over the impact of new technologies on the extent and quality of work and of the diffusion of technologies across and between societies raise questions around the benefits of innovation and how they can be both enhanced and more equally shared, while the continued focus of economics on rational agents optimising narrow objectives raise concerns over whether economics has the tools and the scope to offer the appropriate perspectives and solutions to global societal challenges. At the same time, technological change is an unstoppable force and if humanity is to meet the myriad challenges it faces innovation will clearly be key.

Our research acknowledges the constraints of the main economic paradigm and highlights both the benefits and costs of innovation and technological change. We adopt heterodox and orthodox approaches to contribute to debates and the setting of policy agendas around major global agendas and societal challenges – such as the ongoing processes of digitalisation and automation, climate change, sustainability transitions, and inequality – examining how innovation and technological change can be both an important driver of such global challenges as well as providing potential solutions to such challenges. Embedded in a systems approach to innovation, our research acknowledges the interactions and feedback between different agents and agendas, thus providing a holistic and integrated approach to innovation and technology and how they ultimately impact on society. The approach highlights both the positive and negative impacts of innovation such as artificial intelligence and the unequal and unfair appropriation of benefits from innovation, adopts a broader agenda of innovation research including responsible innovation and social innovation (for dealing with social problems), and addresses the policy trade-offs, such as whether and how innovation and technology can generate pathways of growth with equality, or of climate friendly structural transformation.

Research Areas


The Microeconomics of Innovation and Technology

Innovation is generally considered a key driver of aggregate economic growth and performance, yet the process of innovation usually takes place at the level of the firm or individual entrepreneur, albeit often with support and inputs from the broader innovation system. Research on the microeconomics of innovation and technology within UNU-MERIT seeks to understand the characteristics of innovative firms and the process of innovation at the micro-level, to identify the impact of innovation on the performance of firms, and to evaluate the impact of policies on innovation performance.

The Macroeconomics of Innovation, Structural Change, and Industrial Policy

Innovation has wide-ranging effects on macroeconomic performance, impacting upon productivity growth, employment, wages, profits, income inequality and well-being, among others, effects that may differ across sectors and countries, and by levels of development. Moreover, the process and impacts of innovation are a driver of and driven by deeper structural changes within economies, an observation that creates a role for industrial policy in shaping economic performance. Research on the macroeconomics of innovation, structural change and industrial policy within the unit emphasises the complex drivers of innovation at the macro level, the interactions and feedback effects between innovation and structural change, and the long-run developmental impacts of these interactions. Research in this area further adopts a global perspective, considering the interactions between countries through flows of trade, technology, and investment.

The Economics of New Technologies

The scope for new disruptive technologies to impact – both positively and negatively – on efforts to achieve sustainable socio-economic development cannot be overestimated. New technologies associated with the 4th Industrial Revolution, for example, offer significant potential in raising growth and general living standards worldwide but pose a risk of negative labour market developments and the danger of exacerbating within and between-country inequality. An important component of the research agenda in the unit involves identifying and understanding the development of emerging technologies, examining the impacts of such technologies on sustainable socio-economic development, appreciating the constraints and opportunities that exist in developing economies regarding emerging technologies, and developing appropriate frameworks to manage emerging technologies. An important dimension of this work highlights the inequities created by innovation across many dimensions, including gender, age and education.

Sustainability and the Green and Circular Economy

Innovation is a crucial factor in allowing for a radical transformation toward a sustainable economy and society, including low carbon, resource-efficient and socially inclusive society. Recognising that such innovation need not only be technology-based, or created only by firms, research under this heading also considers social innovation, public sector innovation, social entrepreneurship, and intrapreneurship. The associated research agenda is broad, identifying windows of opportunity for the development and adoption of green technologies and viable pathways to transition to a circular economy, examining the impact of new green technologies on firm behaviour and labour markets, and considering the well-being of people and communities (especially the excluded and vulnerable) during the transition to a more sustainable economy.

The Economics of Knowledge and Science

The development of scientific capacity is an important pre-requisite when considering the importance of the creation and diffusion of knowledge for innovation and is a crucial factor in developing an understanding of innovation systems, encouraging the competitiveness of countries, and of reducing the technological gap to the frontier. As such, an important research area within the unit’s agenda considers the economics of knowledge and science, identifying the role of the university system in generating innovation and new technology and its role in increasing or decreasing the opportunities for people across the world to benefit from new knowledge.