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Handbook on the Economic Complexity of Technological Change

Antonelli, Cristiano (ed.)
Edward Elgar Publishing: Cheltenham, 2011
ISBN 9781848442566 (pb)

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Reviewed by Manfred Paier
Foresight & Policy Development Department, AIT Austrian Institute of Technology GmbH, Vienna

Cover of book Antonelli's handbook is an impressive compendium of theoretical approaches to complexity in economics that has emerged during the last two decades, among others landmarked by the Santa Fe Institute's multi-annual research programme (e.g., Blume und Durlauf 2005). The book attempts to merge the theories of complexity, technological change, innovation, and evolutionary economics. Although it is not the first textbook in suggesting a systematic approach on continuous change in the economic system (Antonelli 2008; Hanusch und Pyka 2007; Metcalfe und Foster 2004), Antonelli significantly advances this perspective. The book unfolds an extensive range of contributions from leading scholars in the field as well as a couple of younger scholars, a fact that may in itself reflect both path dependence and persisting innovative thrust in the community.

The introductory chapter (Part I) articulates the unifying framework, where innovation is an emerging property of organized complexity. Overcoming the limitations of general equilibrium analysis and Darwinian population dynamics, agents show the typical characteristics of any economic actors, including intentional choice and strategic behaviour, but with the ability for creative reaction to their local environment. Indeed, technological change is driven by actors that are in out-of-equilibrium conditions as innovation endogenously depends on the dynamics of the economic system and feeds back on the economic, institutional and knowledge structures. As compared with previous approaches, Antonelli's framework combines conceptual coherence and rigour with creativity, this last largely influenced by Schumpeter´s invention-innovation-diffusion triad.

The book is organised in four parts, the first one (Part II) dealing with the economic complexity of innovation. At the outset, a provocative view on innovation theory (an ´oxymoron´) is presented, which mostly involves the description of important historical developments. Other authors, more inclined towards economic theory, focus on the complexities of the knowledge space and the agents´ knowledge endowments. On the one hand, complex dynamics are rooted in changes and recombination of knowledge (under the influence of local attractors). On the other hand, the focus on agent structures, such as internal organization and firm boundaries, agent interaction and the role of the environment, allows us to discuss what kind of theory of the firm is appropriate to the study of an evolving, complex, developing economy.

In my view, the core of the compendium is Part III, which examines the economic complexity of knowledge. This part covers certain ontological issues on knowledge, measurement and representation and investigates knowledge-related economic processes associated with innovation. While some chapters examine methodology and suggest the power of structural analysis and recombination (i.e., networks, combinatorial models, information entropy and complex distributions), others address the problem of coordination in knowledge generation and illustrate the importance of innovation platforms, knowledge-intensive labour markets, and university-industry relations. The final chapter makes a convincing point by suggesting the functional representation of technology for future research on technological change.

The Part IV, which focuses on the economic complexity of structural change and development, raises the question of economic development as a joint process of growth and qualitative change. A programmatic contribution suggests to introduce the meso-economic level to deal with complexity, so challenging the existing micro-macro dichotomy in the theoretical architecture of economics. The most promising pathways to operationalisation seem to be product spaces, genealogies of products, and network relations (i.e., innovation, production and ICT networks) between actors. These approaches allow us to understand the potential diversity of economic performance on the meso-level .

Certain lessons and implications for economic policy are discussed in Part V. The first chapter focuses on co-evolution and emergence in structural change and growth, following an industry life cycle approach and illustrating specific case-studies on various countries. Another approach shows the application of agent-based models of network evolution for analyzing the spread of innovation in regional contexts, which will be especially interesting for JASSS readers. The final contribution revolves around government as a risk-taking entrepreneur and discusses the provision of innovative technology infrastructure opportunities through public-private partnerships.

To conclude, this handbook is an amazing excursus on the state of the art of complexity thinking in the economics of technological change. Not only did the compendium reinforce the achievements of other theory textbooks in this field; it also paves the way for a 'normalisation' of complexity in economics. It strongly defends the advantage of operationalization and applied research in economics and touches upon important policy implications. Therefore, it is a must-read both for the scientist and for the policy researcher in the field of innovation and technological change.

* References

ANTONELLI, C (2008) Localized Technological Change. Towards the Economics of Complexity. London: Routledge.

BLUME, LE and Durlauf, SN (Eds.) (2005) The Economy As An Evolving Complex System III: Current Perspectives and Future Directions. Santa Fe Institute Studies on the Sciences of Complexity. New York, NJ: Oxford University Press.

HANUSCH,H and Pyka, A (Eds.) (2007) Elgar Companion to Neo-Schumpeterian Economics. Cheltenham, UK: Edward Elgar.

METCALFE, JS and Foster, J (Eds.) (2004) Evolution and Economic Complexity. Cheltenham, UK: Edward Elgar.


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