Architecture #2: Form

We can most easily understand 'form' as the 'structure' of innovation systems.

Probably most innovation studies fall into other categories such how they work, why they work or even do they work which aren't really related to their architecture, but there is still a wealth of knowledge of the structure of innnovation systems.

Problematically, as Machlup noted 50 years ago the word 'structure' is often just a jargon word that obscures meanings as much they enlighten. It appears to me that we can create a taxa of at least three classes of 'structure'. The first world be shift/share analysis which look at the changing composition of industry or innovation patterns. A second class would be 'specialisation' which we would typcally see in analysis of national industry or export patterns. The third and final group of studies would be those that are focussed upon the relationships between actors in the innovation system.


Shift Share.
I am not aware of any particular pieces of work that have linked shift share analysis, which is typically associated with the changes in the sectoral breakdown of GDP over time, and the innovativeness of economies.

Specialisation
Often specialisation has been used as a term related to relative geographic concentrations.

Great work on this topic has been done on innovation and specialisation by people like: Keld Laursen.
(2000), Trade Specialisation, Technology and Economic Growth: Theory and Evidence from Advanced Countries, Cheltenham, UK and Lyme, US: Edward Elgar, ISBN 1 84064 385 4.

That book deals with export specialisations, many other have considered technological specialisation.

Recent work has begun to create a clearer distinction between specialisations and concentrations of activitiy. See for example: Cutrini(2010) 'Specialization and Concentration from a Twofold Geographical Perspective: Evidence from Europe', Regional Studies, 44: 3, 315 — 336.

Relationships

However, most of the innovation studies interested in structure have focussed most on relationships. Different kinds of relationships have been described in the literature on Innovation.

Some examples include:

Redrawn from. Geroski, P. (1994) Market Structure, Corporate Performance and Innovative Activity. New York: Claredon Press – Oxford
.
In this diagram we can see a complex system of innovation interdependencies. A couple of primary ‘sectors’ – mechanical engineering and chemicals are key developers of innovations that flow onto a number of other sectors. Some sectors such as electronics and instruments are intermediate players, both benefiting from innovations generated elsewhere but also providing innovations to others. Finally, there are a range of largely ‘recipient’ complex integrating sectors such as auto, aerospace, paper, food and construction etc which are typically end points for a wide range of technological inputs.


Another presentation.

Redrawn from:
Silvani, A., F. Cancemi, C. DeBresson and X. Hu (1996) ‘Innovative self-sufficency or regional interdependence: Lombardy and the Rest of Italy’ in DeBresson, C. (ed) (1996) Economic Interdependence and Innovative Activity. Cheltenham, Edward Elgar.


Other surveys of the producers and users of innovations have revealed similar patterns. Silvani et al. (1996), for example, have shown quite a similar pattern exists for the innovation interdependencies within just a single Italian region (Lombardy). Figure 2 reveals not only the innovation flows but also key flows of goods (combining an innovation producer-user matrix with standard input-output matrix data. Again, auto, paper, and textiles are recipient sectors, while machinery and chemicals are important innovation generating sectors. In this region the wood and rubber sector has important innovation interdependencies with the chemicals and machinery sectors.

Finally, the analysis of Cesaratto et al. (1996), based on similar data to Silvani et al., is quite interesting. These authors categorise industries into a quite a different format than has typically been developed, although principally reinforcing the emergent understanding of the technological division of labour and the interdependencies. Their taxonomy groups industries into design based capital goods, investment based intermediate goods innovators, complex innovators, marketing oriented innovators, cost oriented consumer goods innovators, construction, services and consumption.

Cesaratto, S., S. Mangano, and S. Massini (1996) ‘New Dimensions on Division of Labor: The ase of Italy (1981-85)’ in DeBresson, C. (ed) (1996) Economic Interdependence and Innovative Activity. Cheltenham: Edward Elgar.

In my own work I kept the interactions down to a single industry but looked at the relationships across borders.

.
So in the diagram above I show that I-O interactions within Europe for the transport industries favour Germany (the arrows are backwards flows of finances) goods flows in opposite direction.

Thus innovation studies have contributed significantly to our understanding of the relationships within the economy.

Paul Romer on Cities

It seems that in recent years that Paul Romer famous for his work on endogenous growth theory has been turning his atention to cities. In particular he has been thinking about what he calls 'charter cities' by which he means cities that established within the borders of a developing country but ruled by a different country with different institutional rules to those of the local economy.

Does this sound familiar - it should, as it is an outline of the history of Hong Kong turned into an academic theory.

You can view him at TED.




You can also listen to him in an interview with te CBC.
http://www.cbc.ca/thecurrent/2010/201002/20100208.html


More resources here:
http://www.chartercities.org/

This idea raises very interesting question regarding city development and whether there are bigger issues of whether theae can be created just about anywhere or hether there are some macro-geography issues involved as well. After all for awhile at least the most famous examples of Hong Kong and Singpore acted as entrepots for hinterlands. Is this a necessary condition? And it is possible to get them wrong, as exemplified by Macau.

Getting the rules right might not be the only thing to get right.

The future of industrial cities

There has been some recent commentary on the alleged antics of Richard Florida and his associated consulting activities.
goto http://network.nationalpost.com/np/blogs/posted/archive/2010/01/06/critics-lambast-urban-guru-florida.aspx

At the bottom of the National Post piece it states:

His next book, which is titled The Great Reset and is due to be published in April, will reportedly expand on these recent ideas. He can expect to face more accusations that his message is elitist in that it suggests professionals and creative workers can stay put in their urban enclaves while disenfranchised blue-collar workers must gather their belongings and vacate suburbia and exurbia.

As one commentator, Josh Leon, a regular contributor to urban affairs magazine Next American City, wrote, “I doubt sincerely that [Jane] Jacobs would be fine with the mass abandonment of communities whose specialized services don’t satiate global markets, which these days happen to have the attention span of an ADHD toddler. Unstable economies, after all, don’t make for stable communities.”

This is a pretty interesting criticism given that rural workers and rural towns have already been through this process. My comment is what else is new? Decline and growth happens due to a myriad of both macro and micro processes - some can be managed some can't. There is only so much current policy and investment approaches can do to make a city more inviting and livable. It can't for example create a mountain range or an ocean shoreline (speaking as a west coaster). I am not a huge fan of Florida but he obviously has some quite sensible things to say. For me the criticism in this piece rings a bit shallow over what Florida could be criticised for. 

What does all this begin to foreshadow? If cities are the real geography of the world economy of the coming century then city governments need to do some pretty hard thinking. Policy is pretty meaningless without muscle and muscle (programs) only happens with money.

So discussions around cities and money are only going to get more intense. If central governments don't come to agreements of redistribution then we are likely to see the Balkanisation http://en.wikipedia.org/wiki/Balkanization of modern nation states through the collection of city taxes http://network.nationalpost.com/np/blogs/toronto/archive/2009/11/05/toronto-needs-to-levy-its-own-sales-tax-city-budget-chief-says.aspx .

The implications of current contradictions of multi-level policy making are not really being analysed by the same tools that we analyse the geo-politics of nation-states. Throw in climate change, petrol prices and life could get interesting but I don't think we heading for total city states systems aka Snow Crash by Neal Stephenson.

An Architecture of Economies and Innovation Systems

Implicit in my purpose for this blog is to enter into a discussion that attempts to disentangle ideas of  geographic, economic and innovation structure. Although we might joking suggest, to paraphrase Derrida that structuralism is dead, it lives on still and should. Today I start a four part series on a relatively new comer to the lexicon of economic 'structure' words; 'architecture'.

The first use of it that I became aware of was in connection to the asia financial crisis and the perceived need to revisit the global financial system architecture. Since then it has been used by others, notably Michael Jacobides et al. (Industry Architectures) and I have even used it in my book Innovation System frontiers (Chapter 10).

Is architecture just another word for structure in English which is surprising devoid of useful terms, or can the word be used with deeper meaning.

as it is currently used.
Industry architectures
Benefiting from innovation: Value creation, value appropriation and the role of industry architectures
Michael G. Jacobides, Thorbjørn Knudsen, Mie Augier. Research Policy 35 (2006) 1200–1221.

p1201. Our first contribution is to extend the Teecian purview (which focuses on the potential dyadic relationships between innovators and outside asset holders) by considering industry architectures, i.e. templates that emerge in a sector and circumscribe the division of labor among a set of co-specialized firms. We explain why these architectures emerge, usually early on in an industry’s life, as a result of balancing advantages from division of labor with transaction costs relating to the certification of quality of the final good or service. We further explain why these architectures sometimes become stable, thus creating the contours of an industry.We then argue that firms may be able to affect the architecture of their sectors, especially when it is not sharply defined, and as such create an “architectural advantage”.

p1202. Yet most economic organizations, including firms and markets, exhibit a considerably more complex structure of cospecialized agents and assets. We shall refer to such a structure of co-specialized agents and assets as architecture, and suggest that industry architectures are the common frameworks determining the nested structures of industry organization. An industry architecture, we argue, is a sector-wide construct that defines the terms of the division of labor.
Architecture of economies. I will confess that I wanted to use the term in my book and did so in probably a rather shallow way given that my diagrams of industry connectedness are little more than the wiring diagrams of the global economy or at best the floor plans. The diagrams do not provide an idea of the overall form of economies. However, in admitting this I also want to say that I do have in mind a broader image of architecture, even if it was not articulated there.

So what is architecture?

Obviously to start with it is primarily used to define the human built environment. One of the earliest writers on architecture, Vitruvius, a Roman writer and 'engineer' of the 1st century BCE  spoke of firmness, utility, and beauty, latter translated by Wotton as "Commoditie, Firmeness, and Delight'.

... today we might summarise these as form, function and beauty (or perhaps happiness after De Botton).
For an interesting read see:  David Cast (1993) Speaking of Architecture: The Evolution of a Vocabulary in Vasari, Jones, and Sir John Vanbrugh. The Journal of the Society of Architectural Historians, Vol. 52, No. 2 (Jun., 1993), pp.179-188 Stable URL: http://www.jstor.org/stable/990784

Can we imagine describing economic or innovation systems in terms of their form, function and delight, we shall see?

New OECD Reports

Just before Christmas the OECD released a number of important reports.


OECD Science, Technology and Industry Scoreboard 2009

 http://www.oecdbookshop.org/oecd/display.asp?sf1=identifiers&st1=9789264063716

 

At a time when world economy is in the midst of the most severe economic downturn since the Great Depression, the Scoreboard provides the statistical information necessary to define a response to these global challenges. This edition of the Scoreboard illustrates and analyses a wide set of indicators of science, technology, globalisation and industrial performance in OECD and major non OECD countries (notably Brazil, Russia, India, Indonesia, China and South Africa). Indicators are organized around five issues: responding to the economic crisis, targeting new growth areas, competing in the world economy, connecting to global research, and investing in the knowledge economy.

 

This book has a bit of a new look and some interesting new analyses. Readers may be drawn to the opening chapter on the economic crisis and the section on emerging research fields.

  

 

OECD: Regions Matter: Economic Recovery, Innovation and Sustainable Growth

 http://www.oecdbookshop.org/oecd/get-it.asp?REF=0409111E.PDF&TYPE=browse

 

Why do some regions grow faster than others, and in ways that do not always conform to economic theory? This is a central issue in today’s economic climate, when policy makers are looking for ways to stimulate new and sustainable growth.OECD work suggests that there is no one-size-fits-all answer to regional growth policy. Rather, regions grow in very varied ways and the simple concentration of resources in a place is not sufficient for long-term growth. This report draws on OECD analysis of regional data (including where growth happens, country-by-country), policy reviews and case studies. It argues that it is how investments are made, regional assets used and synergies exploited that can make the difference. Public investment should prioritize longer-term impacts on productivity growth and combine measures in an integrated way. This suggests an important role for regional policies in shaping growth and economic recovery policies, but also challenges policy makers to implement policy reforms.


This is a really important report and I haven't read it closely enough yet to comment, however, some key messages include.

• Across all OECD countries, regions vary greatly in per capita income levels and growthrates; there are few signs that they are becoming more similar.
• Urban areas tend to have higher income levels than rural regions, but not necessarily higher growth rates; there is no consistent relationship between urban concentration and economic performance.

 The report contains a range of easily accessible statistics and innovative graphics (3D maps).

 

 

OECD: Innovation and Growth: Chasing a Moving Frontier

 http://www.oecdbookshop.org/oecd/display.asp?sf1=identifiers&st1=9789264073968

 

Innovation is crucial to long-term economic growth, even more so in the aftermath of the financial and economic crisis. In this volume, the OECD and the World Bank jointly take stock of how globalization is posing new challenges for innovation and growth in both developed and developing countries, and how countries are coping with them. The authors discuss options for policy initiatives that can foster technological innovation in the pursuit of faster and sustainable growth. The various chapters highlight how the emergence of an integrated global market affects the impact of national innovation policy. What seemed like effective innovation strategies (e.g. policies designed to strengthen the R&D capacity of domestic firms) are no longer sufficient for effective catch-up. The more open and global nature of innovation makes innovation policies more difficult to design and implement at the national scale alone. These challenges are further complicated by new phenomena, such as global value chains and the fragmentation of production, the growing role of global corporations, and the ICT revolution. Where and why a global corporation chooses to anchor its production affects the playing field for OECD and developing economies alike.


Some interesting material, but this book is a collection of papers from a conference the OECD and World Bank ran.

NSF Science and Engineering Indicators 2010 released

The US National Science Foundation (NSF) has just released its latest Indicators report.

Webpage for downloads.
http://www.nsf.gov/statistics/seind10/


Webcast (interesting but less than dynamic)
http://www.nsf.gov/news/news_videos.jsp?cntn_id=116238&media_id=66173&org=NSF

Conferences

There are three conferences with the deadlines rapidly apporaching.

DRUID 2010
The deadline for papers is usually around the 28 of Feb.
http://www2.druid.dk/conferences/index.php?cf=43

DRUID and Imperial College London Business School have agreed to co-organize the DRUID Summer Conference in London on June 16-18, 2010.


"This is the very first time a DRUID flagship event is held outside Denmark and we are very excited about the new promising possibilities this opens for our research community" declares DRUID Director, Professor Peter Maskell, Copenhagen Business School.

Dr Ammon Salter, co-Director of the Innovation Studies Centre, Imperial College London states: "DRUID has become one of the world's leading intellectual forums for discussions about technology, innovation and strategy. We are delighted to welcome DRUID to Imperial, bringing this forum into the heart of London."

SCHUMPETER ASSOCIATION
http://www.schumpeter2010.dk/index.php/schumpeter/schumpeter2010
 
The 13th Conference of the International Schumpeter Society takes place at Aalborg University in Denmark on 21-24 June 2010.


Schumpeter 2010 serves as an opportunity for both established scholars and young researchers to present research that has a Schumpeterian perspective. The major topic of the conference is "Innovation, Organisation, Sustainability and Crises". But the conference more generally embraces micro-studies of the innovation, routine and selection as well as studies of the macro-problems of Schumpeterian growth and development as a process of "creative destruction". The broad range of issues implies that both economists, business economists, and other social scientists can contribute to the conference and that evidence may be provided by statistical and historical methods as well as other methods.

WIOD
The EU funded world input output database is also I believe holding a conference in late May which will apparently have some session open for external submissions.
Watch the WIOD website for details. http://www.wiod.org/