Sectoral Systems of Innovation and Technological Catch-up: the Role of Knowledge Base Complexity

The debate as to whether, how and under which conditions latecomers in an ever more interconnected global economy can become significant producers of new technology and innovation has significant implications for industrial and economic policy. Technological catch-up can lead to higher productivity, economic growth and an increase in living standards. Recent contributions in the systems of innovation and evolutionary economics tradition suggest successful latecomers tend to move into new technological or industrial domains that present frequent windows of opportunity, shorter technological cycles, less steep learning curves, and less costly or problematic access to relevant knowledge. We contribute to this debate by building a model that adds new insights on an industry' knowledge base, to those features of a technological regime that extant studies adopting a sectoral system of innovation (SSI) approach already use to explain catch up. These new insights concern the degree of a knowledge base variety, complexity and decomposability. We study catch up dynamics in the upstream oil/gas, wind energy and solar energy sectors. Our data cover a thirty-seven-year period from 1980 to 2017. We find that complexity and the regime of appropriability play a particularly important role by interfering with a latecomer's attempt to catch up with technological leaders within the industry domain. Regarding the impact of a technological cycles length on catch dynamics, it appears to be significant although a nuanced picture emerges in relation to the nature and strength of the relationship.