Chapter

Technological Congruence and Productivity Growth<sup>1</sup>

Cristiano Antonelli

in Innovation and Growth

Published in print September 2012 | ISBN: 9780199646685
Published online January 2013 | e-ISBN: 9780191748998 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199646685.003.0010
Technological Congruence and Productivity Growth1

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This chapter opens up for new perspectives on how to understand the development and the choice of technology solutions by distinguishing between (i) moving the best practice frontier downwards and (ii) settling on a specific factor combination (specific factor ratio). As a matter of fact, higher levels of efficiency can be obtained with two distinct forms of technological change: i) neutral technological change consisting in general and symmetric shift of the map of the isoquants towards the origin; and ii) biased technological change that consists in asymmetric change of the form of the isoquants. In the latter case efficiency gains are obtained because of higher levels of congruence between the local factor markets and the output elasticity of production factors. The main idea is that an economy, at the aggregate level, as well each firm, industry and region, are rewarded if it manages to choose factor proportions that are congruent with localized resource composition, such that e.g. labor abundant economies apply labor intensive technology solutions.

Keywords: technological congruence; factor endowments; induced technological change; localized technology knowledge; congruence efficiency; technological pluralism

Chapter.  10299 words.  Illustrated.

Subjects: Financial Markets

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