Innovation technology and long cycles of economy: Kontratiev
Theory Lesson 5
Slide 2
Innovation Innovation can be defined in many different ways and
can be synonymous with many concepts: change changing the selection
mechanism everything that enables organizations surviving and
growing
Slide 3
Technology The complex of knowledge, skills, procedures,
equipment and technical solutions that are applicable to any
functional activity which takes place in the organization at the
end of the production / distribution. (Porter M., 1985; Rispoli M.,
1991)
Slide 4
Schumpeter (1912) 5 types of innovation: 1.product innovation
(the production of new goods); 2.innovation of production (new
production method); 3.commercial innovation (new methods of
marketing); 4.innovation in supply (the conquest of a new source of
raw material); 5.market innovations (reorganization of the supply
of an industrial sector);
Slide 5
Source: Confindustria. Our revisitation LINNOVAION TO 360:
INNOVATIONS ICEBERG Resource Technology Public and Private
Investment in R&S Education, spin-off etc. Organization
Efficient use of technology Human capitalTotal quality
Internazionalization & Innovation leadership Sustainability Law
and Regulation Competition and markets and public policies Social
and Environmental development
Slide 6
GAP ITALY-EUROPE (UE4*=100) * The first four countries for the
share of innovative companies are Germany, Belgium, Austria and
Sweden. Source: CSC on Eurostat, CIS-3. propensity to innovation of
enterprises innovation of process innovation of product innovation
in marketing innovation in management
Slide 7
Benchmarking internazionale degli investimenti in ICT
Slide 8
Kondratiev Cycles Focus on price system Cyclic emerging
clusters of innovations, among them related directly or indirectly,
able to systematically change the whole system of prices The
"clusters" (techno-economic paradigms) are not simply collections
of scientific discoveries, but it is essential that they are
applied to the production and organizational innovations are
also
Slide 9
The clusters (techno-economic paradigms) 1.New energy sources
or significant changes in energy production; 2.New materials used
in the production of strategic products; 3.New sectors of
production or otherwise taken off than the previous stage; 4.New
organizational forms of production cycles and labor markets; 5.New
procedures for the movement of goods and information.
Slide 10
The advent of a new techno-economic paradigm produces
overheating of prices that can last for two decades, since it
requires the system to fully renew its industrial structure
(factories and machines), as Schumpeter called "creative
destruction storms." This produces huge investments, as the sum of
a countless number of individual investments that naturally move on
prices. Kondratiev Cycles
Slide 11
Time differentials Geographical differentials Kondratiev
Cycles
Slide 12
The depreciation of investments in replacement of production
cycles, faster for the pioneers and innovators in places, requires
a longer time at a global scale before the system has full (or at
least significantly) converted, can spend a relatively long period,
after which, the future depreciation (accounting and real) along
with the maturation of the technology (economies of scale) tend to
cool prices, until the advent techno-economic paradigm of the next,
pushing prices to rise again (phase A + phase B = 50/55 years).
Kondratiev Cycles
Slide 13
Stage A expansion: rising prices, investment demand growth,
confidence and optimism virtuous circle of investment / demand
Stage A recession : rising prices, overestimation of demand, lack
of market direction, increased competition, heavy cost structure
failures, job loss, decline in demand Stage B expansion: decreasing
prices fewer producers, completion of technological substitution,
standardized technologies, reducing production costs, lower prices,
increased demand Stage B recession : overestimation of demand and
technological obsolescence of the bunch. Kondratiev Cycles
Slide 14
Kondratiev cycle not just the accumulation regime but also ways
of setting
Slide 15
Stage A expansion: organization of production, question,
Investment distribution between wages and profits rules governing
the market-state relationship, behavior and individual and
collective habits. Decoupling without conflict Stage A recession :
Social conflict and conflict of interest which may itself be due to
the crisis. The recession eases the resistance that lead to an
adjustment of the control mode and then make a new pair. Stage B
expansion: the new techno-economic paradigm brings maximum benefits
Stage B recession : overestimation of demand, technological
obsolescence of the bunch. Kondratiev Cycles
Slide 16
Slide 17
The timing of each cycle can not be fixed precisely During the
transition between these two cycles coexist The cycles start
differently in various economies Kondratiev Model is able to show
how the economic Development of systemic reaction to the
introduction of new technologies but does not explain the precise
chronology of the various developments Kondratiev Cycles
Slide 18
Conclusions There is a succession of periods long enough and
internally consistent, in which the organizational forms of market
and society (but also of politics and culture) are seriously
affected by new clusters The change also involves the "rules of the
game" to economic, social, political, must bear, put up a new
framework of constraints and opportunities. Each geographical
economy changes, even if it is at the heart of technological change
Each geographical economy system (local, national) demand for
change, but each will react in the measure and is permitted by his
organization, specialization, quality and quantity of resources.
The speed of adjustment resulting in economic benefits, especially
where the new cluster was formed. If the new rules of the game is
incompatible with the specific geographical economy, this could be
"ordered" not to intercept the change It is not enough to be
predisposed to the new techno-economic paradigm, it must also
evolve positively and quickly adjust mode, otherwise the economic
advantage may dissipate and the decline begins
Slide 19
First Kondratiev cycle Time: 1790 (Industrial Revolution) -
1840 (Hungry Forties) Leading sectors : textile (cotton), ceramics
and metallurgy Power Sources : Hydraulic and Steam (Textiles,
Pumps, Coal Mines) Infrastructure development: river networks,
channels, and toll roads Economic Geography: regional markets
(capital, inputs, labor and local market) Business models:
factories mechanized and modernized workshops (steam power)
Slide 20
Second Kondratiev Cycle Time: 1840-1890 (economic dumps)
Leading sectors : iron metallurgy (steel, copper), machine tools
Power Sources : steam engines, coal Localization : Great Bretain,
Prussia-Russia, Belgium, France, USA Japan Infrastructure
development : Railing and Shipping (transportation) Economic
Geography: oligopolistic markets (protectionism to the outside and
the banking system, labor force, national market) Business model :
factory large precedence over modernized workshops (industrial
districts in Sheffield, Lyon, Darmstadt, etc., where the industrial
revolution is "imported")
Slide 21
Third Kondratiev Cycle Time: 1890-1945 (crisis in 29) Leading
sectors : chemicals, plastics, automobiles, telegraph, radio,
cinema, air (the first war bombing of Libya 1912) Power Sources :
internal combustion engine, electrical machinery, petroleum
Localization : transition from British to American industry further
spread in Western Europe, continued growth in Japan Infrastructure
development : railways, roads, telecommunication networks Economic
Geography : urban-industrial development Business model: Taylorist
model of the assembly line by Henry Ford (Fordism, conflict
management, mass consumption)
Slide 22
Fourth Kondratiev Cycle Time: 1945-1990 (crisi anni 70) Leading
sectors : electromechanical (electrical goods), transport
equipment, chemicals, aerospace, television, telephone, Power
Source: Oil, Nuclear Localization : USA, Europa, Soviet Union.
Infrastructure development: information systems, highways, airports
Economic Geography : Fordist regions (Triangle MI-TO-GE),
Manufacturing Belt, Tokyo-Yokohama, West Midlands, Ruhr, Ile de
France) Business model: Fordist model of globalization, cooperation
between state, employers and trade unions (Welfare, afavore free
resource consumption)
Slide 23
Fifth Kondratiev Cycle . Time: 1990-? Leading sectors : new
economy, biotechnology, microelectronics, nanotechnology Power
Source: oil, nuclear Localization : Increased competition new
emerging countries like China and India Economic Geography: the
geographic scope of business is global optimum. Companies are
organized in network. Business Model: enterprise transnational
network