Middle Innovation Trap

Abstract

In the context of emerging economies, long-run economic growth and development encompass mechanisms from technological catching-up to moving forward by one’s upgrading. However, as the economy reaches the middle-income range, economic growth mostly slows down unless adopting strategies for building technological capabilities. To identify the bottleneck in sustainable technological development and the ways to avoid the middle-income trap, therefore, this chapter focuses on the development patterns of two different types of technological capabilities: implementation and concept design capabilities. Our first finding from the empirical study emphasizes the need for the development of the concept design capability, describing the middle-income trap as a “capability transition failure” or “middle-innovation trap”. Secondly, discussing difficulties of the capability transition from the institutional rigidity perspective, this chapter highlights “innovation commons” as a coherent transition platform for the development of concept design capability.

“Digitalisation” and “Greening” as Components of Technology Upgrading and Sustainable Economic Performance

“…Fifth, quite unexpectedly, greening turned out to be a positive and significant driver of increasing labour productivity per hour in upper-middle-and high-income economies. This result follows evidence showing that only countries at these income levels (the frontier) can reduce the energy and environmental intensity of their GDP [36]. Large regression coefficients suggest that high-income economies have been decoupling sources of their growth from material consumption.…”