THE ROLE OF PUBLIC POLICIES IN FOSTERING INNOVATION AND THEIR IMPLICATIONS FOR EMPLOYMENT OPPORTUNITIES

Abstract

Shaping the industrial system on the pillars of innovation and technological change is considered as a unique occasion for jointly re-launching economic growth, contrasting environmental damage and improving employment opportunities. In the European context, the policy and academic debate on this topic is gaining increasing momentum, leading to relevant public investment and to the simultaneous implementation of policy programs aimed at both fostering and addressing innovation activities towards more-sustainable patterns of development. Together with such a renewed attention towards industrial policies, a new conceptual approach of industrial policy making is finding its way. This modern approach rejects the idea of an optimal state of the system as an achievement target for policy, since it considers innovation policy as a process continuously on the run, whose interactive nature includes a plurality of public and private actors. Therefore, this new perspective overrides the traditional view of innovation in terms of the market failure approach to R&D policy and puts more emphasis on the crucial role played by the institutions in creating, both jointly and individually, the “proper” institutional conditions needed to sustain technological improvements and innovation. Hence, industrial policies aiming at fostering the industrial transformation of the economies and at fuelling structural change processes based on the generation and adoption of new technology should consider a vast array of instruments combining supply-side measures along with other complementarity measures as well demand-pull instruments and systemic programs (Public R&D spending for universities and other public research institutions; funds for mission-oriented programs as defense, space, agriculture, health, energy or industrial technology, and general purpose technologies (GPTs); financing programs for tertiary education). Building on these considerations, the present dissertation is intended to contribute to the policy and academic debates by providing a multifaced investigation on the links between different classes of public policies and innovation activities as well as their implications for employment opportunities. By focusing on the Italian industrial sector, the study is made by two main blocks for a total of three chapters. The first block looks at innovation “tout court” and emphases the concept of “policy” mix, while the second one points the attention on innovation with beneficial environmental effects by looking at its linkages with environmental and innovation policies and its effects in terms of employment growth at the firm level. The structure has been systematized as follows: (1) Chapter 1. The first chapter provides an econometric investigation on the impact of both push and pull policy instruments on firms’ innovative investment. This appears to be a relevant issue from both academic and policy perspectives, considering that, despite of the frequent joint use of multiple instruments to stimulate innovative investment, most of empirical studies are focused on the impact of single policy instruments. In particular, a large scale, systematic evidence on the effects of public procurement on innovation activities based on quantitative policy evaluation techniques is still not available and, beyond the generalized optimism regarding its potential, the stimulating role of procurement on innovation could be affected by a considerable number of hindrances ranging from the low capabilities of the procuring organizations, the low degree of coordination along the national and local procurement chain to, more in general, the still predominant focus of procurement authorities on static-efficiency issues with respect to dynamic-efficiency objectives. By paying particular attention to the self-selection problem, such hampering factors will emerge from the impact evaluation exercise here proposed. (2) Chapter 2. In this part of the dissertation, the attention is devoted at investigating the policy determinants of distinct “modes” of environmental innovation, as identified from a number of environmental goals by means of a clustering analysis. In so doing, the chapter brings together two research lines: the one underlighting the primary role of environmental and innovation policies in fostering the pace of introduction and diffusion of environmental technologies, and the other calling for a more “systemic” approach to environmental innovation. This study contributes to the literature in two ways. Firstly, consistent with the evolutionary perspective of innovation, it provides a novel framework of innovation modes, thus suggesting that firms pursue several approaches when engaging in eco-innovation. Secondly, a related contribution is that this research directly keys into the debate in the literature about the effectiveness of public policies in spurring EI, with the added insight to assess the effect of different policy tools in shaping distinct EI dynamics. Thus, an enriched and more nuanced view of environmental innovation processes is here provided, with important implications for theorizing about policies aiming to foster the transition towards increased sustainability. (3) Chapter 3. Devoted at assessing the employment impact of introducing green technologies, the third chapter presents the major novelty of considering the multifaced nature of environmental innovation, as detected in chapter 2. The analysis is performed within a not-parametric framework which allows to account for a key issue rooted in the evolutionary perspective. It namely refers to the fact that the impact of innovation-related growth drivers might be differentiated according to the pace at which a firm grows. To date, this kind of analysis have been mainly concentrated in the standard innovation field, with the main finding that the faster is the pace of growth the greater is the growth premium arising from innovative activities. The econometric exercise suggests that, regardless to the green technological trajectory followed by firms, the net employment effect of environmental innovation is always positive but only in certain cases statistically significant. This is of particular relevance for struggling firms where environmental innovation turns out to be a key candidate for overcoming the economic impasse while, on the contrary, fast-growing companies seem to fail in taking advantage from most of green orientations. This provides rationales for paying more attention to the potential role of public policies in disabling hampering factors, namely financial and knowledge barriers, that are responsible for preventing firms from engaging and successfully dealing with environmental innovation.