Albuquerque proposed a method to classify the level of

Albuquerque (1999) proposed a method to classify the level of development of each country\'s NISs. He built an Opportunity Taking Indicator (OTI), calculated dividing the country\'s share in world\'s patents (granted by the USPTO), by the country\'s share in world\'s scientific articles (indexed by the ISI). The numerator is a proxy for technology production, and the denominator is a proxy for scientific production. Thus, indicators close to (or above) one indicate high capacity to transform scientific knowledge into technology/innovation, suggesting that the country possesses a mature NIS. By contrast, indicators below one indicate low capacity to transform scientific knowledge into technology/innovation, suggesting that the country possesses an immature NIS. Thus, it is argued that developing countries with indicators associated with a mature NIS would be absorbing technology created abroad, i.e. performing technological catch-up. Following the historical analysis of development processes proposed by Gerschenkron (1962), several studies linked to neo-Schumpeterian approach emphasize that a mature NIS can be composed of different institutional arrangements.Freeman (1995) used the examples of Japan and USSR to highlight the impact of specific historical and institutional backgrounds on the configuration of each country\'s NIS. The author pointed out that although extremely high spending on R&D is observed in both countries, the former managed to develop a mature NIS, while the latter did not. According to Freeman (1995: 11–12), this shows that “simply to commit greater resources to R&D did not in itself guarantee successful innovation, LKB1 and productivity gains”. For him, the fundamental difference between the two systems was the strong presence of internal R&D in Japan, as opposed to R&D developed in universities and research institutes in the USSR. Furthermore, it is noteworthy that in the USSR the incentive for innovation at the firm level was extremely low, making the productive incorporation of innovations generated in the institutes considerably difficult. Hence, despite the high spending on R&D, the USSR was unable to generate an institutional arrangement that enabled an efficient relationship between production units and research institutes. Although the neo-Schumpeterian literature avoids proposing a general configuration for mature NISs, it is possible to identify in the neo-Schumpeterian literature some policies usually associated with the acquisition of the capabilities necessary for technological development. Abramovitz (1986), Lall (1992) and others, emphasize the importance of education and infrastructure, as well as broader macroeconomic and industrial policies. Lall (1992) and Nelson and Pack (1999) emphasize the importance of specific policies that aim to encourage exports. Moreover, these authors stress also the relevance of welfare policies that seek to reduce the conflicts that emerge due to the technological and productive transformations associated with the catch-up processes. Cohen and Levinthal (1990: 138), in turn, emphasize the importance of R&D expenditure, arguing that such expenses are fundamental not only to create innovations, but also to enable the absorption of foreign technology. Finally, reviewing the empirical studies related to the neo-Schumpeterian approach, Fagerberg (1994) indicates the importance of the effort (measured by investment, infrastructure, etc.) to acquire knowledge (measured by education, R&D, patents, etc.) in determining productivity growth.
Contributions to understanding the dynamics of innovation from a post-Keynesian perspective As noted in Section 2, post-Keynesian theory emphasizes the importance of investment for economic growth. Technological progress, in turn, is rarely addressed in the works of Keynes, and its importance is considered only in terms of its influence on the profitability of investment (Crocco, 2008: 281). Hence, much of the post-Keynesian literature considers innovation a factor associated with capital accumulation due to its impact on expected returns. However, according to Crocco (2008: 282), post-Keynesian models generally “do not explain how technological opportunities are generated (…) and completely neglect the role of technical knowledge in the investment decision”. Although the Kaldorian tradition within post-Keynesian economics is an exception to this rule, the neo-Schumpeterian analysis on innovation discussed in the previous section can be combined with the post-Keynesian approach to help solving this important limitation. This section discusses the role of knowledge (tacit and codified) in investment decisions and innovation.