ECON1165 – International economics and innovation

Assignment Instruction

This assignment is composed by four questions on relevant topics considered in the ECON1165 module.Provide an articulated answer of about 500 words to each question. Please, note that this assessment is not an essay.Answers provided  will be evaluated on the basis of its completeness, adherence
to the topic at stake, and level of critical analysis. The purpose of the ECON1165 response paper is to ascertain students’ knowledge of the topics treated during lectures and tutorials, and the related teaching material.

QUESTION 1
1.a) Describe what is the difference between innovation and invention.
1.b) Describe the different types of innovation usually identified by economic and business studies.
1.c) Innovation has been frequently described in formal mathematical models as a linear process.
Do you agree with this view? Articulate your answer by considering the major properties of the
innovation process as discussed during the ECON1165 module.

QUESTION 2
2.a) Provide a definition of “technological capability” and “social capability”, and describe the differences between them . Why can we say that innovation has a “systemic” nature?
2.b) Financial development, social capital, favourable business regulation, trade openness are different aspects of “social capability” influencing innovation processes and (therefore) economic development. Make a ranking of these factors according to their observed degree of importance for economic development.
2.c) Based on our discussions during lectures and tutorials, state whether the following sentence is correct or not: “innovation is a natural consequence of the integration of countries and single companies in the world market economy”. Explain the motivation of your answer.
2.d) Figure 1 below shows the cross-country correlation between the development of the education system and the level of economic development. Analyse Figure 1 by arguing about the importance of the education system for economic development in low, emerging, and developed countries.

QUESTION 3
Developing countries are usually described as followers, with respect to developed ones, in the accumulation of technological knowledge. For this reason, they are after advised to attracted foreign direct investment (FDI) of multinational corporations (MNC) to absorb technological knowledge from abroad.
3.a) Are FDI from MNCs always source of technological progress for developing countries?
3.b) Which are the most relevant channels through which technological knowledge could be transferred from MNCs subsidiaries to domestic companies?
3.c) Think at the different types of Global Value Chain (GVC) governance. Identify which is the best
and the worst form of GVC governance for the absorption of technological knowledge from the
point of view of a single partner company involved in a GVC.

QUESTION 4
4.a) Imagine you are the manager of a new company and you want to stimulate innovation. Argue
which type of leadership “model” is preferable in the management of innovative processes. Which type of challenges is this type of leaderships supposed to address? 
4.b) Now imagine that you are the manager of a national champion company. Which are the two main factors, say dimensions, you need to take into account in the definition of our own
company strategy and behaviour? 
4.c) Let instead assume you are a policy maker. Which type of “scenario” would you prefer to create in order to stimulate as many new business opportunities as possible out of the initial support provided to a national champion firm?