Learning, Technological Capabilities and Structural Dynamics

This chapter discusses why this has occurred and compares the Latin American experience with that of other more successful catching up economies. Both economic history and economic theory generally acknowledge a deep relationship between technical change and economic development. The opening of the technological black box by the Schumpeterian literature produced new insights on how learning and technological capabilities co-evolve and why the technology gaps rise or fall across nations and time. The existence of diverse institutions and organisations, with specific modes of interaction with the productive system, defines National Innovation Systems (NIS), whose features are critical for the dynamics of international technological asymmetries (Mytelka, 2007; Cimoli, Dosi and Stiglitz, 2009). From this perspective, some key aspects of the development process which usually receive less attention in the literature come to the forefront in our analysis. Firstly, the need to analyze technical change within a framework which describes not only the evolution of productivity, but also the evolution of aggregate income, the diversification of the productive structure and the employment levels of the economy. Secondly, the need to emphasize cumulative processes leading to vicious or virtuous cycles - in particular why some countries traverse to a path where learning, production capabilities and institutions interact virtuously, while others remain in a hysteresis state within a low-growth trap. These complementary approaches contribute to explain why Latin America historically went trough different phases which had in common the persistence of structural deficiencies, such as small share of technology-intensive industries in GDP, low productivity growth and underemployment