Technological upgrading and distributed knowledge bases

Established industries, which constitute by far the largest share of the manufacturing and service sectors in most developed economies, are on balance reasonably innovative. They engage in frequent changes in both product and process technologies which, although perhaps less spectacular (in a literal sense) than some of the innovations in newer industries, contribute substantially to their own productivity and competitiveness and to better macroeconomic performance. Through innovation, established industries not only benefit themselves but, in their role as consumers of new products and new ideas, they are also significant contributors to the growth of high-technology industries. The ability of established industries to engage in frequent technological upgrading is an important determinant of prosperity in economies at all levels of development and should be a major pre-occupation of both managers and policy makers (Robertson, et al., 2003; Robertson and Patel, forthcoming).