chapter  5
The employment impact of product and process innovations
ByMario Pianta
Pages 19

A major problem with the current debate on technological change is the prevailing view of innovation as an undifferentiated process. Fundamental differences among the various innovative activities carried out in firms and in the public sector are usually neglected; in particular, the distinction between product and process innovations and the specificity of industrial sectors is largely disregarded. This is partly due to the lack of economic information on technological change and the reliance on R&D as the main indicator. But this is not just an issue of data availability. There is a deeper conceptual problem in looking at innovation as a black and undifferentiated box where a mix of new products and processes, scattered across industries, is expected to explain economic change. Key aspects that are usually disregarded alongside the distinction between product and process innovations include the specificity of the strategies for technological change pursued by firms; their contrasting consequences on productivity, distribution, markets and demand; the macroeconomic context and the role and dynamics of demand which interact with technological change; the structure of the economy and the composition of the labour force; the particular histories of national economies.