This paper aims to investigate to what extent Italy’s growth divergence from major industrialised countries is explained by structural dynamics driven by the evolution of technological change over the past two decades. Along the lines of the main theoretical contributions that address the role of knowledge accumulation in economic development, we conducted our analysis based on the model framework of Kaldor’s Technical Progress Function (TPF). We performed TFP Error Correction Model estimates for Italy and a number of other relevant European countries to account for both long- and short-term interaction effects between variables and to identify any structural breaks in the relationship. Empirical results for Italy point to the increasing inadequacy of capital accumulation to absorb technical progress. Significant evidence of a lock-in condition is also found in terms of market structure and profitability, leading us to claim the need for policies targeted to high-tech industries.
Keywords: Struttura di mercato, progresso tecnico, ricerca e sviluppo
Jel Code: L100, O300