Economic structure, organisation of knowledge, productivity

The economic literature in the last fifteen years has increasingly focused its attention on institutional change as an essential feature both in the interpretation of the growth process and in the prescription of policy action. In a parallel way, after the so called “human capital revolution” of the 60s, a second and more general waive of recognition of the role of knowledge in the economic realm has acquired general consensus, greatly influencing the prescription of policy action. Both trends have been highly relevant in shaping the way economists approach today the issue of flexibility in labour markets. This paper deals with the following questions. To what extent is it theoretically meaningful to compare different economic systems? Apart from cultural, political and social considerations are there also economic considerations or incentive structures which can give ground to their different degree of sustainability? Is it worthwhile to devise and implement policies aiming at supporting variety rather than standardisation in existing models of capitalism? The model presented here is the tool we use to tackle these questions in a very simple and nevertheless meaningful way. Attention is focused on one main point: given the importance of productivity dynamics, the model shows – by means of numerical simulations - that even very simple assumptions concerning its determinants can bring about complex paths that soften usual unilateral conjectures about the causal links between productivity and employment. There is no proof that in every economic system growth can be based only on free competition and passive flexibility in wages, job tasks, lay-offs and territorial mobility. Innovative flexibility can play an important role. This brand of flexibility is built on R&D, education and training, participation in information and knowledge sharing, motivation of employees and executives also by means of tenure contracts. In this view schooling and training need to be included, together with R&D, among the major determinants of both potential and actual growth. But the role of the firms in the process of knowledge creation and preservation can be crucial. Schooling, training and work-based learning do affect productivity, the development of social capability, flexibility of adjustments both in the short and long-term. They are core ingredients of the self-sustaining mechanism which we call development. This paper focuses on the role of three “engines” or paths, which have the effect of enhancing productivity, namely (i) the firm-specific learning process, (ii) the general learning process which is partly internal to the firm and partly external, and (iii) process innovation, which is originated by investments in new capital (technological innovation) and in new organisational methods, and is favoured by R&D activities, carried out both by firms and public/ private agencies. The relationship between these engines of growth is neither a straight, nor an easily visible one. Instead, even if the institutional environment allows a higher or lower degree of anticipation, a pro-cyclical visibility of their economic worth can be inferred. In a very tentative way, our model seems to suggest that engines (ii) and (iii) tend to have in any case a great impact on productivity. Engine (i) can be more or less relevant. It also depends on the degree of development of the NRE in the considered context. In any case its impact can be supplemented by the other two engines. And this seems to suggest that passive flexibility per se cannot be an option for advanced economic systems.