Innovation, Industry Evolution and Employment

The purpose of this paper is to introduce a series of articles on the links between innovation, the evolution of industry and employment. These relations provide the building blocks of a new industrial policy. The articles are included in Innovation, Industry Evolution and Employment published by Cambridge University Press in 1999. The continued rising unemployment coupled with moderate growth in Europe has triggered a plea by policy makers for rethinking the policy approach that brought about European prosperity during the post-war era. The resulting policy debate has been cast in terms of an inevitable tradeoff between greater employment but at the sacrifice of lower wages on the one hand, versus the maintenance of wages and living standards but at the cost of less employment on the other. In terms of this debate, the Anglo-American solution has been the former, while the continental Europeans have chosen the latter. The purpose the thirteen articles of Innovation, Industry Evolution and Employment is to suggest that this policy debate has been miscast. There is an alternative. This alternative involves structural change, and in particular shifting economic activity out of traditional moderate-technology industries and into new emerging knowledge-based industries. In other words, it involves innovation, industry evolution and their consequences for employment development. To shed light on the links between innovation, industry evolution and employment generation, the Tinbergen Institute of Erasmus University Rotterdam, the School of Policy Studies at Georgia State University, and EIM Smalland Medium Sized Business Research and Consultancy in Zoetermeer, the Netherlands hosted a two day conference on the subject in Rotterdam and Zoetermeer, 29-30 August, 1997. The thirteen articles included in Innovation, Industry Evolution and Employment reflect a carefully edited and revised selection of the papers of this conference. What the articles have in common is that they link some measure of economic performance to technology and innovation, and they do it using a dynamic framework based on a longitudinal database that tracks micro-observations over time.