Abstract: Innovation and Foreign Technology in Italy, 1861-2011
Since its unification in 1861, Italy has moved from being a fragmented and mainly agricultural country to one of the seven most industrialized economies in the world. Some commentators interpret this as a success story, while others stress that the country never matched the technological capabilities of its competitors. In this paper we examine the different phases of Italian innovation activity, focusing on the importance of foreign technology and its channels of transfer. The paper is based on a novel dataset of domestic and foreign patents granted in Italy, France, Germany, Japan, Spain, Switzerland, the UK, and the United States, from the 1880s to 2010. Differences across channels of technology transfer and historical phases emerge, as well as in connection with the evolution of human capital endowment and domestic innovative capacity. Machinery imports contributed positively to innovation activity and productivity growth; inward FDI contributed positively to productivity growth, but not to indigenous innovation activity; the accumulation of technical human capital fueled both. In the long Italian Golden Age, for the first time the association of foreign technological knowledge with indigenous innovation processes strengthened productivity. In more recent years the dismal productivity growth is associated with under-performance in formalized innovation and reduced imports of disembodied technology.