Role of production in fostering innovation

This paper investigates whether production capabilities fostered the development of new technological capabilities at the national level. The authors adopt the concept of 'product space' and 'technology space' for network analysis, and analyze whether the current production capability in related technologies influences the future technological capability. The main comparative analysis is based on export data and international patent data from 1980 to 2005, and ALP (Algorithmic Links with Probabilities) concordance to link production and innovation. The results show that past production advantages of a country plays a significant role in the emergence of new technological advantages. This finding suggests that current production capability provides evolution paths not only to new products, but also to technological innovations.