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Working Papers
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Innovation and Learning Dynamics in the Chilean and Argentine Wine Industries

Working Paper No. 145

Published: 2013
Category:
Business

Innovation and Learning Dynamics in the Chilean and Argentine Wine Industries

Fulvia Farinelli
Full Text PDF
Abstract
This paper focuses on the magnitude, variety, and sources of innovation introduced by the Chilean and Argentine wine industries during the past two decades. It analyzes whether the prolonged export growth of Chilean and Argentine wines has been achieved by building the innovation capacity of local actors and creating domestic linkages with local grape producers, winemakers and input providers, or by relying exclusively upon FDI and knowledge flows generated abroad. In line with the evolutionary tradition, this study explores the hypothesis that, much as in the case of high-tech sectors, the ability of developing countries to enter knowledge-intensive natural resource-based sectors, such as wine, depends on their ability to access capital, technology and knowledge from abroad, that is, on what can be defined as “external” sources of innovation. It also depends, however, on the ability to absorb and adapt imported technology and know-how to the local environment, that is, on the creation of local tacit knowledge and endogenous R&D capabilities.
This paper measures, first of all, the innovativeness of the leading 25 Chilean and of the leading 25 Argentine exporters of bottled wines, and looks at the variety of innovations introduced, focusing not only on new methods of production, but also on the development of new products and new ways of organizing business. Subsequently, it identifies the role played by external sources of innovation such as FDI, as well as capital-embodied and codified knowledge flows in triggering the phenomenal technological upgrading process of the Chilean and Argentine wine industries. Finally, it looks at the role played by internal sources of innovation, namely at the creation of local tacit knowledge and incremental innovation, at the emergence of a wide pool of highly qualified human resources, and at the role of sectoral R&D programmes, local universities and research centres in the creation of endogenous technological capabilities.
This paper is structured as follows: Section 2 measures the innovativeness of the leading 25 Chilean and of the leading 25 Argentine exporters of bottled wines. Section 3 looks at the variety of innovations introduced, focusing – in line with the Schumpeterian tradition – not only on new methods of production, but also on the development of new products and new ways of organizing business. Section 4 looks at the triggering role of FDI in stimulating the phenomenal technological upgrading process of the Chilean and Argentine wine industries over the past two decades. Section 5 focuses on the importance of external sources of innovation in sustaining such a process, namely, on the importance of capital-embodied and codified knowledge flows channelled through imports of foreign machinery and quality certification mechanisms. Section 6 looks at the creation of local tacit knowledge and incremental innovation in the Chilean and Argentine wine industries, and at the emergence of a wide pool of highly qualified local oenologists, agronomists and viticulturalists. Section 7 analyses the role of sectoral R&D programmes and of local universities and research centers in the creation of endogenous technological capabilities. Section 8 concludes with some considerations on the longer-term sustainability of the export boom of Chilean and Argentine wines.

Submission

Please send your papers as PDF files to the editor, Victor Ginsburgh, at vginsbur@ulb.ac.be
Papers will be quickly reviewed, prior to potential posting on the website. Decision will be to post or not, possibly with short comments, but without referee reports. The decision will be based primarily on the suitability of the paper’s topic to the aims of the Association.
Such decisions are independent of publication decisions for the Journal of Wine Economics.

Working Paper publication requires that at least one author
is a regular member of AAWE.

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