The paper compares the innovative structure and performance of Italy and Germany by using the concept of the technological system which is defined as the result of the interaction of four different components: the industrial, the innovative, the commercial (domestic and foreign markets) and the institutional sub-systems. The analysis of the intersectoral innovation flows within the two national technological systems is based on an input-output database rearranged in vertically integrated sectors. Specific hypotheses have been formulated and valid proxies for the variables studied have been used. The final results have been obtained by using network analysis methodology and indicators. This called for a dicotornisation of the original matrices. These results take into account separately the existing differences between Italy and Germany in both absolute terms (dimension effect) and relative terms (proportion effect). The paper shows that Germany is characterised by a higher level of systemic connection both in absolute and (generally) in relative terms. The Italian technological system seems to be segmented in a dualistic structure where few high-tech sectors co-exist along with a pool of traditional ones, rather peripheral in the innovation flow network. The German system, on the contrary, appears to be homogeneous with a more evenly distributed structure of intersectoral innovation flows. The paper concludes by considering the effects of the introduction of other sub-systems: namely foreign market and public intervention. While the former introduces further elements of differentiation between Italy and Germany, the latter seems to perform a similar role in both systems.
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