Introduction

Learning processes, leading to growth in the stock of knowledge, are basic in the dynamics of a modern economy. It will be argued in this chapter that almost all learning processes are interactive, influenced, regarding their content, rate and direction, by the institutional set up of the economy.

When the economy is pictured more as a process of communication and cumulative causation than as an equilibrium system, i.e. from an institutional rather than a neoclassical point of view, learning can be conceptualised as the source of technical innovation. Innovation is then, too, regarded as a process rather than as discrete events uniquely localised in space and time. It follows, it will be argued, that innovation is shaped by institutions and institutional change. It will be suggested that this process can be analysed in terms of national systems of innovation, reflecting that nations differ in terms of institutional set-ups. Furthermore, it will be argued that the relations between institutions and innovation can change, sometimes fundamentally, over time.

Institutions have a strong impact on technical change. However, partly as a consequence of the technical change they shape, a tension between technology and institutions and a pressure for institutional change is often provoked. At the same time institutions are normally quite rigid and do not change easily. The capability of national economies to cope with this problem, i.e. to learn about, adapt and change their institutional frameworks – to engage in ‘institutional learning’ – is important for the development of their international competitiveness.