ECONOMICS OF INNOVATION AND SUSTAINABILITY
Instructional goals
The course offers the fundamentals of the economics of innovation and its relationships with growth, structural change, employment and environmental sustainability. It covers topics related to the taxonomy and measurement of innovation, the impact of innovation on the economic and environmental performance of sectors and countries; the relationship between digital technologies and AI with employment; intangible capital, productivity, the role of data (value and governance) and digital indrastractures in modern economies; innovation, trade and global value chains, functional specialisation, and dependency/vulnerability patterns; policy frameworks for innovation and the green transition, with particular attention to EU industrial policy.
Seminal papers and chapters from handbooks and textbooks will be presented and discussed during classes.
Intended learning outcomes
1) Knowledge and Understanding
At the end of the course students will be able:
- to understand sources, nature and economic effects of innovation
- to understand the relationship between economic activity, green and digital innovation and environmental sustainability
- to understand main societal consequences of innovation, including it effect on the labour market, inequality, uneven economic performances of countries, regions and sectors
- to understand the main challenges and policy tools related to sustainable growth
2) Applying knowledge and understanding:
The student will be able:
- to perform empirical analyses focused on innovation, environmental performance and policy in different contexts;
- to analyse the innovation activities employing a varied array of indicators and measures, which are adequate to the investigated contexts;
- to identify and interpret policy tools in relation to varying goals and contexts
These goals will be achieved by means of class exercises.
3) Critical understanding:
We expect students to be able to critically assess the validity and effectiveness of the innovation and environmental policies
4) Communications Skills
Through class’ exercises and presentations the students will be able to communicate their ideas, analysis and critical reasoning.
5) Learning skills
The complementarity between the theoretical knowledge and the know-how students accumulate during the class activities and presentations will allow them to acquire dynamic capabilities useful for their career.
Course Contents
The course focuses on key areas:
- An overview of key concepts and taxonomy to understand innovation and the main relationships between economic activities and the environment.
- Growth and employment effects of innovation
- Firms’ competitiveness and environmental regulation
- Green innovation and climate change
- Key policy instruments: IP and R&D policy, as well as mixes including innovation and environmental policies.
Reference Books
Attending students will be assessed based on the content of the slides which are inspired by seminal works (papers and chapters of books) listed in the MyLuiss platform and listed in the following document.
We invite students to get in touch for questions regarding the content of the assessment for non-attending students.
Teaching Methods
The course consists of lectures, interactive sessions and data hands-on sessions. Discussions on the reading materials are encouraged.
Assessment Method
The overall evaluation for the students attending class follows the SMART Luiss model and consists of:
1) an ongoing assessment (based on student presentations and multiple-choice questions) which accounts for the 1/3 of the final grade
2) a final oral examination, which accounts for the remaining 2/3 of the final grade.
All grades will be on a range from 0 to 30 to which the weights above apply.
Thesis assignment criteria
In general, a strong interest in the subject. From a master's degree student, we expect: 1) ability to propose a thesis that within scope of the topics presented during the course; 2) ability to conduct quantitative analyses; 3) critical thinking when using data and bibliographical resources.
Week 1
1.Introduction. Taxonomy and measurement of innovation. Lecture
Smith, K., ' Measuring Innovation', in Jan Fagerberg, and David C. Mowery (eds), The Oxford Handbook of Innovation (2006; online edn, Oxford Academic, 2 Sept. 2009) Essential (e) https://doi.org/10.1093/oxfordhb/9780199286805.003.0006
Chapters 3 and 4. Swann, GMP (2009). The economics of innovation. An Introduction. Edward Elgar Recommended (r)
Cohen, W. M. (2010). Fifty Years of Empirical Studies of Innovative Activity and Performance. In Hall, B. and Rosenberg, N. (eds) Handbook of the Economics of Innovation. Chapter 4 (except 2.3 and 3) (e)
Adoption and diffusion. Lecture
Geroski, P. A. (2000). Models of technology diffusion. Research Policy, 29(4), 603-625
2. Emerging Digital Technologies and employment. Lecture
Savona, M., Ciarli, T., Steinmueller, E. Vannuccini, S. (2022) The Design of digital automation technologies. Implications for the future of work. CESifo Working Paper EconPol Forum 5/ 2022 September Volume 23. https://www.cesifo.org/DocDL/econpol-forum-2022-5-savona-ciarli-steinmueller-vannuccini-digital-automation.pdf
Jaccoud, F., Petit, F., Ciarli, T., Savona, M. (2024) Automation and Employment over the Technology Life Cycle: Evidence from European Regions. CESifo Working Paper No. 10987. https://www.cesifo.org/en/publications/2024/working-paper/automation-and-employment-over-technology-life-cycle-evidence
Week 2
1.Skills, Competences, and (green) Occupations, hands-on sessions. Breakout sessions
Neffke, F., & Henning, M. (2013). Skill relatedness and firm diversification. Strategic Management Journal, 34(3), 297-316.
Aufiero, S., De Marzo, G., Sbardella, A., & Zaccaria, A. (2024). Mapping job fitness and skill coherence into wages: an economic complexity analysis. Scientific Reports, 14(1), 11752.
Innovation, structural change and climate change. Lecture
2. Innovation, structural change and climate change. Lecture
Ciarli, T., Savona, M. (2019). Modelling the evolution of economic structure and climate change: a review. Ecological economics, 158, 51-64.
Savona, M. and Ciarli, T. (2019) Structural change and sustainability. A selected review of the empirical evidence. Ecological economics, 159, 244-260
Week 3
1.Innovation, growth and development. Lecture
Verspagen, B. (2006) Innovation and Economic Growth, in Fagerberg, J., Mowery, D. C., & Nelson, R. R. (Eds.). (2005). The Oxford handbook of innovation. Oxford University Press, 487-513 Chapter 18
Foster McGregor, N., Alcorta, L, Szirmai, A. & B. Verspagen (eds.), 2021, new Perspectives on Structural Change, Oxford: Oxford University Press.
2.Innovation, growth and development. Lecture
Hidalgo, C. A., Klinger, B., Barabási, A. L., & Hausmann, R. (2007). The product space conditions the development of nations. Science, 317(5837), 482-487
Neffke, F., Sbardella, A., Schetter, U., and Tacchella, A. Economic complexity analysis. In: Bednar J., Beinhocker E., del Rio-Chanona R.M., Farmer J.D., Kaszowska-Mojsa J., Lafond F., Mealy P., Pangallo M., Pichler A. (Eds.), “The Economy As a Complex Evolving System IV'', The Santa Fe Institute Press (2026)
CH1 of Diodato, D., Napolitano, L., Pugliese, E. and Tacchella, A., Handbook of Economic Complexity for Policy, Diodato, D., Napolitano, L., Pugliese, E. and Tacchella, A. (Editors), Publications Office of the European Union, Luxembourg, 2024, https://data.europa.eu/doi/10.2760/9006857, JRC138666.
Week 4
1.EU Klems hands on sessions. Breakout sessions
Corrado, C., Haskel, J., Jona-Lasinio, C., & Iommi, M. (2022). Intangible capital and modern economies. Journal of Economic Perspectives, 36(3), 3-28.
Bontadini, F., Corrado, C., Haskel, J., Iommi, M., Jona Lasinio, C. S., & Miyagawa, T. (2024). Intangible Capital, TFP Growth and Green Shoots in New Productivity Data. International Productivity Monitor, (46), 3-37.
2.AI. Lecture
Mateos-Garcia, (2018) The Complex Economics of Artificial Intelligence, NEST Working Paper.
Agrawal, A., Gans, J. S., & Goldfarb, A. (2019). Artificial intelligence: the ambiguous labour market impact of automating prediction. Journal of Economic Perspectives, 33(2), 31-50.
Gans, J. S. (2025). The Microeconomics of Artificial Intelligence. MIT Press
Klinger, J., Mateos-Garcia, J. C., & Stathoulopoulos, K. (2018). Deep learning, deep change? Mapping the development of the Artificial Intelligence General Purpose Technology.
Week 5
1. The Value and Governance of Data. Lecture
Coyle D., Diepeveen S., Wdowin J., Kay L., Tennison J., (2020) The Value of Data – Summary Report 2020 and Literature Review, Bennet Institute for Public Policy, the Open Data Institute and Nuffield Foundation
Savona, M. (2019). The value of data: Towards a framework to redistribute it. SPRU Working Paper Series 2019-21.
Savona, M. (2026). Data Value and Data Governance. Forthcoming in the Handbook of Big Data and Economic Development. Edward Elgar and IT for Change.
Mohades, S. and Savona, M. (2026). Data Rent and Surplus Value in the Digital Economy. Mimeo
2. Innovation, Trade and Global Value Chains. Lecture
Bontadini, F., Evangelista, R., Meliciani, V., Savona, M. (2024) Technology, global value chains and functional specialisation in Europe, Research Policy, Volume 53, Issue 2, 2024, https://doi.org/10.1016/j.respol.2023.104908.
Fontagné, L., Reshef, A., Santoni, G., & Vannelli, G. (2024). Automation, global value chains and functional specialization. Review of International Economics, 32(2), 662–691. https://doi.org/10.1111/roie.12711
Week 6
1.Mid-term multiple choice questions. Breakout sessions
2.Digital Infrastructures and Geopolitics. Lecture
Papadakis, I. and Savona, M. (2024) The Uneven Geography of Digital Infrastructure:Does It Matter? https://leap.luiss.it/wp-content/uploads/2024/11/PB14.24-The-Uneven-Geography-of-Digital-Infrastructure.pdf
Lehdonvirta, Vili & Wu, Boxi & Hawkins, Zoe. (2023). Cloud empires’ physical footprint: How trade and security politics shape the global expansion of U.S. and Chinese data centre infrastructures. SSRN Electronic Journal. 10.2139/ssrn.4670764.
Week 7
1.Jean Monnet lectures by Professor Dimitri Zurstrassen.
States, Markets and Activist Economic Governance: An Introduction to Industrial Policy and Strategic Autonomy
Oqubay, A. (2020), “The Theory and Practice of Industrial Policy”. Oqubay, A. et. al., The Oxford Handbook of Industrial Policy, Oxford University Press.
Criscuolo, C., et al. (2022), "An industrial policy framework for OECD countries: Old debates, new perspectives", OECD Science, Technology and Industry Policy Papers, No. 127, OECD Publishing, Paris, https://doi.org/10.1787/0002217c-en
Juhász R., Lane N., Rodrik D. (2023), “The New Economics of Industrial Policy”, Annu. Rev. Econ. 16: Submitted. DOI: https://doi.org/10.1146/annurev-economics-081023-024638
2. Jean Monnet lectures by Professor Dimitri Zurstrassen. From The Post-WWII Active Keynesian State to the EU Geo-Economic Industrial Policy
Bussière, E. (2022), "EU industrial policy: lessons from the experience of the 1960's to the 1990's", in J.-C. Defraigne, J. Wouters, E. Traversa & D. Zurstrassen (eds), EU Industrial Policy in the Multipolar Economy, chapter 2, pages 159-172, Edward Elgar Publishing.
Di Carlo, D., and L. Schmitz (2023), "Europe first? The rise of EU industrial policy promoting and protecting the single market", Journal of European Public Policy 30(10): 2063-2096, DOI: 10.1080/13501763.2023.2202684
Guerrieri, P., and P. C. Padoan (2024), "Industrial Policy and Security: The European Union", Chapter 8 in F. Cerniglia & F. Saraceno (eds), Investing in the Structural Transformation: 2024 European Public Investment Outlook.
Zurstrassen, D. (2025), "Learning From the Past? EU Industrial Policy Challenges", Governance 38, 1-16.
Week 8
1. Patent data and complexity hands on sessions. Breakout sessions
Squicciarini, M., H. Dernis and C. Criscuolo (2013), “Measuring Patent Quality: Indicators of Technological and Economic Value”, OECD Science, Technology and Industry Working Papers, 2013/03, OECD Publishing. (R)
Barbieri, N., Consoli, D., Napolitano, L., Perruchas, F., Pugliese, E., & Sbardella, A. (2023). Regional technological capabilities and green opportunities in Europe. The Journal of Technology Transfer, 48(2), 749-778
2. Jean Monnet lectures by Professor Dimitri Zurstrassen. Competition Policy and Industrial Policy in the EU: From Conflict to Complementarity
Käseberg, T., and A. Van Laer (2013), "Competition Law and Industrial Policy: Conflict, Adaptation, and Complementarity", in K. K. Patel and H. Schweitzer (eds), The Historical Foundations of EU Competition Law, Oxford Academic, https://doi.org/10.1093/acprof:oso/9780199665358.003.0006
Traversa, E., and P. M. Sabbadini (2022), "Industrial policy and EU state aid rules", in J.-C. Defraigne, J. Wouters, E. Traversa & D. Zurstrassen (eds), EU Industrial Policy in the Multipolar Economy, chapter 2, pages 45-79, Edward Elgar Publishing.
Di Carlo, D., A. Eisl, and D. Zurstrassen (2024), "Together we trade, divided we aid: Mapping the flexibilization of the EU state aid regime across GBER, IPCEIs and Temporary Frameworks", Joint JDI-LUHNIP Policy Paper No. 307, Jacques Delors Institute.
Duso, T., and M. Peitz (2025), "Aligning Competition Policy and Industrial Policy in the EU", DIW Discussion Papers 2145.
Week 9
Reading session
Week 10
Reading session
Week 11
1.Jean Monnet lectures by Professor Dimitri Zurstrassen. EU Industrial and Trade Policies: The Balance Between Openness and Strategic Autonomy
Gual, J. (1995), "The three common policies: an economic analysis", in P. Buigues, A. Jacquemin and A. Sapir (eds), European Policies on Competition, Trade and Industry: Conflict and Complementarities, Edward Elgar Publishing.
Pelkmans, J. (2006), "Common Trade Policy", in J. Pelkmans, European Integration: Methods and Economic Analysis, Pearson Education Limited.
Rosén, G., and S. Meunier (2023), "Economic Security and the Politics of Trade and Investment Policy in Europe", Politics and Governance 11(4), https://www.cogitatiopress.com/politicsandgovernance/issue/view/372
2. Testimonial Professor Grzegorz Tchorek.
Innovative business models in the energy transition
The lecture examines the strategic framework of the European Green Deal, the key megatrends reshaping the energy and industrial sectors, and the role of technological and organizational innovation as structural drivers of change. A case study on the hydrogen economy is included to illustrate boom-and-bust dynamics, introducing core energy economics tools such as the Levelized Cost of Electricity (LCOE) and the Levelized Cost of Hydrogen (LCOH).
Shields, K. (2023). Leading Innovation. Leading Innovation, 2nd Edition.
https://ecampusontario.pressbooks.pub/leadinginnovation2/
Green Technology Book: Energy Solutions for Climate Change. WIPO, 2024
https://www.wipo.int/web-publications/green-technology-book-energy-solutions-for-climate-change/en/index.html
Vik, J., Melås, A. M., Stræte, E. P., & Søraa, R. A. (2021). Balanced readiness level assessment (BRLa): A tool for exploring new and emerging technologies. Technological Forecasting and Social Change, 169, 120854.
Week 12
1. Jean Monnet lectures by Professor Dimitri Zurstrassen. Breakout sessions. The New EU Industrial Strategy for the Green Transition: From Single Market integration to the Clean Investment Deal.
Mathews, J. A. (2020), "Greening Industrial Policy", in A. Oqubay and J. Y. Lin (eds), The Oxford Handbook of Industrial Hubs and Economic Development, Oxford University Press, pp. 266-283, https://doi.org/10.1093/oxfordhb/9780198862420.013.10
Allan, B., J. I. Lewis, and T. Oatley (2021), "Green Industrial Policy and the Global Transformation of Climate Politics", Global Environmental Politics 21(4): 1–19, DOI: https://doi.org/10.1162/glep_a_00640
Veugelers, R., S. Tagliapietra, and C. Trasi (2024), "Green Industrial Policy in Europe: Past, Present and Prospects", Journal of Industry, Competition and Trade 24(1): 1-22, DOI: https://doi.org/10.1007/s10842-024-00418-5
2. Jean Monnet lectures by Professor Dimitri Zurstrassen. The New EU Industrial Strategy for Innovation, Digital Transition and Technological Sovereignty
Seidl, T., and L. Schmitz (2023), "Moving on to not fall behind? Technological sovereignty and the 'geo-dirigiste' turn in EU industrial policy", Journal of European Public Policy: 1-28.
Donnelly, S. (2023), "Semiconductor and ICT Industrial Policy in the US and EU: Geopolitical Threat Responses", Politics and Governance 11(4): 129-139.
Calcara, A., J. Teer, and I. Zaccagnini (2025), "Technological underpinnings of European autonomy and US-China competition", Journal of European Integration 47(6): 943-963, DOI: 10.1080/07036337.2025.2536828.
Hauge, J., B. Houtzager, and A. J. Hörmann (2025), "The new economic nationalism: industrial policy and national security in the United States, China, and the European Union", Geoforum 166: 104382.
Week 13
1. Testimonial Professor Simona Milio. Strategy, Innovation, and Sustainability under Uncertainty
This guest lecture focuses on strategy as a dynamic process of strategic choice in contexts of uncertainty, highlighting the central role of innovation and sustainability in contemporary organisations. It examines technological, organisational, and business model innovation as key mechanisms for value creation and competitive positioning, and analyses sustainability as an integral strategic dimension shaping resilience, risk management, regulatory compliance, and stakeholder legitimacy. Through empirical examples from business and public policy, the lecture encourages critical reflection on how organisations integrate innovation and sustainability into strategic decision-making and adapt their strategies in complex and rapidly changing environments.
WEEK 14
1.Student presentations. Breakout sessions
2. Student presentations