Much of the research on national systems of innovation has focused on their institutional aspects, on the relationships between firms, universities and government agencies and on the science and technology activities carried out by such actors. Less attention has been paid to the economic outcomes, in terms of growth and employment performances, of the operation of national systems of innovation and of their interaction with the production system.

In this chapter first an analytical framework is proposed, linking some key aspects of national systems of innovation with the globalisation of technology, and with the outcomes in terms of economic growth and employment. The dominance of product or process innovations in the operation of firms and of national systems is identified as a key discriminant for assessing the possible outcomes for growth and job creation. Such a distinction appears to be crucial both in conceptual and empirical terms. On the one hand it allows us to identify two distinct trajectories of technological change, with specific impacts on innovation and economic performance; on the other hand, these outcomes can be empirically examined using a number of appropriate proxies for innovation efforts which can be related to growth and employment patterns.

Second, an empirical analysis is carried out with a cross-country comparison, where the orientation of national innovation systems towards product innovations is proxied by R&D intensitites, and the orientation towards process innovations is proxied by aggregate investment intensities; the impact on growth performances is also assessed.

Third, the sectoral structure of manufacturing industry in the more advanced countries is considered, grouping industries on the basis of the dominance of product or process innovations, as emerged from the recent European Community Innovation Surveys.