The dynamics of knowledge externalities : localized technological change in Italy This book elaborates a new dependent and localized growth theory based upon knowledge externalities by making two important contributions. Firstly it elaborates the hypothesis that total factor productivity growth stems from pecuniary knowledge externalities that consist in the access to localized external knowledge at costs that are below equilibrium levels. Secondly it implements the economic analysis of complex dynamic systems with a novel approach to understanding the role of knowledge interactions and knowledge governance mechanisms in the generation of new technological knowledge within economic systems characterized by webs of interdependence pt. 1. The localized generation and exploitation of technological knowledge and innovation pt. 2. The Italian evidence