nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2016‒08‒28
eleven papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  1. Did FDI Really Cause Chinese Economic Growth? A Meta-Analysis By Philip Gunby; Yinghua Jin; W. Robert Reed
  2. Economic Growth and Technological Progress in Turkey: An Analysis of Schumpeterian Mechanisms By Attar, M. Aykut
  3. Globalization and the markups of European firms By Gabor Bekes; Cecilia Hornok; Balázs Muraközy
  4. Managing Innovation under Competitive Pressure from Informal Producers Managing Innovation under Competitive Pressuire from Informal Producers By Pedro Mendi; Rodrigo Costamagna
  5. The Swedish National Innovation Council: Innovation policy governance to replace linearity with holism By Edquist, Charles
  6. Multinational Enterprise Growth and Vietnam’s Employment and Wages in Manufacturing and Trade Industries: Did Takeovers Play a Role? By Ramstetter, Eric D.
  7. Towards a Smart Specialization Strategy for Haifa, Israel By Benner, Maximilian; Bieringer, Lukas; Knaupp, Matthias; Wittemaier, Jana; Wruck, Adrian
  8. Policy capacities for new regional industrial path development – The case of new media and biogas in southern Sweden By Martin, Hanna; Martin, Roman
  9. A Complexity-Theoretic Perspective on Innovation Policy By Koen Frenken
  10. Contagion, spillover and interdependence By Rigobon, Roberto
  11. How competitiveness shocks affect macroeconomic performance across euro area countries By Staehr, Karsten; Vermeulen, Robert

  1. By: Philip Gunby (University of Canterbury); Yinghua Jin; W. Robert Reed (University of Canterbury)
    Abstract: Foreign direct investment (FDI) has been linked to economic growth in a number of countries. Productivity spillovers at the firm level have been identified as a key element in the process by which FDI stimulates economic growth. Moreover, there is evidence of FDI-related productivity spillovers in China. Whether these spillovers have been of sufficient size to affect growth at the aggregate level, however, is an empirical question. We apply meta-analysis to the corresponding empirical literature to find an answer. Our main finding is that the effect of FDI on Chinese economic growth is much smaller than one would expect from a naïve aggregation of existing estimates. Publication bias and a profusion of estimates based on less preferred study and sample characteristics have served to inflate observed estimates. Once these effects are accounted for, the estimated effect of FDI on Chinese economic growth is reduced to statistical insignificance. This suggests that the cause(s) of the Chinese “economic miracle†likely lie elsewhere.
    Keywords: Meta-analysis, FDI, China, economic growth
    JEL: O11 O53 F21
    Date: 2016–07–26
  2. By: Attar, M. Aykut
    Abstract: This paper studies a second-generation Schumpeterian model to understand the nature of technological progress and economic growth in Turkey. It identifies some structural parameters numerically and tests whether certain Schumpeterian mechanisms work. Results show that, while horizontal (product) innovation works as determined in theory, vertical (process) innovation does not operate in the long run. Since the paper directly estimates the structural forms originating from the general equilibrium of the model economy, results do not carry any endogeneity bias. The paper also explains, in a quite transparent way, why the Turkish economy did not converge to frontier economies. The most appropriate policy under resource constraints is to strengthen the incumbent firms and support their growth, and the formation of new enterprises is not a policy priority.
    Keywords: R & D, entry, process innovation, product innovation, productivity, policy.
    JEL: O32 O41 O50
    Date: 2016–08
  3. By: Gabor Bekes (Institute of Economics - Centre for Economic and Regional Studies, Hungarian Academy of Sciences and CEPR); Cecilia Hornok (Kiel Institute for the World Economy); Balázs Muraközy (Institute of Economics - Centre for Economic and Regional Studies, Hungarian Academy of Sciences)
    Abstract: We use a unique cross-section survey of manufacturing firms from four European countries (France, Germany, Italy, Spain) linked with balance sheet data to study the relationship between key aspects of globalization and firm-level markups. The main results are: (i) Exporting is positively correlated with markups; (ii) Importing intermediate inputs and outsourcing are also positively correlated with markups; (iii) Firms with affiliates have higher markups than other firms, while simply membership in a group or being foreign-owned seem to be less important; (iv) Perceived competition from low-cost markets is negatively correlated with markups; (v) Higher quality production and innovation, especially if it results in IP, has a strong positive relationship with markups; (vi) While these variables are correlated, they are significant in a joint model including all four groups, and `fully globalized' firms tend to charge around 100% higher markups than non-globalized firms.
    Keywords: markups, exporting, importing, FDI, innovation
    JEL: D22 D24 F14 L11 L60
    Date: 2016–06
  4. By: Pedro Mendi (Navarra Center for International Development); Rodrigo Costamagna (INALDE Business School, Universidad de la Sabana)
    Abstract: This paper studies the impact on innovation of competition against firms in the informal sector. Using the World Bank’s Enterprise Survey data from a sample of African and Latin American countries, we find that the marginal impact of informality on innovation by formal firms decreases with the intensity of competitive pressure from informal firms, consistent with an inverted-U relationship between propensity to innovate and competitive pressure from firms in the informal sector.
    Date: 2015–11–20
  5. By: Edquist, Charles (CIRCLE, Lund University)
    Abstract: The Swedish National Innovation Council (NIC) was created by the Prime Minister (Stefan Löfven) in February 2015, and it has now been operating for 18 months. It is personally chaired by the Prime Minister, which is unusual for such councils in other countries. Another atypical characteristic of the Swedish NIC is its dominant and wide focus on innovation rather than on research (for which there is another council in Sweden). The existence of NIC has given innovation policy issues a much higher status and degree of importance both within the government itself and within government agencies, i.e. in the entire state apparatus. NIC has become a major governance instrument in order to transform Swedish innovation policy from being linear towards becoming holistic. The continued separation between innovation policy and research policy is also very important if the linear view shall lose its dominance in the field of innovation policy. The Swedish NIC will be described and analyzed in this paper and its operation will be exemplified by four types of NIC activity. I will show that two of these activities have already been directly successful in influencing innovation policy in practice (state risk capital provision and innovation-related public procurement) and that an interesting development has been taking place in the other two (holistic innovation policy and additionality). These examples will be placed within a framework of the relevant innovation theory and of the development of innovation policy in a larger context.
    Keywords: Innovation; Innovation Policy; Holistic innovation policy; Research policy; Linear view; Systems of innovation
    JEL: O30 O38 O49 O52
    Date: 2016–08–23
  6. By: Ramstetter, Eric D.
    Abstract: This paper examines how foreign multinational enterprises (MNEs) have grown in Vietnam’smanufacturing and trade industries, and tries to shed light on how MNE takeovers ofVietnamese firms have affected employment, and wages between 2000 and 2012. Althoughthe scale of MNE activity has been substantial and grown in recent years, there are substantialdiscrepancies in measures of MNE shares from alternative sources and uncertainty over theactual share of MNEs in Vietnamese production or employment. On the other hand, thenumber of MNE takeovers has been very small and they appear to have played only a smallrole in changes of MNE shares. Rather, changes in MNE shares have resulted primarily fromthe entry and exit MNEs and changes in the scale of MNE activity.
    Keywords: Multinational enterprises, state-owned enterprises, ownership, employment, wages, Multinational enterprises, state-owned enterprises, ownership, employment, wages, F23, J31, L60, O53
    Date: 2016–03
  7. By: Benner, Maximilian; Bieringer, Lukas; Knaupp, Matthias; Wittemaier, Jana; Wruck, Adrian
    Abstract: The notion of smart specialization has gained considerable prominence in the international discourse on regional development. The idea of directing the attention of regional policy towards strengths and opportunities in a region’s knowledge base, and of developing regional economic and innovation strategies in a participatory public-private entrepreneurial process of discovery has unfolded policy relevance especially in countries of the European Union and its neighborhood. Nevertheless, the concept of smart specialization can be applied to regional economies in other countries, too. The present study does so for the city of Haifa, Israel. It provides a profile of the Haifa regional economy, examines regional policies in the framework of the Israeli economic and political context, and identifies possibilities for regional policy to focus on in the coming years. Drawing on the idea of an entrepreneurial process of discovery on the regional level which is a critical component of the smart specialization concept, the study suggests how such an entrepreneurial process of discovery could be organized in the case of Haifa. Conclusions drawn from this study can inform the elaboration of smart specialization strategies in other regions, too.
    Keywords: smart specialization; smart specialisation; clusters; regional development; regional policy; Haifa; Israel
    JEL: O18 R11 R12 R58
    Date: 2016–08–24
  8. By: Martin, Hanna (CIRCLE, Lund University); Martin, Roman (University of Gothenburg)
    Abstract: Over the past few years, a growing body of work in economic geography and innovation studies has enhanced our understanding of forms and determinants of regional industrial path development. The importance of policy, however, has received limited attention and accordingly, the role of policy for the emergence and development of new regional industrial growth paths remains largely unexplored. This paper takes an institutional perspective and suggests that the regional innovation system (RIS) approach can contribute to conceptualizing and analysing the role of policy for new regional industrial path development. We argue that in order to turn regional preconditions into new growth paths, RIS require strong policy capacities, consisting of formal and governance capacities. In the empirical part, we analyse the emergence and further development of two new growth paths in the region of Scania in southern Sweden, namely biogas and new media. Based on personal interviews with policy makers, representatives from knowledge and supporting organizations and firms as well as a document analysis, we investigate how policy interventions have influenced the rise and evolution of these two industries. We show that in both cases policy-led initiatives have played an important role in enabling new path development. We find that policy can play multiple roles in nurturing and maintaining new growth paths and that these are closely interlinked with particular policy capacities of RIS.
    Keywords: new path development; regional policy; regional innovation system; capacity building
    JEL: O10 O30 O38 R11 R58
    Date: 2016–08–23
  9. By: Koen Frenken
    Abstract: : It is argued that innovation policy based on notions of market failure or system failure is too limited in the context of current societal challenges. I propose a third, complexity-theoretic approach. This approach starts from the observation that most innovations are related to existing activities, and that policy’s additionality is highest for unrelated diversification. To trigger unrelated diversification into activities that contribute to solving societal challenges, government’s main task is to organize the process of demand articulation. This process leads to clear and manageable societal objectives that effectively guide a temporary collation of actors to develop solutions bottom-up. The combination of a broad coalition, a clear objective and tentative governance are the means to cope with the inherent complexity of modern-day innovation
    Date: 2016–08
  10. By: Rigobon, Roberto (Massachusetts Institute of Technology)
    Abstract: This paper reviews the empirical literature on international spillovers and contagion. Theoretical models of spillover and contagion imply that the reduced form observable variables suffer from two possible sources of bias: endogeneity and omitted variables. These econometric problems in combination with the heteroskedasticity that plagues the data produce time varying biases. Several empirical methodologies are evaluated from this perspective: non-parametric techniques such as correlations and principal components, as well as parametric methods such as OLS, VAR, event studies, ARCH, non-linear regressions, etc. The paper concludes that there is no single technique that can solve the full fledge problem and discusses three methodologies that can partially address some of the questions in the literature.
    Keywords: spillovers; contagion; heteroskedasticity
    JEL: C58 F32 F36 G15
    Date: 2016–08–11
  11. By: Staehr, Karsten; Vermeulen, Robert
    Abstract: This paper considers the short-term effects of competitiveness shocks on macroeconomic performance in the euro area. Vector autoregressive models are estimated on quarterly data from 1995 to 2013 for individual countries and the whole euro area. The results show that competitiveness shocks help to explain subsequent GDP developments in most countries but have little explanatory power for the current account balance and domestic credit. These results apply for all of the competitiveness measures considered, but a non-traditional competitiveness measure accounting for quality differences fares better in some cases. The effects of the competitiveness measures vary substantially across the countries in the euro area, which likely reflects their different economic structures and institutions. This heterogeneity suggests that policy measures seeking to improve competitiveness may have very different effects on economic performance and financial stability in different countries. JEL Classification: E32, E61, F32
    Keywords: competitiveness, euro area, macroeconomic variables, transmission
    Date: 2016–07

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