nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2020‒07‒13
nine papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  1. Geographic Clustering and Resource Reallocation Across Firms in Chinese Industries By Guo, Di; Jiang, Kun; Xu, Chenggang; Yang, Xiyi
  2. The causal effects of R&D grants: evidence from a regression discontinuity By Pietro Santoleri; Andrea Mina; Alberto Di Minin; Irene Martelli
  3. Spillovers in Childbearing Decisions and Fertility Transitions: Evidence from China By Pauline Rossi; Yun Xiao
  4. Business Cycle during Structural Change: Arthur Lewis' Theory from a Neoclassical Perspective By Michael D. König; Kjetil Storesletten; Zheng Song; Fabrizio Zilibotti
  5. Affirmative Action, Shifting Competition, and Human Capital Accumulation: A Comparative Static Analysis of Investment Contests By Christopher Cotton; Brent R. Hickman; Joseph P. Price
  6. Agricultural Clusters Approach to Enhance Competitiveness of Smallholder Farms in Southeast Asia By Imelda L. Batangantang; Ma. Christina G. Corales; Rebeka A. Paller; Nikka Marie P. Billedo; Rico C. Ancog; Rodolfo V. Vicerra; Glenn B. Gregorio
  7. Path dependence in regional structural change: implications for the EU cohesion and innovation policy By Tullio Buccellato; Giancarlo Corò
  8. Innovation in Irrigation Technologies for Sustainable Agriculture: An Endogenous Switching Analysis on Italian Farms’ Land Productivity By Sabrina Auci; Andrea Pronti
  9. Universities, agglomeration, and regional innovation By Orlando, Michael; Verba, Michael; Weiler, Stefan

  1. By: Guo, Di; Jiang, Kun; Xu, Chenggang; Yang, Xiyi
    Abstract: We examine the effects of China's industrial clustering on resource reallocation efficiency across firms. Based on our county-industry level DBI index panel, we find that industrial clustering significantly increases local industries' productivity by lifting the average firm productivity and reallocating resources from less to more productive firms. Moreover, we find major mechanisms through which resource reallocation is improved within clusters: (i) clusters facilitate higher entry rates and exit rates; and (ii) within clusters' environment the dispersion of individual firm's markup is significantly reduced, indicating intensified local competition within clusters. The identification issues are carefully addressed by instrumental variable (IV) regressions.
    Keywords: Competition; Industrial Cluster; Productivity Growth; Resource reallocation
    JEL: D2 H7 L1 O1 R1 R3
    Date: 2020–03
  2. By: Pietro Santoleri; Andrea Mina; Alberto Di Minin; Irene Martelli
    Abstract: Direct public support for business R&D is a well-established remedy to market failures, yet empirical evidence on its effectiveness yields conflicting results. The paper investigates the impact of the first European public R&D grant program targeting small and medium enterprises (i.e. the SME Instrument) on a wide range of firm outcomes. We leverage the assignment mechanisms of the policy and employ a sharp regression discontinuity design to provide the broadest quasi-experimental evidence on R&D grants over both geographical and sectoral scopes. Results show that grants trigger sizable impacts. They increase investment, notably in intangibles, and innovation outcomes as measured by cite-weighted patents; they trigger faster growth in assets, employment and revenues; they lead to higher likelihood of receiving follow-on equity financing and lower failure chances. These effects tend to be larger for firms that are smaller and younger, or operating in sectors characterized by higher financial frictions. Furthermore, responses are stronger in countries and regions with lower economic development. The paper provides extensive evidence that the beneficial effects of R&D grants materialize through funding rather than certification effects.
    Keywords: Regression discontinuity design; Research and development; Innovation Policy; SMEs.
    Date: 2020–06–29
  3. By: Pauline Rossi (University of Amsterdam); Yun Xiao (University of Amsterdam)
    Abstract: This article uses China's family planning policies to quantify and explain spillovers in fertility decisions. We test whether ethnic minorities decreased their fertility in response to the policies, although only the majority ethnic group, the Han Chinese, were subject to birth quotas. We exploit the policy rollout and variation in pre-policy age-specific fertility levels to construct a measure of the negative shock to Han fertility. Combining this measure with variation in the local share of Han, we estimate that a woman gives birth to 0.65 fewer children if the average completed fertility among her peers is exogenously reduced by one child. The fertility response of minorities is driven by cultural proximity with the Han and by higher educational investments, suggesting that spillovers operate through both social and economic channels. These results provide evidence that social multipliers can accelerate fertility transitions.
    Keywords: Fertility, Family planning, China, Spillovers, Peer Effects, Partial population experiment
    JEL: C36 D1 J11 J13 O15 O53
    Date: 2020–06–20
  4. By: Michael D. König (Vrije Universiteit Amsterdam, School of Business and Economics); Kjetil Storesletten (Department of Economics, University of Oslo); Zheng Song (Chinese University of Hong Kong, Department of Economics); Fabrizio Zilibotti (Cowles Foundation, Yale University)
    Abstract: We construct a model of rm dynamics with heterogenous productivity and distortions. The productivity distribution evolves endogenously as the result of the decisions of ï¬ rms seeking to upgrade their productivity over time. Firms can adopt two strategies toward that end: imitation and innovation. The theory bears predictions about the evolution of the productivity distribution. We structurally estimate the stationary state of the dynamic model targeting moments of the empirical distribution of R&D and TFP growth in China during the period 2007-2012. The estimated model ts the Chinese data well. We compare the estimates with those obtained using data for Taiwan and ï¬ nd the results to be robust. We perform counterfactuals to study the effect of alternative policies. We ï¬ nd large effects of R&D misallocation on long-run growth.
    Keywords: China, Imitation, Innovation, Misallocation, Productivity, R&D, Subsidies, Taiwan, TFP Growth, Traveling Wave
    JEL: O31 O33 O47
    Date: 2020–06
  5. By: Christopher Cotton (Queen's University); Brent R. Hickman (Olin Business School, University of Washington); Joseph P. Price (Brigham Young University)
    Abstract: We develop a model in which many heterogeneous agents invest in human capital as they compete for better college admission slots or employment opportunities. The model provides theoretical predictions about how affirmative action or preferential treatment policies change the distribution of effort, human capital accumulation, and job/college slot allocations across different population groups. Our findings deliver two key insights. First, incentives to invest in human capital depends substantially on the strength of one's competition. Second, we find evidence of a counter-intuitive role for preferential treatment in promoting overall human capital development.
    Keywords: large contest, all-pay contest, all-pay auction, affirmative action, college admissions, field experiment, human capital
    JEL: J15 J24 C93 D82 D44
    Date: 2020–06
  6. By: Imelda L. Batangantang; Ma. Christina G. Corales; Rebeka A. Paller; Nikka Marie P. Billedo; Rico C. Ancog; Rodolfo V. Vicerra; Glenn B. Gregorio
    Abstract: The agriculture-based small and medium enterprises (SMEs) in developing countries are continuously affected by globalization. An agricultural cluster—organized either through horizontal and vertical linkages, is a strategic approach to operationalize the appropriate channels at a scale necessary for it to have enhanced competitive strength to connect with national and international markets. Analyzing selected case studies in Southeast Asia, this policy paper demonstrates several models of cluster farming and how it is being implemented on the ground.
    Keywords: Southeast Asia
    Date: 2020
  7. By: Tullio Buccellato (Economic Research Department, Confindustria); Giancarlo Corò (Department of Economics, University Of Venice Cà Foscari)
    Abstract: The key purpose of this paper is to measure the strength of regional economic fabrics based on their structure. We propose a new mapping of European regions based on structural proximity; the representation takes the shape of a network, which is also useful to define clusters of regions according to the similarity of their economic structures and, hence, in the endowment of productive competences. We show that there is a high persistence in the relative positioning of regions according to their economic structure and that this is markedly associated with patterns of economic growth and convergence. The spectrum of regional performance range from virtuous urban agglomerates characterized by the presence of advanced services, with enhanced institutional quality, endowed with efficient transport infrastructures and highly educated and productive workforce, to regions characterised by scarce service or industrial activity, sometimes with a cumbersome role of tourism-related business, with poor institutions and transport infrastructure and low endowments of human capital and productive workforce. To richer pools of productive competences are associated faster paces of economic growth. The findings of this paper suggest that place-based policies should be implemented to support territorial development in the short/medium term, but these policies can be effective for the long run growth only when they are meant to leverage on the regional pool of competences to trace trajectories of structural change.
    Keywords: Resilience, economic complexity, regional disparities
    JEL: O10 O25 P25 R10 L16
    Date: 2020
  8. By: Sabrina Auci (University of Palermo, Department of Political Science and International Relations); Andrea Pronti (University of Ferrara, Department of Economics and Management)
    Abstract: This paper aims to analyse how the farmer’s choice on adopting innovative and sustainable irrigation systems such as water conservation and saving technologies (WCSTs), induced also by the climatic variability, would shape the economic resilience of the Italian agricultural farms by improving land productivity. A proper water management would increase efficiency in the agricultural activities by improving the use of water endowments and rising agricultural economic performances to address a sustainable development. We used an endogenous switching regression model considering two sources of endogeneity: the selection indicator and a continuous endogenous explanatory variable. By applying the control function method, a correlated random effects probit model for the selection equation and a correlated random effects model for the outcome equation are estimated in a panel data context based on a detailed micro-level dataset of all the Italian farms. Our results confirm that adopting WCSTs increases land productivity of adopters significantly.
    Keywords: Water scarcity, Innovation, Micro irrigation, Sustainable agriculture, Italian farms
    Date: 2020–12
  9. By: Orlando, Michael; Verba, Michael (Tilburg University, School of Economics and Management); Weiler, Stefan
    Date: 2019

This nep-cse issue is ©2020 by João José de Matos Ferreira. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.