nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2022‒06‒27
four papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  1. Trade and innovation By Marc J. Melitz; Stephen J. Redding
  2. International Scientific Co-Publications in Europe By Leogrande, Angelo; Costantiello, Alberto; Laureti, Lucio; Matarrese, Marco Maria
  3. How do environmental policies affect green innovation and trade? Evidence from the WTO Environmental Database (EDB) By Bellelli, Francesco S.; Xu, Ankai
  4. Productivity Implications of R&D, Innovation, and Capital Accumulation for Incumbents and Entrants: Perspectives from a Catching-up Economy By Jaan Masso; Amaresh K Tiwari

  1. By: Marc J. Melitz; Stephen J. Redding
    Abstract: Two central insights from the Schumpeterian approach to innovation and growth are that the pace of innovation is endogenously determined by the expectation of future profits and that growth is inherently a process of creative destruction. As international trade is a key determinant of firm profitability and survival, it is natural to expect it to play a key role in shaping both incentives to innovate and the rate of creative destruction. In this paper, we review the theoretical and empirical literature on trade and innovation. We highlight four key mechanisms through which international trade affects endogenous innovation and growth:(i) market size; (ii) competition; (iii) comparative advantage; (iv) knowledge spillovers. Each of these mechanisms offers a potential source of dynamic welfare gains in addition to the static welfare gains from trade from conventional trade theory. Recent research has suggested that these dynamic welfare gains from trade can be substantial relative to their static counterparts. Discriminating between alternative mechanisms for these dynamic welfare gains and strengthening the evidence on their quantitative magnitude remain exciting areas of ongoing research.
    Keywords: innovation, growth, international trade
    Date: 2021–06–17
  2. By: Leogrande, Angelo; Costantiello, Alberto; Laureti, Lucio; Matarrese, Marco Maria
    Abstract: The determinants of “International Scientific Co-Publications” in Europe are analyzed in the following article. Data from the European Innovation Scoreboard-EIS of the European Union for 36 countries in the period 2010-2019 were used. The data were analyzed using Panel Data with Fixed Effects, Panel Data with Random Effects, Pooled OLS, WLS, Dynamic Panel. The results show that the variable “International Scientific Co-Publication” is negatively associated with “Employment Share Manufacturing”, “Intellectual Assets”, “Turnover Share Large Enterprises”, “Linkages” and positively associated with “SMEs innovating in house”, “Trademark Applications”, “Human Resources”, “Publicprivate co-publications”, “Attractive Research Systems”, “Government procurement of advanced technology products”, “Turnover Share SMEs”. Then, a clustering analysis is realized with the algorithm k-Means. The Silhouette Coefficient and the Elbow Method are confronted to optimize the k-Means algorithm. The results show that the Elbow method is more efficient than the Silhouette coefficient in identifying the optimal number of clusters corresponding to k = 4 with the k-Means algorithm. A network analysis was then carried out using the “Manhattan Distance”. The analysis shows the presence of 9 network structures of which 5 are complex i.e., with a number of linkages greater than 3, and 4 are basic i.e. consist of a single link between two countries. Furthermore, we confront eight different machine learning algorithms to predict the future level of “International Scientific Co-Publications”. We found that the best algorithm in performing prediction with original data is the Tree Ensemble Regression. The predicted value of “International Scientific Co-Publication” is expected to growth by 0.61%.
    Keywords: Innovation, and Invention: Processes and Incentives; Management of Technological Innovation and R&D; Diffusion Processes; Open Innovation.
    JEL: O3 O30 O31 O32 O33 O34
    Date: 2022–05–24
  3. By: Bellelli, Francesco S.; Xu, Ankai
    Abstract: This study investigates how environmental policies impact trade and innovation in environmental goods. We make two major contributions to the economic debate. First, we extract a set of information from the WTO Environmental Database (EDB) through natural language processing techniques that could be useful for future research and policy analysis. Second, we use this data to test a set of economic hypotheses on how environmental measures impact environmental innovation and trade. Our findings show that environmental measures can be an effective tool for stimulating green innovation and trade in green goods. However, policy design matters. Green innovation is most sensitive to R&D expenditure and measures on intellectual property protection and enforcement, whereas trade in green goods increases with environmental subsidies and support measures. Conversely, we find that non-tariff barriers - such as quarantine requirements, import quotas, regulation affecting movement or transit - reduce both imports and exports of environmental goods. Our findings also highlight strong path dependency in innovation. Hence, the earlier the intervention, the greater the accumulated benefits from green innovation. Conversely, delays in intervention increase the cost of transition by further "locking-in" the economy on dirtier exports and technologies. Finally, our result highlight that there is a clear linkage between innovation and trade. Past patents are a strong predictor of future exports, and nations tend to innovate more in technologies related to their exports. We also find evidence of strong technological spillovers across countries and sectors integrated in Global Value Chains (GVC). Hence, integration in environmental goods' GVCs could provide further channels of green technology diffusion and development.
    Keywords: trade and environment,environmental policies,innovation
    JEL: F14 F18 O38 Q55 Q58
    Date: 2022
  4. By: Jaan Masso; Amaresh K Tiwari
    Abstract: We study the productivity implications of R&D, capital accumulation, and innovation output for entrants and incumbents in Estonia. First, in contrast to developed economies, a small percentage of firm engage in formal R&D, but a much larger percentage innovate. Second, while we find no difference in the R&D elasticity of productivity for the entrants and incumbents, the impact of innovation output - many of which are a result of 'doing, using and interacting' (DUI) mode of innovation - is found to be higher for the entrants. Entrants who innovate are 21% to 30% more productive than entrants who do not; the corresponding figures for the incumbents are 10% to 13%. Third, despite the adverse sectoral composition typical of catching-up economies, Estonian incumbents, who are the primary carriers of 'scientific and technologically-based innovative' (STI) activities, are comparable to their counterparts in developed economies in translating STI activities into productivity gains. Fourth, while embodied technological change through capital accumulation is found to be more effective in generating productivity growth than R&D, the effectiveness is higher for firms engaging in R&D. Finally, our results suggest that certain policy recommendations for spurring productivity growth in technologically advanced economies may not be applicable for catching-up economies.
    Date: 2022–05

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