nep-ino New Economics Papers
on Innovation
Issue of 2005‒12‒09
35 papers chosen by
Koen Frenken
Universiteit Utrecht

  1. From Innovation Development to Implementation: Evidence from the Community Innovation Survey By Florence Jaumotte; Nigel Pain
  2. Effects of Acquisitions on Product and Process Innovation and R&D Performance By Cefis, Elena; Rosenkranz, Stephanie; Weitzel, Utz
  3. Innovation in the Business Sector By Florence Jaumotte; Nigel Pain
  4. The Impact of Entry and Competition by Open Source Software on Innovation Activity By Jürgen Bitzer; Philipp J.H. Schröder
  5. An Overview of Public Policies to Support Innovation By Florence Jaumotte; Nigel Pain
  6. Labour Pooling in R&D Intensive Industries By Gerlach, Heiko A.; Roende, Thomas; Stahl, Konrad O.
  7. From Ideas to Development: The Determinants of R&D and Patenting By Florence Jaumotte; Nigel Pain
  8. Subsidizing Technological Innovations in the Presence of R&D Spillovers By Carsten Helm; Anja Schöttner
  9. How Strong Buyers Spur Upstream Innovation By Roman Inderst; Christian Wey
  10. The Effects of Entry on Incumbent Innovation and Productivity By Aghion, Philippe; Blundell, Richard William; Griffith, Rachel; Howitt, Peter; Prantl, Susanne
  11. The Knowledge Spillover Theory of Entrepreneurship By Acs, Zoltán J; Audretsch, David B; Braunerhjelm, Pontus; Carlsson, Bo
  12. Job-Hopping in Silicon Valley: Some Evidence Concerning the Micro-Foundations of a High Technology Cluster By Bruce Fallick; Charles A. Fleischman; James B. Rebitzer
  13. Diffusion of New Technology in Indian Auto Component Industry: An Examination of the Determinants of Adoption By Parhi, Mamata
  14. Modelling the duration of patent examination at the European Patent Office By Harhoff, Dietmar; Wagner, Stefan
  15. Who Benefits from New Medical Technologies? Estimates of Consumer and Producer Surpluses for HIV/AIDS Drugs By Tomas J. Philipson; Anupam B. Jena
  16. Innovation and Standards in Clinical Practice: The Case of HIV Treatments By Monica Merito; Andrea Bonaccorsi
  17. Wake Up and Smell the Ginseng: The Rise of Incremental Innovation in Low-Wage Countries By Puga, Diego; Trefler, Daniel
  18. Wirksamkeit der Projektförderung der Kommission für Technologie und Innovation (KTI) : Analyse auf der Basis verschiedener «Matched-Pairs»- Methoden By Spyros Arvanitis; Laurent Donzé; Nora Sydow
  19. Growth and Entrepreneurship: An Empirial Assessment By Zoltan J. Acs; David B. Audretsch; Pontus Braunerhjelm; Bo Carlsson
  20. Surplus Appropriation from R&D and Health Care Technology Assessment Procedures By Tomas J. Philipson; Anupam B. Jena
  21. R&D Races and Spillovers between the EU and the US: Some Causal Evidence By Erdal Atukeren
  22. Tax Competition, Capital Mobility, and Innovation in the Public Sector By Prof. Dr. Michael Rauscher
  23. A Comparison between US and International Patent Classification as Input Data of a Technology Competition-Oriented Cluster Analysis By Reinhard Haupt; Matthias Korgel
  24. Entrepreneurial Access and Absorption of Knowledge Spillovers: Strategic Board and Managerial Composition for Competitive Advantage By Audretsch, David B; Lehmann, Erik E
  25. The Technological Bias Against Production Workers in United States Manufacturing 1949 – 1996 By Martin Hoskins
  26. Entrepreneurial Founder Effects in the Growth of Regional Clusters: How Early Succes is a Key Determinant By Michael S. Dahl; Christian Ø.R. Pedersen; Bent Dalum
  27. Induced Technological Change in a Limited Foresight Optimization Model By Fredrik Hedenus; Christian Azar; Kristian Lindgren
  28. Rice Biotechnology: Opportunity, Perceived Risks and Potential Benefits to Bangladesh By Mahabub Hossain; Muazzam Husain; S.K Datta
  29. Internet Security, Vulnerability Disclosure and Software Provision By Choi, Jay-Pil; Fershtman, Chaim; Gandal, Neil
  30. Power-Biased Technological Change and the Rise in Earnings Inequality By Frederick Guy; Peter Skottz
  31. The Long Run Bias Against Manual Workers in British Manufacturing 1920 – 1995 By Martin Hoskins
  33. Analysis of Technological Portfolios for CO2 stabilizations and Effects of Technological Changes By Fuminori Sano; Keigo Akimoto; Takashi Homma; Toshimasa Tomoda
  34. Dissipation of Knowledge and the Boundaries of the Multinational Enterprise By Valeria Gattai
  35. Skills, human capital and the plant productivity gap: UK evidence from matched plant, worker and workforce data By Haskel, Jonathan; Hawkes, Denise; Pereira, Sonia

  1. By: Florence Jaumotte; Nigel Pain
    Abstract: Innovation surveys provide a broad measure of the successful commercial introduction of new product and process innovations. The dual purposes of this paper are to establish whether survey-based measures of innovation are related to more widely used intermediate measures, such as R&D and patents, and to identify the principal factors that affect the probability of successful innovation. Cross-country panel data is used from the third European Community Innovation Survey (CIS3), with allowance made for possible differences by firm size and by sector of activity. The survey measures of innovative activity and success are found to be positively correlated with past R&D and patenting, suggesting that factors affecting the development of innovations also affect their subsequent implementation. The availability of qualified personnel and private financing, less rigid product and labour market regulations, greater co-operation in the innovation process and public financial support are all found to be positively associated with the proportion of successful innovators for at least some sectors and firm sizes. Innovation in small firms is found to be more dependent on co-operation and the availability of finance than in larger firms. <P>Du développement à la mise en oeuvre de l'innovation Les enquêtes sur l’innovation fournissent une large mesure de l’introduction commerciale réussie de nouvelles innovations produits et procédés. Les objectifs de ce papier sont d’une part d’établir si les mesures de l’innovation basées sur ces enquêtes sont corrélées aux mesures intermédiaires de l’innovation plus couramment utilisées, telles que la R-D et les brevets ; et d’autre part d’identifier les principaux facteurs qui déterminent la probabilité d’innover avec succès. Les données de panel pays utilisées proviennent de la troisième Enquête Communautaire sur l’Innovation (CIS3), et permettent de différencier les résultats par taille d’entreprise et secteur d’activité. Les mesures d’enquête de l’activité et des succès d’innovation sont positivement corrélées avec la R-D et les brevets observés sur les années précédentes, suggérant que les facteurs qui affectent le développement des innovations déterminent également leur mise en oeuvre ultérieure. D’autre part, la disponibilité de personnel qualifié et de financement privé, une réglementation des marchés de produits et du travail peu restrictive, une plus grande coopération dans le processus d’innovation et l’aide publique financière sont toutes positivement associées à la proportion de firmes ayant innové avec succès, du moins pour certains secteurs et tailles d’entreprise. Enfin, l’innovation dans les petites entreprises est plus dépendante de la coopération et de la disponibilité de financement que dans les grandes entreprises.
    Keywords: product and process innovations, firm size and industry differences, Community Innovation Survey data, innovations products et procédés, différences par taille d'entreprise et secteur d'activité, données de l'Enquête Communautaire sur l'Innovation
    JEL: D21 O31 O38
    Date: 2005–12–02
  2. By: Cefis, Elena; Rosenkranz, Stephanie; Weitzel, Utz
    Abstract: Using a game theoretical model on firms' simultaneous investments in product and process innovation, we deduct and empirically test hypotheses on the optimal R&D portfolio, investment, performance, and dynamic efficiency of R&D for acquisitions and in independently competing firms. We use Community Innovation Survey data on Italian manufacturing firms. Theoretical and empirical results show that firms involved in acquisitions invest in different R&D portfolios and invest at least as much in aggregate R&D as independent firms. The empirical results do not support our hypothesis on dynamic efficiency since acquisitions lead to inferior R&D performance.
    Keywords: cost reduction; dynamic efficiency; innovation; mergers and acquisitions; product differentiation
    JEL: C72 L1 L13 O32
    Date: 2005–10
  3. By: Florence Jaumotte; Nigel Pain
    Abstract: This paper draws together the key findings from separate detailed analyses of the determinants of R&D, patenting and the commercial introduction of innovations in the business sector in order to identify the policies, institutions and framework factors that provide the most effective means of supporting innovation. The evidence suggests that there is a clear role for framework conditions, framework policies and specific science policies, both independently and in interaction with each other. Policies that raise the absorptive capacity of the economy (the capacity to understand and make use of new knowledge) are likely to have dual benefits, not only helping to stimulate new innovative activities, but also helping to maximise the benefits to be gained from the existing stock of knowledge. Potential policy trade-offs also need to be taken into account. Some policies that offer benefits for current innovation also have costs that could adversely affect future incentives to innovate. Others have trade-offs when considered in combination. Cross-country differences in the level of R&D intensity are shown to be closely correlated with crosscountry differences in science policies and institutions. Framework conditions and policies have an important influence when accounting for cross-country differences in the rate of change of R&D intensities over time. <P>L'innovation dans le secteur des entreprises Ce document fait la synthèse des principales conclusions d’un certain nombre d’analyses détaillées sur les déterminants de la R&D, du brevetage et de l’introduction commerciale des innovations dans le secteur des entreprises, afin de pouvoir mettre en évidence les facteurs politiques, institutionnels et structurels qui offrent les meilleures conditions pour soutenir l’innovation. On constate que les conditions et politiques structurelles comme les politiques spécifiques de la science ont une importance évidente, tant isolément qu’en interaction les unes avec les autres. Les politiques qui visent à agir sur la capacité d’absorption de l’économie (c’est-à-dire à améliorer la capacité de comprendre les nouveaux savoirs et d’en faire usage) ont généralement un impact doublement positif : non seulement elles contribuent à stimuler de nouvelles activités d’innovation, mais elles aident en outre à maximiser le bénéfice que l’on peut tirer du stock de connaissances existantes. Il faut aussi tenir compte des éventuels inconvénients que peuvent avoir ces politiques. Certaines mesures de soutien aux innovations en cours ont aussi des coûts qui risquent de pénaliser les incitations à l’innovation dans l’avenir. D’autres ont des effets pervers si elles sont combinées. On démontre que les écarts d’intensité de R&D d’un pays à l’autre sont étroitement corrélés aux différences observées au niveau des politiques scientifiques et des établissements de recherche. Les conditions cadres et les politiques jouent un rôle non négligeable pour expliquer les différences d’un pays à l’autre dans le rythme d’évolution de l’intensité de R&D au fil du temps.
    Keywords: innovation, innovation, research and development, recherche-développement, innovation policy, politique d'innovation, patenting, framework conditions, conditions cadres
    JEL: O30 O38
    Date: 2005–12–02
  4. By: Jürgen Bitzer (Free University Berlin); Philipp J.H. Schröder (Aarhus School of Business)
    Abstract: This paper presents the stylized facts of open source software innovation and provides empirical evidence on the impact of increased competition by OSS on the innovative activity in the software industry. Furthermore, we introduce a simple formal model that captures the innovation impact of OSS entry by examining a change in market structure from monopoly to duopoly under the assumption that software producers compete in technology rather than price or quantities. The paper identifies a pro-innovative effect of OSS competition.
    Keywords: open source software, innovation, strategic interaction
    JEL: L13 L30 L86
    Date: 2005–12–02
  5. By: Florence Jaumotte; Nigel Pain
    Abstract: Innovation is a broad topic, about which much has been written. Almost every kind of public policy has either a direct or an indirect impact on factors that affect innovative activity. The purpose of this paper is to draw out the key implications from selected studies concerning a small number of science-related policies that are widely employed in order to deal with perceived market failures in the innovation process. The main issues considered are fiscal incentives for private R&D, the role of public research organisations, the regulation of intellectual property, the availability of finance, and the supply of skilled human resources for science and technology. Two central themes developed in the paper are the need for accurate evaluation of all these policies, since each may have costs as well as benefits, and the likely enhancement of the wider social benefits from innovation if knowledge is able to diffuse freely, and if potential beneficiaries have sufficient absorptive capacity to be able to understand and use new knowledge productively. <P>Revue des politiques publiques en faveur de l'innovation L’innovation est un sujet vaste qui a fait l’objet d’une littérature abondante. Presque tout instrument de politique économique a un impact, soit direct, soit indirect, sur les déterminants de l’activité d’innovation. L’objectif de ce papier est de faire le point, à partir d’une sélection d’études, sur un petit nombre de politiques d’innovation couramment utilisées pour remédier aux imperfections de marché dans le processus d’innovation. Celles-ci incluent les incitations publiques aux activités privées de recherche et développement (R&D), le rôle des instituts publics de recherche, les droits de propriété intellectuelle, le développement du secteur financier, et la disponibilité de ressources humaines qualifiées en science et technologie. Deux thèmes centraux développés dans le papier sont d’une part le besoin d’une évaluation précise de toutes ces politiques, étant donné que chacune d’entre elles présente à la fois des coûts et des bénéfices, et d’autre part l’importance de la diffusion du savoir qui accroît substantiellement les bénéfices sociaux de l’innovation, à condition que les bénéficiaires potentiels jouissent d’une capacité d’absorption suffisante pour comprendre et appliquer productivement le nouveau savoir.
    Keywords: innovation, innovation, intellectual property rights, droit de propriété intellectuelle, scientists and engineers, fiscal incentives, public research organisations, scientifiques et ingénieurs, incitations publiques, instituts publics de recherche
    JEL: O30 O38
    Date: 2005–12–01
  6. By: Gerlach, Heiko A.; Roende, Thomas; Stahl, Konrad O.
    Abstract: We investigate firms' incentives to locate in the same region to gain access to a large pool of skilled labour. Firms engage in risky R&D activities and thus create stochastic product and implied labour demand. Agglomeration in a cluster is more likely in situations where the innovation step is large and the probability for a firm to be the only innovator is high. When firms cluster, they tend to invest more and take more risk in R&D compared to spatially dispersed firms. Agglomeration is welfare-maximizing, because expected labour productivity is higher and firms choose a more efficient, technically diversified portfolio of R&D projects at the industry level.
    Keywords: agglomeration; labour pooling; R&D
    JEL: L13 O32 R12
    Date: 2005–10
  7. By: Florence Jaumotte; Nigel Pain
    Abstract: This paper uses panel regressions to investigate the effects of innovation policies and framework factors on business R&D intensity and patenting for a sample of 20 OECD countries over the period 1982- 2001. Both sets of factors are found to matter; the main determinants of innovativeness appear to be the availability of scientists and engineers, research conducted in the public sector (including universities), business-academic links, the degree of product market competition, a high level of financial development and access to foreign inventions. The effect of direct public financial support for business R&D is generally positive but modest, though it may larger for cash-constrained firms. Intellectual property rights appear to increase patenting significantly, but have little impact on R&D spending. Finally, the paper takes a closer look at the labour market for researchers, estimating jointly equations for employment and wages. Although the supply of scientists and engineers is eventually responsive to wage differentials, both with other professions and across countries, the evidence suggests that it may difficult to raise significantly the real amount of domestic R&D in the short run because the supply of researchers is relatively inelastic. <P>Des idées au développement Ce papier examine au moyen de régressions de panel les effets des instruments de politique d’innovation et des conditions cadres sur l’intensité de recherche et développement (R&D) du secteur des entreprises et les dépôts de brevets pour un échantillon de 20 pays de l’OCDE durant la période 1982- 2001. Les deux groupes de facteurs paraissent être importants ; les principaux déterminants du degré d’innovation semblent être la disponibilité de scientifiques et ingénieurs, la recherche conduite dans le secteur public (y compris les universités), les liens entre les entreprises et le secteur académique, la concurrence dans les marchés de produits, le degré de développement du secteur financier et l’accès aux innovations réalisées à l’étranger. Le soutien financier direct aux activités de R&D des entreprises a généralement un effet positif mais modeste, bien que celui-ci puisse être plus important pour des entreprises en manque de liquidités. Les droits de propriété intellectuelle ont surtout un effet positif sur les dépôts de brevets mais peu d’impact sur les dépenses en R&D des entreprises. Finalement, le papier examine le marché du travail pour les chercheurs par le biais d’équations simultanées d’emploi et de salaires. Bien que l’offre de scientifiques et d’ingénieurs réponde à terme aux différentiels de salaires, à la fois entre professions et entre pays, les données suggèrent qu’il peut être difficile d’augmenter sensiblement la quantité réelle de R&D domestique à court terme, car l’offre de chercheurs est relativement inélastique.
    Keywords: research and development, recherche-développement, politique d'innovation, framework conditions, patents, scientists and engineers, science policy, conditions cadres, brevets, scientifiques et ingénieurs
    JEL: O30 O31 O32
    Date: 2005–12–02
  8. By: Carsten Helm (Institut für Volkswirtschaftslehre (Department of Economics), Technische Universität Darmstadt (Darmstadt University of Technology)); Anja Schöttner (School of Business and Economics, Humboldt University Berlin)
    Abstract: We analyze a situation where a principal wants to induce firms to produce an output, e.g. electricity from renewable energy sources. Firms can undertake non-contractible investments to reduce production costs of the output. Parts of these investments spills over and also reduce production costs of the other firm. Comparing the general price subsidy and an innovation tournament, we find that the principal's expected cost of implementing a given expected output are always higher under the tournament, even though this scheme may lead to more innovation.
    Keywords: R&D spillovers, tournaments, subsidies, moral hazard
    JEL: Q55 D82 H23 D43
    Date: 2005–11
  9. By: Roman Inderst; Christian Wey
  10. By: Aghion, Philippe; Blundell, Richard William; Griffith, Rachel; Howitt, Peter; Prantl, Susanne
    Abstract: How does firm entry affect innovation incentives and productivity growth in incumbent firms? Micro-data suggests that there is heterogeneity across industries - incumbents in technologically advanced industries react positively to entry, but not in laggard industries. To explain this pattern, we introduce entry into a Schumpeterian growth model with multiple sectors which differ by their distance to the technological frontier. We show that entry threat spurs innovation incentives in technologically advanced sectors - successful innovation allows incumbents to prevent entry. In laggard sectors it discourages innovation - increased entry reduces incumbents' expected rents from innovating. We find that the empirical patterns hold using rich micro-level productivity growth and patent panel data for the UK, and controlling for the endogeneity of entry by exploiting the large number of policy reforms undertaken during the Thatcher era.
    Keywords: entry; growth; innovation
    JEL: D21 F21 L10 O31
    Date: 2005–10
  11. By: Acs, Zoltán J; Audretsch, David B; Braunerhjelm, Pontus; Carlsson, Bo
    Abstract: Contemporary theories of entrepreneurship generally focus on the decision-making context of the individual. The recognition of opportunities and the decision to commercialize them is the focal concern. While the prevalent view in the entrepreneurship literature is that opportunities are exogenous, the most prevalent theory of innovation in the economics literature suggests that opportunities are endogenous. This paper bridges the gap between the entrepreneurship and economic literature on opportunity by developing a knowledge spillover theory of entrepreneurship. The basic argument is that knowledge created endogenously via R&D results in knowledge spillovers. Such spillovers give rise to opportunities to be identified and exploited by entrepreneurs. Our results show that there is a strong relationship between knowledge spillovers and new venture creation.
    Keywords: entrepreneurship; knowledge; management science; opportunity
    JEL: J24 M13 O3 R1
    Date: 2005–11
  12. By: Bruce Fallick (Federal Reserve System); Charles A. Fleischman (Federal Reserve System); James B. Rebitzer (Case Western Reserve University, The Levy Economics Institute, & The National Bureau of Economic Research)
    Abstract: Observers of Silicon Valley’s computer cluster report that employees move rapidly between competing firms, but evidence supporting this claim is scarce. Job-hopping is important in computer clusters because it facilitates the reallocation of talent and resources toward firms with superior innovations. Using new data on labor mobility, we find higher rates of job-hopping for college-educated men in Silicon Valley’s computer industry than in computer clusters located out of the state. Mobility rates in other California computer clusters are similar to Silicon Valley’s, suggesting some role for features of California law that make non-compete agreements unenforceable. Consistent with our model of innovation, mobility rates outside of computer industries are no higher in California than elsewhere.
    Keywords: agglomerations, clusters, non-compete agreements, human capital, innovation, Silicon Valley, modular production.
    JEL: R12 L63 O3 J63
    Date: 2005–12–02
  13. By: Parhi, Mamata (United Nations University, Institute for New Technologies)
    Abstract: The contribution of new technologies to economic growth is harnessed only when new technologies are widely diffused in the economy. Diffusion results from a series of individual decisions to introduce the new technologies, decisions being the result of a comparison of the uncertain benefits and costs associated with adoption. An understanding of the factors affecting this choice is therefore an essential step forward in order to study the diffusion process of new technologies. The aim of this paper is to provide a comprehensive understanding of the possible set of factors determining adoption of new technologies such as Advanced Manufacturing Techniques (AMTs) in the Indian auto component industry. Building on both the early ‘epidemic' and the later ‘equilibrium' theories of adoption, our analysis is purported to provide an empirical exploration of determinants of adoption that takes into account the influence of structural, (i.e., firm-specific), and socio-economic factors on the process of adoption. Our results, though confirms most of the theoretical and empirical predictions about technology adoption, provides new evidence on the importance of external sources of knowledge and the crucial role of demand side on the adoption process.
    Keywords: Technology Transfer, Diffusion of Innovations, Management Techniques, Production Control, Industrial Management, Industrial Cooperation, Automotive Industry, India
    Date: 2005
  14. By: Harhoff, Dietmar; Wagner, Stefan
    Abstract: We analyze the duration of patent examination at the European Patent Office (EPO). Our data contain variables that are correlates of the applicants’ and examiners’ assessments of a patent’s economic and technical relevance as well as ex post-application citation measures which indicate the impact of the patent application on the state of the art. We present descriptive statistics for 30 major technology fields. In our multivariate analysis we estimate competing risk specifications in order to characterize differences in the processes leading to either a withdrawal of the application by the applicant, a refusal of the patent grant or an actual patent grant by the European Patent Office. Measuring a patent’s importance relying on the number of citations by subsequent patents we find that more important patents are approved faster by the EPO than less important patents but that applicants are more hesitant to withdraw these potentially valuable applications.
    Keywords: European Patent Office; patent examination; patents; survival analysis
    JEL: C15 C41 D73 O34
    Date: 2005–10
  15. By: Tomas J. Philipson; Anupam B. Jena
    Abstract: The social value of an innovation is comprised of the value to consumers and the value to innovators. We estimate that for the HIV/AIDS therapies that entered the market from the late 1980's onwards, innovators appropriated only 5% of the social surplus arising from these new technologies. Despite the high annual costs of these drugs to patients, the low share of social surplus going to innovators raises concerns about advocating cost-effectiveness criteria that would further reduce this share, and hence further reduce incentives for innovation.
    JEL: I1
    Date: 2005–12
  16. By: Monica Merito; Andrea Bonaccorsi
    Abstract: The goal of this study was to analyze the emergence of treatment standards associated with the adoption of anti-HIV drug innovations in the empirical setting of Italian clinical practice. Due to the rapid pace of technological change and the initial uncertainty concerning capabilities and indications of new treatments, the emergence of standard patterns of care turned out to be far from predictable and straightforward. Health providers' links to an international medicine and their internal coordination mechanisms were found to be associated with clinical decisions. Effectiveness and health costs of diverging treatment strategies were also compared.
    Keywords: Medical innovation, Treatment standard, Clinical guidelines, HIV/AIDS, Sequence analysis
    Date: 2005–11–25
  17. By: Puga, Diego; Trefler, Daniel
    Abstract: Increasingly, a small number of low-wage countries such as China and India are involved in innovation - not the `big ideas', but the constant incremental innovations needed to stay ahead in business. We provide some evidence of this and develop a model in which there is a transition from old-style product-cycle trade to trade involving incremental innovation in low-wage countries. We explain why levels of involvement in innovation vary across low-wage countries and even across firms in each low-wage country. We then draw out the implications of this for the location of production, trade, capital flows, earnings and living standards.
    Keywords: international trade; low-wage country innovation
    JEL: F1
    Date: 2005–10
  18. By: Spyros Arvanitis (Swiss Institute for Business Cycle Research (KOF), Swiss Federal Institute of Technology Zurich (ETH)); Laurent Donzé (Seminar of Statistics, Department of Quantitative Economics); Nora Sydow (Swiss Institute for Business Cycle Research (KOF), Swiss Federal Institute of Technology Zurich (ETH))
    Date: 2005–04
  19. By: Zoltan J. Acs; David B. Audretsch; Pontus Braunerhjelm; Bo Carlsson
    Abstract: This paper suggests that the spillover of knowledge may not occur automatically as has typically been assumed in models of endogenous growth. Rather, a mechanism is required that serves as a conduit for the spillover and commercialization of knowledge from the source creating it to the firm actually commercializing the new ideas. In this paper, entrepreneurship is identified as one such mechanism facilitating the spillover of knowledge. Using a panel of entrepreneurship data for 18 countries, empirical evidence is found that in addition to measures of R&D and human capital, entrepreneurial activity also serves to promote economic growth.
    Keywords: Entrepreneurship, Growth
    Date: 2005–11
  20. By: Tomas J. Philipson (University of Chicago); Anupam B. Jena (University of Chicago)
    Abstract: Given the rapid growth in health care spending that is often attributed to technological change, many private and public institutions are grappling with how to best assess and adopt new health care technologies. We argue that popular assessment criteria going under the rubric of “cost-effectiveness” often concern maximizing consumer surplus, which many times is consistent with maximizing static efficiency after an innovation has been developed. Dynamic efficiency, however, concerns aligning the social costs and benefits of R&D and is therefore determined by how much of the social surplus from the new technology is appropriated as producer surplus. We estimate that for the HIV/AIDS therapies that entered the market from the late 1980’s onwards, producers appropriated only 5% of the social surplus arising from these new technologies. We show how to translate standard findings of cost- effectiveness to estimates of innovator appropriation for standard studies of over 200 drugs, and find that these studies implicitly support a low degree of appropriation as well. Despite the high annual costs of drugs to patients, the low share of social surplus going to innovators raises concerns about advocating cost-effectiveness criteria that would further reduce appropriation by innovators, and hence further reduce dynamic efficiency by unduly sacrificing future patients’ health for current ones.
    JEL: D6 D7 H
    Date: 2005–11–28
  21. By: Erdal Atukeren (Swiss Institute for Business Cycle Research (KOF), Swiss Federal Institute of Technology Zurich (ETH))
    Abstract: This paper examines the causal relationships between the R&D sector activities of the EU and the US in a multivariate framework. As a novelty in this literature, we employ the subset transfer function methodology to account for the possibility of “dry holes” in the effects of R&D efforts on economic activity. We find that R&D activity in the EU is a direct Granger-cause of both R&D and economy-wide productivity in the US, and the effects are negative. On the other hand, the EU reacts positively to increases in R&D productivity in the US. Thus, the US can be said to respond submissively to an R&D move by the EU, while the EU’s reaction to the R&D efforts by the US firms is on the aggressive side. These findings are largely in line with the actual developments in the productivity differentials between the EU and the US and the patterns in their relative shares in the world market for high tech exports.
    Keywords: R&D races, productivity spillovers, direct Granger-causality, EU’s Lisbon targets, high tech exports
    JEL: C32 O30 O40
    Date: 2005–08
  22. By: Prof. Dr. Michael Rauscher (University of Rostock)
    Abstract: The paper analyses the impact of tax competition on innovation in the public sector. It is shown that the effects of increased mobility of the tax base on innovation and growth are ambiguous. The negative relationship is more likely, however. Moreover, it is shown that a Leviathan government may be induced to spend a larger share of its budget on unproductive activities.
    Keywords: tax competition, economic growth, innovation, Leviathan competition, North-South model.
    JEL: H21 H7 O31 O41
    Date: 2005
  23. By: Reinhard Haupt (University of Jena, Faculty of Economics); Matthias Korgel
    Abstract: In a framework of a multivariate analysis of patent data this study applies a method of defining and analysing technology-based clusters of companies with the help of patent classification. In addition to the utilization of US patent classification we compare the results of a second analysis using the international patent classification. It is shown that the international patent classification is appropriate to conduct technology-oriented competition analyses, as long as a preparatory work of experts foregoes which classifies single classification symbols to technology fields as detailed as necessary to meet the demands of the individual analysis.
    Keywords: technology competition, patent classification, cluster analysis
    Date: 2005–11–25
  24. By: Audretsch, David B; Lehmann, Erik E
    Abstract: The resource theory of the firm implies that knowledge is a key resource bestowing a competitive advantage for entrepreneurial firms. However, it remains rather unclear up to now, how new ventures and small business can access knowledge resources. The purpose of this paper is to suggest two strategies in particular that facilitate entrepreneurial access to and absorption of external knowledge spillovers: the attraction of managers and directors with an academic background. Based on data on board composition of 295 high technology firms, the results clearly demonstrate the strong link between geographical proximity to research intense universities and board composition.
    Keywords: board composition; corporate governance; entrepreneurship; university spillover
    Date: 2005–11
  25. By: Martin Hoskins
    Abstract: This paper presents quantitative estimates of the effects of technological change on the composition of production and non-production workers in manufacturing in the United States for the period 1950 – 1995. The paper separates the effects of relative wage change, biased technological change and changes in sectoral composition and estimates the effect of upward pressure on relative pay exerted by biased technological change.
    Keywords: Skill change; United Kingdom; technological change; sectoral composition
    JEL: J40 O52
    Date: 2005–11
  26. By: Michael S. Dahl; Christian Ø.R. Pedersen; Bent Dalum
    Abstract: How can the growth of regional clusters be explained? This paper studies in great detail the growth of the wireless communication cluster in Northern Denmark. Unlike the dominant theories, we argue that initial success of the first firms are the main driving force behind the generation of new firms that eventually lead to the formation of clusters. The success of the first firms tend to generate spinoffs, which becomes successful themselves due to the background of the founders.
    Keywords: Agglomeration; Clusters; Spin-offs; Knowledge Diffusion
    JEL: R10 O13 J60 L63
    Date: 2005
  27. By: Fredrik Hedenus (Chalmers University); Christian Azar (Chalmers University); Kristian Lindgren
    Abstract: The threat of global warming calls for a major transformation of the energy system the coming century. Modeling technological change is an important factor in energy systems modeling. Technological change may be treated as induced by climate policy or as exogenous. We investigate the importance of induced technological change (ITC) in GET-LFL, an iterative optimization model with limited foresight that includes learning-by-doing. Scenarios for stabilization of atmospheric CO2 concentrations at 400, 450, 500 and 550 ppm are studied. We find that the introduction of ITC reduces the total net present value of the abatement cost over this century by 3-9% compared to a case where technological learning is exogenous. Technology specific polices which force the introduction of fuel cell cars and solar PV in combination with ITC reduce the costs further by 4-7% and lead to significantly different technological solutions in different sectors, primarily in the transport sector.
    Keywords: Energy system model, Limited foresight, Climate policy, Endougenous learning, Technological lock-in
    JEL: O33
    Date: 2005–10
  28. By: Mahabub Hossain; Muazzam Husain; S.K Datta
    Abstract: This paper has been prepared as part of CPD's ongoing agricultural policy research and advocacy activities with IRRI under the PETRRA project. It discusses the benefits and risks of rice biotechnology research and genetically engineered varieties developed from such research. It assesses the potential benefits of biotechnology for rice improvement in the context of Bangladesh. The paper collated perceived risk of biotechnology. It reports the findings of a survey on knowledge, perceptions and attitude of civil society to identify the constraints to adoption of rice biotechnology in Bangladesh. It also raises some issues for debate that may assist the government to take up positions on this issue vital to achieving and sustaining food and nutrition security in Bangladesh.
    Keywords: Rice, Biotechnology, Bangladesh
    JEL: Q25
    Date: 2004–07
  29. By: Choi, Jay-Pil; Fershtman, Chaim; Gandal, Neil
    Abstract: In this paper, we examine how software vulnerabilities affect firms that license software and consumers that purchase software. In particular, we model three decisions of the firm: (i) an upfront investment in the quality of the software to reduce potential vulnerabilities; (ii) a policy decision whether to announce vulnerabilities; and (iii) a price for the software. We also model two decisions of the consumer: (i) whether to purchase the software; and (ii) whether to apply a patch.
    Keywords: internet security; network effects; software; vulnerabilities
    JEL: L86 O3
    Date: 2005–10
  30. By: Frederick Guy (School of Management and Organizational Psychology, Birkbeck College); Peter Skottz (Department of Economics, University of Massachusetts)
    Abstract: New information and communication technologies, we argue, have been ‘power- biased’: they have allowed firms to monitor low-skill workers more closely, thus reducing the power of these workers. An efficiency wage model shows that ‘power-biased technical change’ in this sense may generate rising wage inequality accompanied by an increase in both the effort and unemployment of low-skill workers. The skill-biased technological change hypothesis, on the other hand, others no explanation for the ob- served increase in effort.
    Keywords: power-biased technical change, skill bias, efficiency wages, wage inequality, work intensity.
    JEL: J31 O33
    Date: 2005–11
  31. By: Martin Hoskins
    Abstract: This paper presents quantitative estimates of the effects of technological change on the composition of manual and non-manual employment in manufacturing in the United Kingdom for the period 1921 – 1995. The paper separates the effects of relative wage change, biased technological change and changes in sectoral composition and calculates the upward pressure on relative pay exerted by biased technological change.
    Keywords: Skill change; United Kingdom; technological change; sectoral composition
    JEL: J40 O52
    Date: 2005–11
  32. By: Mário Centeno; Márcio Corrêa
    Abstract: According to data from the OCDE, almost one third of the total quantity of on-the-job training is worker-provided. The aim of this paper is to study, in a labor market characterized by frictions, the effects of technological progress on the optimal worker-provided on-the-job training. The paper shows that the greater the technological progress rate less is the probability of the worker investing in specific human capital, if the technology is of creative destruction type, and the greater is the probability of the worker investing specific human capital, if the technology is characterized by renovation; whilst the effect over the general human capital investment doesn't exist in both models. The paper also shows that the impact of human capital investments on labor market outcomes depend on the type of investment - either firm or the market oriented. If the investment is totally aimed at the market, we have as a result an increase in the rate of unemployment, whilst if the investment is totally directed at the firm, we have the opposite effect.
    JEL: E24 J24 J63 J64
    Date: 2005
  33. By: Fuminori Sano (Research Institute of Innovative Technology for the Earth); Keigo Akimoto (Research Institute of Innovative Technology for the Earth); Takashi Homma (Research Institute of Innovative Technology for the Earth); Toshimasa Tomoda (Research Institute of Innovative Technology for the Earth)
    Abstract: In this study, cost-effective technological options to stabilize CO2 concentrations at 550, 500, and 450 ppmv are evaluated using a world energy systems model of linear programming with a high regional resolution. This model treats technological change endogenously for wind power, photovoltaics, and fuel-cell vehicles, which are technologies of mass production and are considered to follow the “learning by doing” process. Technological changes induced by climate policies are evaluated by maintaining the technological changes at the levels of the base case wherein there is no climate policy. The results achieved through model analyses include 1) cost-effective technological portfolios, including carbon capture and storage, marginal CO2 reduction costs, and increases in energy system cost for three levels of stabilization and 2) the effect of the induced technological change on the above mentioned factors. A sensitivity analysis is conducted with respect to the learning rate.
    Keywords: Energy systems model, Global warming, Technological portfolios, Technological changes
    JEL: C61 O33 Q41 Q42
    Date: 2005–10
  34. By: Valeria Gattai (Bocconi University and ISESAO)
    Abstract: This paper provides a theoretical formalisation of the joint-venture contract, as an alternative to Foreign Direct Investment (FDI), within a Dissipation of Intangible Assets framework. In a two-period model, we discuss how the threat of knowledge spillover shapes the boundaries of a Multinational Enterprise. Similarly to the theoretical findings on the FDI-licensing trade off, we show that the integrated solution is more likely to emerge when know-how easily spills over – i.e. when firms are endowed with more Intangible Assets or they belong to high tech industries. Probit estimates, from a new firm-level dataset, show that Japanese manufacturing operations in Europe are in line with these predictions.
    Keywords: Dissipation, Intangible assets, FDI, joint-venture, Internalisation, Japan
    JEL: F23 C25 O5
    Date: 2005–10
  35. By: Haskel, Jonathan; Hawkes, Denise; Pereira, Sonia
    Abstract: Using two matched plant level skills and productivity datasets for UK manufacturing we document that (i) more productive firms hire more skilled workers: in 2000, plants at the top decile of the TFP distribution (controlling for their four-digit industry) hired workers with, on average, around 1/3rd of a year of additional schooling compared to firms in the bottom decile and (ii) in an accounting sense the skills gap between the firms in the top and bottom deciles of the TFP distribution accounts for 3 to 10% of the TFP gap depending on the specification used.
    Keywords: productivity; skills
    JEL: D24 J24 L6
    Date: 2005–11

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