nep-ino New Economics Papers
on Innovation
Issue of 2005‒12‒14
nineteen papers chosen by
Koen Frenken
Universiteit Utrecht

  1. Innovation and Development around the World, 1960-2000 By Daniel Lederman; Laura Saenz
  2. Patenting and Research and Development : A Global View By Mariano Bosch; Daniel Lederman; William F. Maloney
  3. Sustaining Urban Growth Through Innovative Capacity : Beijing and Shanghai in Comparison By Jici Wang; Xin Tong
  4. Innovation, strategic renewal and its effect on small firm performance By Mickey Folkeringa; Andre van Stel; Joris Meijaard
  5. Promoting Innovation in Developing Countries: A Conceptual Framework By Jean-Eric Aubert
  6. Singapore as an Innovative City in East Asia : An Explorative Study of the Perspectives of Innovative Industries By Poh Kam Wong; Yuen Ping Ho; Annette Singh
  7. The Co-evolution of Institutions and Technology By Desiree Desierto
  8. The Contribution of Skilled Immigration and International Graduate Students to U.S. Innovation By Aaditya Mattoo; Gnanaraj Chellaraj; Keith E. Maskus
  9. Commercializing Cohen-Boyer 1980-1997 By Maryann Feldman; Alessandra Colaianni; Kang Liu
  10. From Efficiency-Driven to Innovation-Driven Economic Growth : Perspectives from Singapore By Kim-Song Tan; Sock-Yong Phang
  11. Road Freight Logistics, Competition and Innovation : Downstream Benefits and Policy Implications By Mark Dutz
  12. Relaciones interindustriales y difusión de la innovación: una aproximación desde la Teoría de Redes By Ana Salomé García; Antonio Morillas; Carmen Rueda
  13. International R&D Collaboration Networks By Huasheng, SONG; Vincent, VANNETELBOSCH
  14. Is Skill-Biased Technological Change here yet ? Evidence from Indian Manufacturing in the 1990 By Eli Berman; Rohini Somanathan; Hong W. Tan
  15. The Impact of New Firm Formation on Regional Development in the Netherlands By Stel, A.J. van; Suddle, K.
  16. Human Capital Accumulation in R&D-based Growth Models By Claudio, MATTALIA
  17. Credit Constraints as a Barrier to Technology Adoption by the Poor : Lessons from South-Indian Small-Scale Fishery By Xavier Gine; Stefan Klonner
  18. From nascent to actual entrepreneurship: the effect of entry barriers By Andre van Stel; David Storey; Roy Thurik; Sander Wennekers
  19. Learning, Investment, and Entrepreneurial Survival By Junjian Miao; Neng Wang

  1. By: Daniel Lederman (The World Bank); Laura Saenz (The World Bank)
    Abstract: The authors present a database of indicators of innovative activity around the world since the early 1960s. The data include measures of innovation outcomes as well as variables related to innovation effort. The main indicator of innovation outputs is patents. The main variables related to innovation inputs are investment in research and development (R&D) and technical personnel (engineers, scientists) working in R&D activities. The sources of these data are publicly available (OECD, UNESCO, etc.), yet there have been few attempts at double checking the consistency of these data and digitizing observations dating back to the 1960s. After discussing the sources and definitions of the data, the authors examine trends and patterns of innovation outputs and inputs by looking at the over-time behavior of the relevant series and comparing the performance of developing and high-income countries. They also provide cross-regional comparisons and a detailed examination of trends in selected countries. In turn, the authors provide estimates of the impact of innovation on long-run development by following an emerging empirical literature on the determinants of levels of GDP per capita. The econometric results suggest that innovation might indeed have strong positive effects on long-run development, which might be stronger than the direct effects of institutions. The analysis pays close attention to issues related to the potential endogeneity of innovation (and institutions) with respect to the level of development.
    Keywords: ???
    Date: 2005–11–01
  2. By: Mariano Bosch (The World Bank); Daniel Lederman (The World Bank); William F. Maloney (The World Bank)
    Abstract: Using a new global data base on patents and innovation inputs, the authors examine the process of knowledge creation measured by the dynamic relationship between research and development and U.S. patents granted. They confirm at the country level the recurrent micro-level finding of a strong relationship between the two and estimate the OECD elasticity to be effectively equal to one. This conflicts with the frequent micro-level finding of strongly diminishing returns in knowledge generation and suggests the importance of knowledge spillover effects measurable only at the aggregate level. Developing countries, however, do show diminishing returns. The authors then explain the differences in spillovers between the OECD and developing countries by testing for the impact of measures of the functioning of the national innovation system-the set of institutions and agents that create and disseminate knowledge. Across the entire sample education, security of intellectual property rights, and in some specifications, the quality of research institutions and their interaction with the private sector, affect the transformation of research and development into patents.
    Keywords: Private sector development, Macroeconomics and growth
    Date: 2005–10–01
  3. By: Jici Wang (Peking University); Xin Tong (Peking University)
    Abstract: The authors examine the diverse prospects of innovative sectors in Beijing and Shanghai using available indicators and data collected for this study through surveys. Beijing is the first choice for companies locating in China, but foreign employees prefer Shanghai for living convenience and cultural amenities. While Shanghai lags behind Beijing in knowledge creation and the generation of startup companies in the innovative sectors, it takes the lead in the commercialization of technological innovations and the development of creative cultural industries. The municipal authorities of Beijing and Shanghai have improved the innovation environment of the cities, but certain elements still stunt the growth of innovative industries, which cannot be removed easily. Three kinds of knowledge-intensive enterprises included in innovative sectors in the survey are high-tech manufacturers, knowledge-intensive business services, and creative content providers. The survey found that the clustering of the firms arose from the attraction of preferential policies and the purchase by governments or state-owned enterprises of information technology products. The survey shows that interaction among firms is inadequate in the knowledge-based industrial clusters in both Beijing and Shanghai. Hence, it may be some time before clustering leads to substantial gains in collective efficiency for innovative industry in Beijing and Shanghai.
    Keywords: Industry, Private sector development, Urban development
    Date: 2005–03–01
  4. By: Mickey Folkeringa; Andre van Stel; Joris Meijaard
    Abstract: In this paper, we investigate the relationship between strategic renewal and the performance of smaller firms (less than 100 employees). We use a panel of micro data on about 1000 Dutch firms. The dataset contains information on aspects of strategic renewal, including process innovation and knowledge management. In our regression analyses we explain the variation in firm performance and we explicitly control for reversed causality, business cycle effects, sector effects, and firm age. We find that market research, an active external network for knowledge acquisition and strategic efforts into the improvement of internal processes are positively related to turnover growth. Furthermore, codification of knowledge, cooperation with partner firms and the provision of training to employees directly relates to employment growth. The results emphasize the importance of both knowledge absorption and knowledge creation to the success of innovative efforts in small firms. We find that the impact of the various measures varies with firm size. One further notable finding is that the ownership of patents negatively impacts small firm performance, particularly for the smallest firms in our sample.
    Keywords: strategic renewal, growth of small firms, entrepreneurship, innovation
    JEL: L25 O33
    Date: 2005–11
  5. By: Jean-Eric Aubert (The World Bank)
    Abstract: The author provides a conceptual framework for approaching the promotion of technological innovation and its diffusion in developing countries. Innovation climates in developing countries are, by nature, problematic, characterized by poor business and governance conditions, low educational levels, and mediocre infrastructure. This raises particular challenges for the promotion of innovation. The latter should be understood as the diffusion of technologies-and related practices-which are new to a given context (not in absolute terms). What matters first is to provide the necessary package of support-technical, financial, commercial, legal, and so on-with flexible, autonomous agencies adapting their support and operations to the different types of concerned enterprises. Facilitating and responding to the emergence of grass-root needs at the local level is also essential. Support to entrepreneurs and local communities should be primarily provided in matching grant forms to facilitate the mobilization of local resources and ownership. It is of primary importance to pay the greatest attention to country specificities, not only in terms of development level, size, and specialization, but also in terms of administrative and cultural traditions. At the global level, major issues need also to be considered and dealt with by appropriate incentives and regulations: the role of foreign direct investment in developing countries' technological development, conditions of technologies' patenting and licensing, the North-South research asymmetry, and brain drain trends.
    Keywords: Agriculture, Industry, Private sector development, Rural development, Public sector management
    Date: 2005–04–01
  6. By: Poh Kam Wong (National University of Singapore); Yuen Ping Ho (National University of Singapore); Annette Singh (National University of Singapore)
    Abstract: The city-state of Singapore has achieved rapid economic development in the past by its positioning as an efficient business hub in Asia. To remain competitive in the global knowledge economy, however, Singapore needs to move beyond efficiency by developing a strong "innovative" edge as well. This paper examines the challenges that Singapore faces in seeking to do so through an explorative survey of 40 firms from three innovative sectors: high-tech manufacturing industries, knowledge-intensive business services (KIBS), and creative content industries. Overall, while the survey confirms Singapore's continuing competitive strength in efficiency infrastructure, it also finds a favorable perception of Singapore as an innovative city. Indeed, many of the industry actors indicated that an efficient business infrastructure is a prerequisite for locating their innovative activities in Singapore, suggesting that the relationship between innovation and efficiency is complementary, rather than substitutional. While the study found that intellectual property and its protection are widely recognized by actors in all three sectors, interesting differences exist. In particular, intellectual property protection appears to be of greater concern to the high-tech research and development-intensive manufacturing sector and the creative contents sector than to the KIBS sector. Another interesting difference is that while competition in high-tech innovation tends to be global, competition in creative content tends to have a stronger local or regional dimension. Public policy in East Asia has traditionally emphasized the development of technological innovation capabilities in the manufacturing sector. In light of the findings, public policymakers may need to be more sensitive to the nuanced differences in policies needed to promote the new creative content industries and the associated supporting KIBS.
    Keywords: Industry, Private sector development, Urban development
    Date: 2005–04–01
  7. By: Desiree Desierto
    Abstract: We propose a model of growth driven by the co-evolution of institutions and technology. To be consistent with Douglass North (1990, 1991, 1994), institutions are defined as a type of collective knowledge about a specific environment that can prescribe how to adapt general technology before the latter can be actually used. Institutions, then, are treated as a factor in the innovation process, and as such can be purposely accumulated. The simultaneous accumulation of institutions and technology are modeled as an evolutionary game whereby boundedly-rational .rms choose how much to allocate to ‘institutional spending’ vis-a-vis research expenditures, in anticipation of changes in monopoly pro.ts from technological innovation. Using Taylor and Jonker’s (1978) Replicator Dynamics to describe the evolution of such strategies, we are able to show how this transition process converges to the steady state model of Romer (1990).
    Keywords: endogenous growth, institutions, technological change
    JEL: O30 O33 O49 Z13
    Date: 2005–12
  8. By: Aaditya Mattoo (The World Bank); Gnanaraj Chellaraj (The World Bank); Keith E. Maskus (University of Colorado at Boulder)
    Abstract: The impact of international students and skilled immigration in the United States on innovative activity is estimated using a model of idea generation. In the main specification a system of three equations is estimated, where dependent variables are total patent applications, patents awarded to U.S. universities, and patents awarded to other U.S. entities, each scaled by the domestic labor force. Results indicate that both international graduate students and skilled immigrants have a significant and positive impact on future patent applications, as well as on future patents awarded to university and nonuniversity institutions. The central estimates suggest that a 10 percent increase in the number of foreign graduate students would raise patent applications by 4.7 percent, university patent grants by 5.3 percent, and nonuniversity patent grants by 6.7 percent. Thus, reductions in foreign graduate students from visa restrictions could significantly reduce U.S. innovative activity. Increases in skilled immigration also have a positive, but smaller, impact on patenting.
    Keywords: International economics
    Date: 2005–05–01
  9. By: Maryann Feldman; Alessandra Colaianni; Kang Liu
    Abstract: This paper examines the history of the licensing and subsequent commercialization of the Cohen-Boyer Patents. These licenses are considered among the most successful examples of university technology transfer in terms of generating revenue and creating a range of new products. Stanford was negotiating new ground with their licensing program and they consulted widely in the design and implementation their program. The paper begins by providing the context for Stanford’s approach to licensing and then examines the implementation of the licensing practices and procedures. The final section of the paper examines the commercial products that companies developed using the technology and the resulting licensing revenues. We demonstrate that even with a successful nonexclusive license the outcome is highly skewed with about 80% of the revenues originating from ten companies with a small number of products.
    Keywords: Cohen-Boyer; patents; university technology transfer; licenses; biotechnology
    JEL: L65
    Date: 2005
  10. By: Kim-Song Tan (Singapore Management University); Sock-Yong Phang (Singapore Management University)
    Abstract: This paper looks at Singapore's efforts to transform the economic growth base from one that is predominantly efficiency-driven to one that is more innovation-driven. To accelerate the transition process, the government is aggressively investing in "innovation infrastructure"-systems and institutions that make the city a more conducive environment for innovations. The modus operandi, with a distinctive "winner-picking" flavor, mirrors that of its earlier strategic industrial policy in building up the manufacturing sector. It is also in sync with the new urban growth literature which argues that the success of any innovation-driven growth strategy depends on a city's ability to attract a large community of creative individuals in different fields. Innovation infrastructure building requires more than putting in the right systems. It also requires a mindset change at various levels of society. This paper looks at how the government's policy philosophy and practices have evolved over time, and discusses the effectiveness of the government-led, strategic supply-push approach in propelling Singapore onto an innovation-driven growth path. It takes into consideration the city-state's underlying comparative advantages (or disadvantages) and asks how Singapore's existing strength in efficiency infrastructure may give it a first mover advantage in attracting creative talent, how its success may be affected by the small size of the economy, and the various political and social constraints that a small sovereign city-state faces. These issues are explored against the backdrop of the keen competition among the major cities in the region to become an innovation hub.
    Keywords: Private sector development, Urban development, Labor and employment
    Date: 2005–04–01
  11. By: Mark Dutz (The World Bank)
    Abstract: This empirical paper sheds light on a significant element of the debate of whether infrastructure services have a strong impact on economic development by exploring the impact of innovative road freight services on downstream business users. The paper uses a new and purpose-specific survey of 165 logistics service providers and 493 user enterprises in food processing, food distribution, and the automotive industry in the Czech Republic, Hungary, and Poland. The main findings are that there are substantial downstream benefits from innovations in road freight services, both dampening cost increases and raising sales revenues of business users. The additional finding that increased intensity of competition in road freight services is significantly associated with the provision of innovative services suggests that easing any remaining barriers to competition in upstream business sectors should be a priority.
    Keywords: Infrastructure, Industry, Private sector development
    Date: 2005–11–01
  12. By: Ana Salomé García (Universidad de Oviedo); Antonio Morillas (Universidad de Málaga); Carmen Rueda (Universidad de Oviedo)
    Abstract: El análisis input-output es una herramienta de gran potencialidad que permite profundizar en el conocimiento de la estructura productiva de un espacio económico. Por otro lado, el entramado sectorial constituye uno de los posibles factores determinantes en la capacidad de innovación de un territorio. En este trabajo, desde la óptica de la teoría de redes, se estudian algunas características estructurales de la red productiva de la economía andaluza relevantes en la difusión de la innovación y la tecnología. En particular, se exponen y calculan diversos indicadores relacionados con el concepto topológico de centralidad.
    Keywords: graphs theory, input output analysis, innovation
    JEL: R
    Date: 2005–12–07
  13. By: Huasheng, SONG; Vincent, VANNETELBOSCH
    Abstract: We reconsider Goyal and Moraga-Gonzalez (Rand J. of Econ. 32 (2001), 686-707) model of strategic networks in order to analyze how government policies (e.g. subsidies) will affect the stability and efficiency of networks of R&D collaboration among three firms located in different countries. A conflict between stability and efficiency is likely to occur. When governments cannot subsidize R&D, this conflict will occur if public spillovers are not very small. However, when governments can subsidize R&D, the likelihood of a conflict is considerably reduced. Indeed, a conflict will arise only if public spillovers are very small or quite large.
    Keywords: Network; R&D collaboration; Subsidy
    JEL: C70 F13 L13 L20
    Date: 2005–05–15
  14. By: Eli Berman (University of California, San Diego and National Bureau of Economic Research); Rohini Somanathan (University of Michigan and Indian Statistical Institute); Hong W. Tan (The World Bank)
    Abstract: Most high and middle-income countries showed symptoms of skill-biased technological change in the 1980s. India-a low income country-did not, perhaps because India's traditionally controlled economy may have limited the transfer of technologies from abroad. However the economy underwent a sharp reform and a manufacturing boom in the 1990s, raising the possibility that technology absorption may have accelerated during the past decade. The authors investigate the hypothesis that skill-biased technological change did in fact arrive in India in the 1990s using panel data disaggregated by industry and state from the Annual Survey of Industry. These data confirm that while the 1980s were a period of falling skills demand, the 1990s showed generally rising demand for skills, with variation across states. They find that increased output and capital-skill complementarity appear to be the best explanations of skill upgrading in the 1990s. Skill upgrading did not occur in the same set of industries in India as it did in other countries, suggesting that increased demand for skills in Indian manufacturing is not due to the international diffusion of recent vintages of skill-biased technologies.
    Keywords: Private sector development
    Date: 2005–11–01
  15. By: Stel, A.J. van; Suddle, K. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: This paper examines the relationship between new firm formation and regional employment change in the Netherlands. Using a new regional data base for the period 1988-2002, we examine the time lags involved in the relationship. We also investigate whether the relationship differs by time period, by sector and by degree of urbanization. We find that the maximum effect of new businesses on regional development is reached after about six years. Our results also suggest that the overall employment impact of new-firm startups is positive but that the immediate employment effects may be small in the Netherlands. Furthermore, we find that the relation between new businesses and regional development has been stable during the period under investigation, that the employment impact of new firms is strongest in manufacturing industries and that the employment impact of new firms is stronger in areas with a higher degree of urbanization.
    Keywords: Startups;Entrepreneurship;Regional Development;the Netherlands;
    Date: 2005–11–30
  16. By: Claudio, MATTALIA
    Abstract: This paper considers a multi-sectoral endogenous growth model, that reproduces the essental aspects of an ‘ICT-based economy’, in which a central role is played by human capital accumulation. Indeed, households also invest in human capital through schooling, and this turns out to be the thrue engine of growth. Furthermore, this model displays no scale effect and the stimulations allow to get interesting results concerning the link between market power and growth, the presence of ‘imbalance effects’ and the consequences of different types of subsidies
    Keywords: Information technology; endogenous growth; imbalance effect
    JEL: E22 O40 C63
    Date: 2005–09–15
  17. By: Xavier Gine (The World Bank); Stefan Klonner (Cornell University)
    Abstract: It is generally recognized that the adoption of a new technology plays a fundamental role in the development process. However, the benefits from the introduction of the technology may be unevenly distributed among the population, especially if the markets do not function properly. While the microeconomic literature on technology adopted and diffusion focuses on "who" and "when," the macroeconomic literature has focused on the overall impact of globalization on inequality. In this paper the authors bring these two strands of the literature together by studying the diffusion of plastic reinforced fiber boats in a fishing village in Tamil Nadu and by analyzing the dynamics of income inequality during this process.
    Keywords: Private sector development, Rural development
    Date: 2005–07–01
  18. By: Andre van Stel; David Storey; Roy Thurik; Sander Wennekers
    Abstract: This exploratory study focuses on the conversion from nascent to actual entrepreneurship and the role of entry barriers in this process. Using data for a sample of countries partici-pating in the Global Entrepreneurship Monitor between 2002 and 2004, we estimate a two-equation model explaining the nascent entrepreneurship rate and the young business entre-preneurship rate, while taking into account the interrelationship between the two variables (i.e. the conversion). Furthermore various determinants of entrepreneurship reflecting the demand and supply side of entrepreneurship as well as government intervention are incor-porated in the model. We find evidence for a strong conversion effect from nascent to ac-tual entrepreneurship. We also find positive effects on entrepreneurial activity rates of la-bour flexibility and tertiary enrollment and a negative effect of social security expenditure. Concerning the effect of entry regulations we find mixed results. Using one set of entry regulation measures we find no effects whereas using data from a second source we find a weak negative effect of more burdensome entry regulations on the rate of entrepreneurship.
    Keywords: nascent entrepreneurship, young businesses, entry regulations
    JEL: H10 M13
    Date: 2005–11
  19. By: Junjian Miao (Department of Economics, Boston University); Neng Wang (Columbia Business School)
    Abstract: Empirical evidence shows that entrepreneurs on average do not earn more than paid em- ployees in terms of present value. One may ask why individuals what to stay in business and take entrepreneurial activities. To address this question, we propose a continuous time real options model in which entrepreneurs do not know their investment quality and learn about it over time. We show that due to the option value of learning, an entrepreneur may stay in business even though the net present value (NPV) is negative. We also show that risk aversion erodes option value and lowers private ¯rm value so that a highly risk averse entrepreneur may exit even when the NPV is positive. We also show that a more risk averse or a more pessimistic entrepreneur exits earlier. Finally, the model can generate the positive relation between wealth and survival duration without liquidity constraints.
    Keywords: real options, learning, private firm value, survival, precautionary savings
    JEL: D80 D91 G11 E21
    Date: 2005–07

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