nep-ino New Economics Papers
on Innovation
Issue of 2006‒05‒06
five papers chosen by
Koen Frenken
Universiteit Utrecht

  1. The Knowledge Economy and Urban Economic Growth By Otto Raspe; Frank van Oort
  2. Skill-biased Technology Adoption: Evidence for the Chilean manufacturing sector By Olga M. Fuentes; Simon Gilchrist
  3. Technological Paradigms and Firms' Interaction. By R. Andergassen; F. Nardini; M. Ricottilli
  4. Self-organised Criticality and Technological Convergence. By R. Amir; A. Mantovani
  5. How to Allocate R&D (and Other) Subsidies: An Experimentally Tested Policy Recommendation By Thomas Giebe; Tim Grebe; Elmar Wolfstetter

  1. By: Otto Raspe; Frank van Oort
    Abstract: In this paper we contribute to the longstanding discussion on the role of knowledge to economic growth in a spatial context. We observe that in adopting the European policy strategy towards a competitive knowledge economy, The Netherlands is – as most European countries - mainly oriented towards industrial, technological factors. The policy focus is on R&D specialized regions in their spatial economic strategies. We place the knowledge economy in a broader perspective. Based on the knowledge economy literature, we value complementary indicators: the successful introduction of new products and services to the market (‘innovation’) and indicators of skills of employees (‘knowledge workers’). Using econometric analysis, we relate the three factors ‘R&D’, ‘innovation’ and ‘knowledge workers’ to regional economic growth. We conclude that the factors ‘innovation’ and ‘knowledge workers’ are more profoundly related to urban employment and productivity growth than the R&D-factor. Preferably, urban research and policymakers should therefore take all three knowledge factors into account when determining economic potentials of cities.
    Keywords: knowledge economy, economic geography, urban economic growth, innovation, knowledge workers, spatial econometrics
    Date: 2006–04
  2. By: Olga M. Fuentes (Institute for Economic Development,Boston University); Simon Gilchrist (Institute for Economic Development,Boston University)
    Abstract: We examine the evolution of the demand for skilled workers relative to unskilled workers in the Chilean manufacturing sector following Chile’s liberalization of trade in the late 1970’s. Following such trade reforms, the standard Heckscher-Olin model predicts that a low labor-cost country like Chile should experience an increased demand for low skilled workers relative to high skilled workers. Alternatively, if trade liberalization is associated with the adoption of new technologies, and technology is skill-biased, the relative demand for skilled workers may rise. Using a newly available plant-level data set that spans the sixteen year period 1979-1995, we find that the relative demand for skilled workers rose sharply during the 1979-1986 period and then stabilized. The sharp increase in demand for skilled workers coincided with an increased propensity to adopt new technologies as measured by patent usage. Plant-level analysis of labor demand confirms a significant relationship between the relative demand for skilled workers and technology adoption as measured by patent usage and other technology indicators. Our results suggest that skill-biased technological change is a significant determinant of labor demand and wage structures in developing economies.
  3. By: R. Andergassen; F. Nardini; M. Ricottilli
  4. By: R. Amir; A. Mantovani
  5. By: Thomas Giebe (Institut für Wirtschaftstheorie I, Humboldt.Universität zu Berlin Spandauer Str. 1, 10099 Berlin, Germany Email:; Tim Grebe (Institut für Wirtschaftstheorie I, Humboldt.Universität zu Berlin Spandauer Str. 1, 10099 Berlin, Germany Email: grebe; Elmar Wolfstetter (Institut für Wirtschaftstheorie I, Humboldt.Universität zu Berlin Spandauer Str. 1, 10099 Berlin, Germany Email:
    Abstract: This paper evaluates how R&D subsidies to the business sector are typically awarded. We identify two sources of ine_ciency: the selection based on a ranking of individual projects, rather than complete allocations, and the failure to induce competition among applicants in order to extract and use information about the necessary funding. In order to correct these ine_- ciencies we propose mechanisms that include some form of an auction in which applicants bid for subsidies. Our proposals are tested in a simulation and in controlled lab experiments. The results suggest that adopting our proposals may considerably improve the allocation.
    Keywords: Research, Subsidies, Experimental Economics
    JEL: D44 D45 H25 O32 O38
    Date: 2005–10

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