nep-ino New Economics Papers
on Innovation
Issue of 2008‒03‒15
twelve papers chosen by
Steffen Lippert
Massey University Department of Commerce

  1. National innovation system, competitiveness and economic growth By Marco Flávio da Cunha Resende; Daniela Almeida Raposo Torres
  2. Embedding Research in Society: Development Assistance Options for Supporting Agricultural Innovation in a Global Knowledge Economy By Hall, Andy
  3. Ambiguity Attitude, R&D Investments and Economic Growth By Guido Cozzi; Paolo E. Giordani
  4. Evaluating innovation policy: a structural treatment effect model of R&D subsidies By Takalo, Tuomas; Tanayama, Tanja; Toivanen, Otto
  5. Outsourcing and Technological Innovations: A Firm-Level Analysis By Bartel, Ann P.; Lach, Saul; Sicherman, Nachum
  6. R&D and Productivity: Testing Sectoral Peculiarities Using Micro Data By Potters, Lesley; Ortega-Argilés, Raquel; Vivarelli, Marco
  7. Social Capital, Innovation and Growth: Evidence from Europe By Akçomak, I. Semih; ter Weel, Bas
  8. Trade Policy and Innovation By Huasheng Song; Hylke Vandenbussche
  9. Innovation Cooperation and Innovation Activity of Slovenian Enterprises By Andreja Jaklic; Joze P. Damijan; Matija Rojec
  10. Evaluating the Impact of Technology Development Funds in Emerging Economies: Evidence from Latin America By Bronwyn H. Hall; Alessandro Maffioli
  11. Pharmaceutical research in Wilhelmine Germany: The case of E. Merck By Carsten Burhop
  12. Measuring Intersectoral Knowledge Spillovers: an Application of Sensitivity Analysis to Italy By Cerulli Giovanni; Potì Bianca

  1. By: Marco Flávio da Cunha Resende (Cedeplar-UFMG); Daniela Almeida Raposo Torres (Cedeplar-UFMG)
    Abstract: Differences in income-elasticities of imports and exports among countries bring about distinct degrees of external constraints to growth. This argument has been pointed out by Prebisch and by authors in the Kaldorian tradition. Prebisch’s explanations for this phenomenon relate to the differences in international insertion between agrarian / peripheral and industrial / central economies. Kaldorian authors, in turn, refer to Prebisch only to explain why such elasticities differ between products and between countries. However, even after undergoing industrialization processes, several economies still face external constraints to growth. The aim of this paper is to explain differences in trade elasticities among industrial economies. Therefore, it intends to demonstrate, by using the Neo-Schumpeterian literature, the causal relations between the development of a National Innovation System, the differences in income-elasticities of imports and exports, the degree of competitiveness and the degree of external vulnerability of an economy.
    Keywords: national innovation system, competitiveness, external vulnerability
    JEL: O43 O40
    Date: 2008–02
  2. By: Hall, Andy (UNU-MERIT, LINK)
    Abstract: The emergence of a globalised knowledge economy, and the contemporary views of innovation capacity that this trend enables and informs, provides a new context in which development assistance to agricultural research and development needs to be considered. The main argument in this paper, which focuses on The Netherlands, is that development assistance should use this emerging scenario to identify niches where inputs can add value to the R&D investments of others, particularly in activities that help wire up innovation systems, linking R&D to other activities and actors in society. The paper outlines four agricultural innovation priorities and guiding principles for development assistance that could help strengthen national and global innovation capacity. These trends also raise many tensions and dilemmas for the development research community in Northern countries. A key message of this paper is that these tensions could be better handled if a long-term vision for development assistance to ST&I - which recognised the contingencies of the global knowledge economy and the importance of participation in the resolution of international issues that affect all countries - were in place. The paper concludes by suggesting that national development assistance policies on ST&I cannot be thought of separately from a country's general ST&I policy as participation in the resolution of international issues is a key element of a country's comparative advantage. This requires investments in expertise in the North and not just financial assistance to the South.
    Keywords: knowledge economy, development assistance, agricultural research, agricultural innovation, science and technology policy, innovation policy, development research, international development, community, globalization
    JEL: O13 O19 O29 O38 Q18
    Date: 2008
  3. By: Guido Cozzi; Paolo E. Giordani
    Abstract: The process aimed at discovering new ideas is an economic activity whose returns are intrinsically uncertain. In a standard neo-Schumpeterian growth framework we assume that, when deciding upon R&D efforts, economic agents hold ‘ambiguous beliefs’ about the exact probability of arrival of the next vertical innovations, and face ambiguity via the α-MEU decision rule (Ghirardato et al. (2004)). Along the steady-state equilibrium the higher the agents’ ambiguity aversion (α), the lower the R&D efforts and, coeteris paribus, the overall economic performance. Consistently with a cross-country empirical evidence, this causal mechanism suggests that, together with the profitability conditions of the economy, different ‘cultural’ attitudes towards ambiguity may contribute to explain the different R&D intensities observed across countries.
    Keywords: Schumpeterian growth, ambiguity, cultural attitude towards Ambiguity, arrival rate of innovation, R&D investments.
    JEL: D81 Z1
  4. By: Takalo, Tuomas (Bank of Finland Research); Tanayama, Tanja (HECER, University of Helsinki); Toivanen, Otto (HECER, University of Helsinki)
    Abstract: This paper studies the welfare effects of R&D subsidies. We develop a model of continuous optimal treatment with outcome heterogeneity where the treatment outcome depends on applicant investment. The model takes into account heterogeneous application costs and identifies the treatment effect on the public agency running the programme. Under the assumption of a welfare-maximizing agency, we identify general equilibrium treatment effects. Applyiing our model to R&D project-level data we find substantial treatment effect heterogeneity. Agency-specific treatment effects are smaller than private treatment effects. We find that the rate of return on subsidies for the agency is 30–50%.
    Keywords: applications; effort; investment; R&D; selection; subsidies; treatment programme; treatment effects; welfare
    JEL: C31 L53 O31 O38
    Date: 2008–03–11
  5. By: Bartel, Ann P. (Columbia University); Lach, Saul (Hebrew University, Jerusalem); Sicherman, Nachum (Columbia University)
    Abstract: This paper presents a dynamic model that analyzes how firms’ expectations with regards to technological change influence the demand for outsourcing. We show that outsourcing becomes more beneficial to the firm when technology is changing rapidly. As the pace of innovations in production technology increases, the firm has less time to amortize the sunk costs associated with purchasing the new technologies. This makes producing in-house with the latest technologies relatively more expensive than outsourcing. The model therefore provides an explanation for the recent increases in outsourcing that have taken place in an environment of increased expectations for technological change. We test the predictions of the model using a panel dataset on Spanish firms for the period 1990 through 2002. The empirical results support the main prediction of the model, namely, that all other things equal, the demand for outsourcing increases with the probability of technological change.
    Keywords: technological change, outsourcing
    JEL: O33 L24 L11 J21
    Date: 2008–02
  6. By: Potters, Lesley (Utrecht School of Economics); Ortega-Argilés, Raquel (European Commission); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    Abstract: The aim of this study is to investigate the relationship between a firm's R&D activities and its productivity using a unique micro data panel dataset and looking at sectoral peculiarities which may emerge; more specifically, we used an unbalanced longitudinal database consisting of 532 top European R&D investors over the six-year period 2000-2005. Our main findings can be summarised along the following lines: knowledge stock has a significant positive impact on a firm's productivity, with an overall elasticity of about 0.125; this general result is largely consistent with previous literature in terms of the sign, the significance and the estimated magnitude of the relevant coefficient. More interestingly, the coefficient increases monotonically when we move from the low-tech to the medium-high and high-tech sectors, ranging from a minimum of 0.05/0.07 to a maximum of 0.16/0.18. This outcome, in contrast with recently-renewed acceptance of low-tech sectors as a preferred target of R&D investment, suggests that firms in high-tech sectors are still far ahead in terms of the impact on productivity of their R&D investments, at least as regards top European R&D investors.
    Keywords: panel data, R&D, productivity, knowledge stock, perpetual inventory method
    JEL: O33
    Date: 2008–02
  7. By: Akçomak, I. Semih (Maastricht University); ter Weel, Bas (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: This paper investigates the interplay between social capital, innovation and per capita income growth in the European Union. We model and identify innovation as an important mechanism that transforms social capital into higher income levels. In an empirical investigation of 102 European regions in the period 1990-2002, we show that higher innovation performance is conducive to per capita income growth and that social capital affects this growth indirectly by fostering innovation. Our estimates suggest that there is no direct role for social capital to foster per capita income growth in our sample of European Union countries.
    Keywords: social capital, innovation, economic growth, European Union
    JEL: O1 O3 O52 Z13
    Date: 2008–02
  8. By: Huasheng Song; Hylke Vandenbussche
    Abstract: This paper develops a model where firms across countries differ in their capacity to innovate. Our main goal is to study firm level innovation under various trade policy shocks. We consider two countries where firms across countries are heterogeneous in their innovation efficiencies. We find that the benefits of trade liberalization and trade protection differ across firms. One of the main results we obtain is that trade protection hurts the productivity of highly efficient firms while it increases the productivity of lowly efficient firms. The predictions of our model are in line with recent empirical evidence that while trade protection fosters the productivity of lowly efficient firms, it reduces productivity of highly efficient firms.
    Keywords: Trade Policy, Innovation, Exports
    JEL: F12 F13 L13
    Date: 2008
  9. By: Andreja Jaklic; Joze P. Damijan; Matija Rojec
    Abstract: Innovation cooperation has been recognised as an important determinant of enterprises’ innovation activity, productivity, and growth, and has recently become the subject of intensive research. We explore the importance of innovation cooperation for the innovation activity of Slovenian enterprises, what kind of innovation cooperation is the most “productive” for innovation activities, and whether the location and foreign ownership of innovation cooperation matters. Probit estimations confirmed external innovation cooperation as one of the most important incentives for innovation activity, after R&D spending. However, a significant influence was only confirmed for domestic and not for international innovation cooperation in general. The efficiency varies also by type of partners; while inter-firm innovation cooperation significantly increases the probability of innovation, this was not found regarding cooperation with universities and R&D institutes. The impact of innovation cooperation differs by distance; the contribution of EU partners to innovation activity was the highest (higher then that of domestic partners), while partners from other locations may even decrease the probability of innovation.
    Keywords: innovation cooperation, innovation activity, foreign ownership, innovation partner, R&D, Slovenia
    JEL: D2 L2 O3
    Date: 2008
  10. By: Bronwyn H. Hall; Alessandro Maffioli
    Abstract: Evaluations of government Technology Development Funds (TDF) in Argentina, Brazil, Chile and Panama are surveyed. All the evaluations were done at the recipient (firm) level using data from innovation surveys, industrial surveys, and administrative records of the granting units, together with quasi-experimental econometric techniques to minimize the effects of any selection bias. TDF effectiveness is found to depend on the financing mechanism used, on the presence of non-financial constraints, on firm-university interaction, and on the characteristics of the target beneficiaries. Four levels of potential impact were considered: R&D input additionality, behavioural additionality, increases in innovative output, and improvements in performance. The evidence suggests that TDF do not crowd out private investment and that they positively affect R&D intensity. In addition, participation in TDF induces a more proactive attitude of beneficiary firms towards innovation activities. However, the analysis does not find much statistically significant impact on patents or new product sales and the evidence on firm performance is mixed, with positive results in terms of firm growth, but little corresponding positive impact on measures of firm productivity, possibly because the horizon over which the evaluation was conducted was too short.
    JEL: O32 O38
    Date: 2008–03
  11. By: Carsten Burhop (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: In this paper, we describe the emergence and evolution of pharmaceutical research at the German company E. Merck during the late 19th and early 20th century. Revolutionary changes in the scientific knowledge base, especially the rise of bacteriological research, and the market entry of dyestuff producers into pharmaceuticals made the re-organisation of pharmaceutical research during the 1890s a necessary corporate strategy. Consequently, Merck restructured its in-house research between 1895 and 1898. Moreover, the firm deepened its co-operation with universities and other outside inventors. Jointly and severally, the firm depended on outside inventors for the generation of new products, whereas in-house scientists improved the productive efficiency. Moreover, we show that a significant number of new products were launched between the late 1890s and 1905. During the following years, however, resource constraints restricted Merck’s innovative capacity.
    Keywords: Business history, pharmaceutical research, case study
    JEL: N83 O32
    Date: 2008–01
  12. By: Cerulli Giovanni (Ceris - Institute for Economic Research on Firms and Growth, Rome, Italy); Potì Bianca (Ceris - Institute for Economic Research on Firms and Growth, Rome, Italy)
    Abstract: R&D spillovers are unanimously considered as one of the main driving forces of technical change, innovation and economic growth. This paper aims at measuring inter-industrial R&D spillovers, as a useful information for policy-makers. We apply an “uncertainty-sensitivity analysis” to the Italian input-output table of intermediate goods split into 31 economic sectors for the year 2000. The value added of using this methodology is the opportunity of distinguishing (separately) between spillover effects induced by productive linkages (the Leontiev forward multipliers) and those activated by R&D investments, capturing also the uncertain and non-linear nature of the relations between spillovers and factors affecting them.
    Keywords: R&D spillovers, Input-output models, Sensitivity analysis, Monte Carlo simulations
    JEL: O32 C67 C15
    Date: 2007–12

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