nep-ino New Economics Papers
on Innovation
Issue of 2008‒09‒13
thirteen papers chosen by
Steffen Lippert
Massey University Department of Commerce

  1. The Knowledge Production of ‘R’ and ‘D’ By Czarnitzki, Dirk; Kraft, Kornelius; Thorwarth, Susanne
  2. The Impact of the Distribution of R&D Expenses on Firms’ Motivations to Patent By Barros, Henrique M.
  3. Trade Unions go global! By Guido Cozzi; Francesco Schettino
  4. Ownership, R&D and productivity change : assessing the catch-up in China’s high-tech industries By Yu, J.; Nijkamp, P.
  5. R&D Investment and Financing Constraints of Small and Medium-Sized Firm By Czarnitzki, Dirk; Binz, Hanna L.
  6. Would global patent protection be too weak without international coordination? By Edwin L.-C. Lai
  7. Licensing Uncertain Patents: Per-Unit Royalty vs Up-Front Fee By David Encaoua; Yassine Lefouili
  8. How Much Does Immigration Boost Innovation? By Jennifer Hunt; Marjolaine Gauthier-Loiselle
  9. Defensive Publishing: An Empirical Study By Joachim Henkel; Stefanie Pangerl
  10. A Politico-Economic Analysis of the European Union’s R&D Policy By Chu, Angus C.
  11. Technology adoption and the investment climate : firm-level evidence for Eastern Europe and Central Asia By Correa, Paulo G.; Fernandes, Ana M.; Uregian, Chris J.
  12. Trade and Innovation Project: A Synthesis Paper By Osamu Onodera
  13. Innovation and growth through local and global interaction By R. Andergassen; F. Nardini; M. Ricottilli

  1. By: Czarnitzki, Dirk; Kraft, Kornelius; Thorwarth, Susanne
    Abstract: Many studies investigate the relationship between R&D expenditures as an input and patents as an intermediate product or output of a knowledge production function. We suggest that the productivity of research in patent production functions has been underestimated in the literature, as scholars typically use information about R&D, i.e. the sum of research expenditure and development expenditure, due to data availability. However, in most industries only (applied) research will lead to patentable knowledge, and development happens after the initial research phase that may have led to a patent. Instead of using data on R&D, we separate the knowledge creating process into `R’ and `D’. This data stems from R&D surveys of Belgian firms. It turns out that only the `R’ part of R&D expenditure has a significant effect on patents and that development expenditure are insignificant. Thus previous literature relying on R&D expenditure suffers from a measurement error, such that the coefficient of R&D is biased towards zero, as R&D includes a large fraction of irrelevant expenditure, i.e. development expenditure, with respect to patenting.
    Keywords: Patents, Research, Development, Knowledge Production Function
    JEL: O31 O32
    Date: 2008
  2. By: Barros, Henrique M.
    Date: 2008–10
  3. By: Guido Cozzi; Francesco Schettino
    Abstract: Patent or article citations reflect the consequences of a published idea on the discovery of new ideas. We draw a simple theoretical model predicting that the shape of the future citations of an idea can reveal the complexity of its innovative research spillover. We apply this method to the patent forward citations in the US industries.
    Keywords: Patent Forward Citations, Technological Complexity, Skewness.
    JEL: O31 O33
    Date: 2008–08
  4. By: Yu, J. (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Nijkamp, P.
    Abstract: This study contributes to the debate on whether China’s domestic enterprises (DEs) have experienced a significant catch-up compared with foreign-funded enterprises (FFEs) in high-tech industries. Our paper tries to estimate a new set of capital stock and R&D capital stock by ownership for China’s high-tech industries. Then, using this newly constructed data set, it assesses the comparative productivity performance of state-owned enterprises (SOEs) (as the most important proxy for DEs) in high-tech industries from 1996 to 2006. The results show that SOEs as a whole have experienced an inverted U-shape trajectory of catch-up for 1996-2006, while those SOEs which originate from competitive industries tend to show a better performance. With respect to the technology catch-up, SOEs in particular are still lagging behind because of their failure to develop indigenous technology capabilities.
    Keywords: Productivity; R&D; Catch-up; Indigenous technology capability
    JEL: E22 L63 O47 P27
    Date: 2008
  5. By: Czarnitzki, Dirk; Binz, Hanna L.
    Abstract: This study tests for financial constraints on R&D investment and how they differ from capital investment. To identify constraints in the access to external capital, we employ a credit rating index. Our models show that internal constraints, measured by mark-ups, are more decisive for R&D than for capital investment. For external constraints, we find a monotonic relationship between the level of constriction and firm size for both types of investment. Thus, external constraints turn out to be more binding with decreasing firm size. On the contrary, we do not find such monotonic relationships for internal constraints. Differentiation by firms’ age does not support lower constraints for older firms.
    Keywords: R&D Investment, Capital Investment, Financial Constraints, Panel Data, Censored Regression Models
    JEL: O31 O32
    Date: 2008
  6. By: Edwin L.-C. Lai (Research Department, Federal Reserve Bank of Dallas)
    Abstract: I extend the Grossman and Lai (2004) model to answer the question, “Would global patent protection be too weak without international coordination?†by introducing firmbiased government preferences and trade barriers in the model. I make use of the estimates of the firm-bias parameter from the political economy literature to proxy for the degree of governments’ firm-bias. Then I calculate the range of trade barriers that is sufficient to give rise to under-protection of patents in the global system without international policy coordination in IPR protection. I make the judgement that the true trade barrier between countries very likely falls within this range of under-protection. Therefore, I conclude that there was probably under-protection of patents without international policy coordination in IPR protection. It means that the free-rider problem with a large number of independent players overrides the effects of firm-bias and trade barriers, giving rise to too low a rate of innovation in the world. Allowing for the possibility that countries discriminate against foreign firms in Nash equilibrium does not change this conclusion. The problem can possibly be corrected by international coordination in intellectual property rights (IPR) protection.
    Keywords: Intellectual property rights, TRIPS, innovation
    JEL: F1 O31 O34
    Date: 2005–11
  7. By: David Encaoua (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Yassine Lefouili (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: In this paper we examine the implications of uncertainty over patent validity on patentholders' licensing strategies. Two licensing mechanisms are examined: per-unit royalty and up-front fee.We provide conditions under which uncertain patents are licensed in order to avoid patent litigation. It is shown that while it is possible for the patentholder to reap som e "extra profit" by selling an uncertain patent under the pure per-unit royalty regime, the opportunity to do so does not exist under a pure up-front fee regime. We also establish that the relatively high bargaining power the licensor has even when its patent is weak can be reduced if the patentholder cannot refuse to license an unsucessful challenger or if collective challenges are allowed for. Furthermore we show that the patentee may prefer to license through the per-unit royalty mechanism rather than the fixed fee mechanism, especially if its patent is weak. This finding contradicts the traditional theoretical result that fixed fee licensing dominates royalty rate licensing from the patentholder's perspective.
    Date: 2008–07
  8. By: Jennifer Hunt; Marjolaine Gauthier-Loiselle
    Abstract: We measure the extent to which skilled immigrants increase innovation in the United States by exploring individual patenting behavior as well as state-level determinants of patenting. The 2003 National Survey of College Graduates shows that immigrants patent at double the native rate, and that this is entirely accounted for by their disproportionately holding degrees in science and engineering. These data imply that a one percentage point rise in the share of immigrant college graduates in the population increases patents per capita by 6%. This could be an overestimate of immigration's benefit if immigrant inventors crowd out native inventors, or an underestimate if immigrants have positive spill-overs on inventors. Using a 1950-2000 state panel, we show that natives are not crowded out by immigrants, and that immigrants do have positive spill-overs, resulting in an increase in patents per capita of about 15% in response to a one percentage point increase in immigrant college graduates. We isolate the causal effect by instrumenting the change in the share of skilled immigrants in a state with the initial share of immigrant high school dropouts from Europe, China and India. In both data sets, the positive impacts of immigrant post-college graduates and scientists and engineers are larger than for immigrant college graduates.
    JEL: J61 O31
    Date: 2008–09
  9. By: Joachim Henkel; Stefanie Pangerl
    Abstract: Defensive Publishing denotes publication of an invention with the purpose of creating prior art, and thus preventing patents being granted on this invention. Although widely employed, it has hardly been investigated empirically. Our study is based on 56 in-depth interviews, among others with most industrial firms in the German DAX 30 stock index. We find that 70 percent of the companies in our sample use defensive publications, for up to one third of their inventions. Interestingly, we find that the patent system itself is frequently used for defensive publishing. Our findings also challenge contributions connecting defensive publishing to patent races.
    Keywords: Defensive publication; Intellectual property; Freedom to operate; Patens
    JEL: O32 O34 M21
    Date: 2008
  10. By: Chu, Angus C.
    Abstract: This paper provides a politico-economic analysis of the European Union’s (EU) R&D policy. It develops an open-economy R&D-growth model characterized by two parameters that capture respectively the degree of technology spillover and the effectiveness of lobbying. In a non-cooperative equilibrium, each country chooses the level of R&D subsidy independently and fails to internalize technology spillover. Consequently, R&D subsidy is underprovided. In an economic union, the central government internalizes technology spillover but is vulnerable to lobbying by politicians from each country, who attempt to free-ride on the central government budget. Consequently, R&D subsidy is overprovided; however, this overprovision becomes less severe as the degree of technology spillover increases. Therefore, technology spillover has a surprisingly positive effect on welfare in an economic union. As for the effect on relative welfare, there is a cutoff value for the degree of technology spillover such that if and only if spillover is above this threshold, then an economic union dominates independent countries in welfare. Furthermore, this threshold is an increasing function in the effectiveness of lobbying. This paper also considers the possibility that the EU faces a binding budget ceiling. In this case, lobbying on R&D subsidy exerts a distortionary effect on revenue allocation, and hence a welfare loss continues to exist.
    Keywords: endogenous growth; policy coordination; lobbying; R&D subsidy
    JEL: O38 O41 D72
    Date: 2008–07
  11. By: Correa, Paulo G.; Fernandes, Ana M.; Uregian, Chris J.
    Abstract: The international diffusion of technology presents an opportunity for developing economies distant from the world technological frontier to reduce their income gap relative to advanced economies. It is therefore crucial to understand why, when faced with similar technological alternatives different firms in different countries choose to adopt different vintages of capital. This paper examines technology adoption across firms in Eastern Europe and Central Asia. The findings show that access to complementary inputs - managerial capacity, skilled labor, finance, and good infrastructure - and to international knowledge - through foreign direct investment or exports - is an important correlate of technology adoption. The link between market incentives and technology adoption is more nuanced. Although consumer pressure results in technology adoption, competitor pressure does not, suggesting that only firms with rents are able to adopt technology given substantial resource constraints. Privatized firms exhibit better technology adoption outcomes but only when a clear private owner with a profit incentive is present. Better governance is associated with technology adoption only in the countries that joined the European Union in 2004. Future increases in technology adoption by firms in the region will require complementary reforms of the investment climate.
    Keywords: E-Business,Technology Industry,ICT Policy and Strategies,Microfinance,
    Date: 2008–09–01
  12. By: Osamu Onodera
    Abstract: This paper, together with five case studies, is a part of a larger project looking at the various effects that trade and investment can have on innovation. The study looks at the role of trade and investment in technology transfer, the competition effects of trade and investment on innovation as well as economies of scale. The study also looks at Global Value Chains as an organisational innovation in its own right, which is supported by a freer trade and investment environment. The study also forms a contribution to the OECD Innovation Strategy launched at the OECD Ministerial Council Meeting in 2007.
    Keywords: competition, innovation, intellectual property rights, Doha Development Agenda, licensing, technology transfer, MNEs, multinational enterprises, scale economies, global value chains, absorption capacity, TRIPs
    Date: 2008–08–07
  13. By: R. Andergassen; F. Nardini; M. Ricottilli
    Date: 2008–06

This nep-ino issue is ©2008 by Steffen Lippert. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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