nep-ino New Economics Papers
on Innovation
Issue of 2014‒05‒17
29 papers chosen by
Steffen Lippert
University of Otago, Dunedin

  1. The Path of R&D Efficiency over Time By Pilar Beneito; María Engracia Rochina-Barrachina; Amparo Sanchis
  2. Forward Markets to Spur Innovation By Linda Cohen; Amihai Glazer
  3. Innovation in the Service Sector and the Role of Patents and Trade Secrets (Japanese) By MORIKAWA Masayuki
  4. Knowledge Spillovers from Renewable energy Technologies, Lessons from patent citations By Joelle Noailly; Victoria Shestalova
  5. Innovation and Productivity in Services:Evidence from Germany, Ireland and the United Kingdom By Peters, Bettina; Riley, Rebecca; Siedschlag, Iulia; Vahter, Priit; McQuinn, John
  6. Green Technology and Optimal Emissions Taxation By Stuart McDonald; Joanna Poyago-Theotoky
  7. Access to universities’ public knowledge: Who’s more regionalist? By Acosta,Manuel; Azagra-Caro,Joaquín M.; Coronado,Daniel
  8. The importance (or not) of patents to UK firms By Professor Bronwyn Hall
  9. Entrepreneurship and Innovation: Evidence from SMEs in Prishtina region, Kosovo By Govori, Arbiana
  10. Collaboration in innovation between foreign subsidiaries and local universities: evidence from Spain By Guimón, José; Salazar, Juan Carlos
  11. Innovation and Public Research Institutes: Cases of AIST, RIKEN, and JAXA By SUZUKI Jun; TSUKADA Naotoshi; GOTO Akira
  13. Estimating the additionality of R&D subsidies using proposal evaluation data to control for research intentions By Henningsen, Morten S.; Hægeland, Torbjørn; Møen, Jarle
  14. R&D Policy and Schumpeterian Growth: Theory and Evidence By A. Minniti; F. Venturini
  15. Localized and Biased Technologies: Atkinson and Stiglitz’s New View, Induced Innovations, and Directed Technological Change By Daron Acemoglu
  16. The generation of common purpose in innovation partnerships: a design perspective By Thomas Gillier; Akın Kazakçı; Gérald Piat
  17. On the Mechanism of International Technology Diffusion for Energy Productivity Growth By Wei Jin; ZhongXiang Zhang
  18. Innovation capabilities for sustainable development in Africa By Lee, Keun; Juma, Calestous; Mathews, John
  19. Examiner amendments to applications to the european patent office: Procedures, knowledge bases and country specificities By Azagra-Caro,Joaquín M.; Tur,Elena M.
  20. How Does Agglomeration Promote the Product Innovation of Chinese Firms? By ZHANG Hong-yong
  22. Innovation and IPRs in the Agricultural Seed Sector. By Derek Eaton
  23. Exporting and productivity: The role of ownership and innovation in the case of Vietnam By Newman, Carol; Rand, John; Tarp, Finn; Thi Tue Anh, Nguyen
  24. Technology and costs in international competitiveness: from countries and sectors to firms By G. Dosi; M. Grazzi; D. Moschella
  25. Financial Health Economics By Ralph S.J. Koijen; Tomas J. Philipson; Harald Uhlig
  26. Foreign STEM Workers and Native Wages and Employment in U.S. Cities By Giovanni Peri; Kevin Shih; Chad Sparber
  27. Trade and Intellectual Property Rights in the Agricultural Seed Sector By Derek Eaton
  28. ICT as a general purpose technology: spillovers, absorptive capacity and productivity performance By Francesco Venturini; Ana Rincon-Aznar; Dr Michela Vecchi
  29. Innovation Subsidies: Misallocation and Technology Upgrade By Javad Sadeghzadeh

  1. By: Pilar Beneito (University of Valencia and ERI-CES); María Engracia Rochina-Barrachina (University of Valencia); Amparo Sanchis (University of Valencia)
    Abstract: In this paper we investigate the pattern of R&D efficiency in terms of the number of product innovations achieved by firms over time. Embodied in the R&D capital stock, we distinguish among physical R&D capital and human R&D capital, and allow the latter to be subject to dynamic returns along firms’ R&D histories. We assume that firms’ innovation outcomes depend on the length of the period of time they have been investing in R&D and explore whether the interruption in this temporal sequence of engagement in R&D affects the rate of achievement of innovation outcomes. For this purpose, we estimate an innovation production function using a panel dataset of Spanish manufacturing firms for the period 1990-2006. Our results suggest that R&D activities exhibit dynamic returns that are increasing but at a decreasing rate, possibly due to exhaustion of innovation opportunities. In addition, our findings indicate that interruptions of R&D activities reduce R&D efficiency, probably due to organizational forgetting. However, spillover effects seem to exist between firms’ R&D spells since firms resuming R&D activities achieve innovation success rates above the innovation rates of their initial years of R&D activities.
    Keywords: R&D, dynamic returns, interruptions, product innovation, count data
    Date: 2014–04
  2. By: Linda Cohen (Department of Economics, University of California-Irvine); Amihai Glazer (Department of Economics, University of California-Irvine)
    Abstract: This paper presents a mechanism inducing costly research and innovation in the absence of intellectual property rights. The mechanism relies on forward contracting between the provider of the innovation and firms or individuals that benefit from the pecuniary effects of the innovation, rather than from its direct use. Applied to innovation as a non-discrete public good, the mechanism resolves time consistency, agency, and free-riding problems, and provides an incentive for ex post efficient pricing.
    Keywords: Innovation; Public goods; Mechanism design; Patents; Forward contracts
    Date: 2014–04
  3. By: MORIKAWA Masayuki
    Abstract: This paper, using Japanese firm-level data, presents findings about innovative activities in the service sector and the role of patents and trade secrets on innovations. According to the analysis, first, service firms have less product innovations than do manufacturing firms, but the productivity of innovative service firms is very high. Second, service firms have a low propensity of holding patents, but the holding of trade secrets is comparable to that of the manufacturing firms. Third, patents and trade secrets have positive relationships with product innovations, and the effects are quantitatively similar in magnitude both in the manufacturing and the service sectors. On the other hand, a positive relationship between trade secrets and process innovations is found only in the manufacturing sector. These results suggest a pivotal role of the patent system and trade secret law on innovation and productivity growth of the service sector.
    Date: 2014–04
  4. By: Joelle Noailly; Victoria Shestalova (The Centre for International Environmental Studies, The Graduate Institute of International and Development Studies, Geneva)
    Abstract: This paper studies the knowledge spillovers generated by renewable energy technologies, unraveling the technological fields that benefit from knowledge developed in storage, solar, wind, marine, hydropower, geothermal, waste and biomass energy technologies. Using citation data of patents in renewable technologies at 17 European countries over the 1978-2006 period, the analysis examines the relative importance of knowledge flows within the same specific technological field (intra-technology spillovers), to other technologies in the field of power-generation (inter-technology spillovers), and to technologies unrelated to power-generation (external-technology spillovers). The results show significant differences across various renewable technologies. While wind technologies mainly find applications within their own technological field, a large share of innovations in solar energy and storage technologies find applications outside the field of power generation, suggesting that solar technologies are more general and, therefore, may have a higher value for society. Finally, the knowledge from waste and biomass technologies is mainly exploited by fossil-fuel power-generating technologies. The paper discusses the implications of these results for the design of R&D policies for renewable energy innovation.
    Keywords: Renewable energy, innovation, patents, knowledge spillovers, technology policy.
    Date: 2013–12–01
  5. By: Peters, Bettina; Riley, Rebecca; Siedschlag, Iulia; Vahter, Priit; McQuinn, John
    Abstract: We examine the links between innovation investment, innovation output and productivity in service enterprises. For this purpose, we use micro data from the Community Innovation Surveys 2006-2008 in Germany, Ireland, and the United Kingdom and estimate an augmented structural model which links innovation inputs, innovation outputs and productivity. Our estimates suggest that innovation in service enterprises was linked to higher productivity. In all three countries analysed, amongst the innovation types that we consider, the strongest link between innovation and productivity was found for marketing innovations. Successful innovation in service enterprises appears to be associated with enterprise size, innovation expenditure intensity (in Germany and the United Kingdom), foreign ownership (Ireland), exporting and engagement in co-operation for innovation activities. The determinants of innovation in service enterprises appear remarkably similar to the determinants of innovation in manufacturing enterprises.
    Keywords: Internationalisation of services; innovation; productivity
    Date: 2014–04
  6. By: Stuart McDonald (School of Economics, The Universty of Queensland, Australia); Joanna Poyago-Theotoky (School of Economics, La Trobe University, Australia; Rimini Centre for Economic Analysis (RCEA), Italy)
    Abstract: We examine the impact of an optimal emissions tax on research and development of emission reducing green technology (E-R&D) in the presence of R&D spillovers. We show that the size and eectiveness of the optimal emissions tax depends on the type of the R&D spillover: input or output spillover. In the case of R&D input spillovers (where only knowledge spillovers are accounted for), the optimal emissions tax required to stimulate R&D is always higher than when there is an R&D output spillover (where abatement and knowledge spillovers exist simultaneously). We also nd that optimal emissions taxation and cooperative R&D complement each other when R&D spillovers are small, leading to lower emissions.
    Keywords: Environmental R&D, Green Technology, R&D Spillover, Emissions Tax
    JEL: H23 L11 Q55
    Date: 2014–03
  7. By: Acosta,Manuel; Azagra-Caro,Joaquín M.; Coronado,Daniel
    Abstract: This paper tracks university-to-firm patent citations rather than the more usual patent-to-patent or paper-to-patent citations. It explains regional and non-regional citations as a function of firms’ absorptive capacity and universities’ production capacity in the region rather than explaining citations as a function of distance between citing and cited regions. Using a dataset of European Union regions for the years 1997-2007, we find that fostering university R&D capacity increases the attractiveness of the local university’s knowledge base to firms in the region, but also reduces wider searches for university knowledge. Increasing the absorptive capacity of local business encourages firms to access university knowledge from outside the region.
    Keywords: Knowledge flows, patent citations, spillovers, regions
    JEL: O31 O33 R12
    Date: 2014–05–15
  8. By: Professor Bronwyn Hall
    Abstract: � Abstract A surprisingly small number of innovative firms use the patent system. In the UK, the share of firms patenting among those reporting that they have innovated is about 4%. Survey data from the same firms support the idea that they do not consider patents or other forms of registered IP as important as informal IP for protecting inventions. We show that there are a number of explanations for these findings: most firms are SMEs, many innovations are new to the firm, but not to the market, and many sectors are not patent active. We find evidence pointing to a positive association between patenting and innovative performance measured as turnover due to innovation, but not between patenting and subsequent employment growth. The analysis relies on a new integrated dataset for the UK that combines a range of data sources into a panel at the enterprise level.
    Date: 2013–05
  9. By: Govori, Arbiana
    Abstract: Innovation has become a central theme and challenge in the literature of entrepreneurship, SMEs management, and strategic knowledge management and in the literature of organizational learning. Innovation needs a business environment that is conducive to long-term investments in new business activities. This way, the development of innovation policy in SMEs forms an important environment that needs to be supported by government new economic policies and strategies and especially by new approach to entrepreneurship and innovation. In this paper we address the innovation strategies of SMEs engaged in the production of products and services. We base our conclusions on an analysis of primary data collected in a survey of 80 small and medium sized firms in the region of Prishtina, held between March 2014 and May 2014. The results show that innovation in business tends to be driven by external competitive pressures and customer demands. Many SMEs face financial barriers to engaging and undertaking innovation, while a few of them have been seriously engaged in innovation despite the obstacles.
    Keywords: Entrepreneurship, Innovation, SMEs, Competition, Strategy, Funding
    JEL: M0 M1 M2 O3 O30 O31 O32 O33 O34 O38
    Date: 2014–05–07
  10. By: Guimón, José (Department of Economic Structure and Development Economics, Universidad Autónoma de Madrid); Salazar, Juan Carlos (Department of Economic Structure and Development Economics, Universidad Autónoma de Madrid)
    Abstract: Collaboration between foreign subsidiaries and universities is relevant for multinational companies that aim at absorbing knowledge from abroad, as well as for policymakers attempting to maximize the spillovers associated with FDI. In this paper, we explore how multinational companies collaborate with universities in the foreign countries where they locate and provide new empirical evidence for Spain as a host country. Using a probit model with panel data from the Community Innovation Survey, we failed to find significant differences between the propensity of foreign subsidiaries and comparable Spanish firms to collaborate with universities. Subsequently, building on a new survey and five case studies, we were able to relate the scale and scope of such collaborations with the dynamic mandates of foreign subsidiaries in global innovation networks and to explore further the variety of motivations that drive collaboration.
    Keywords: collaboration in innovation; FDI; foreign subsidiaries; global innovation networks; multinational companies; open innovation; spillovers; university-industry collaboration
    JEL: F23 O32
    Date: 2014–05–07
  11. By: SUZUKI Jun; TSUKADA Naotoshi; GOTO Akira
    Abstract: In this paper, we focus on three large public research institutes (PRIs) in Japan—National Institute of Advanced Industrial Science and Technology (AIST), the Institute of Physical and Chemical Research (RIKEN), and the Japan Aerospace Exploration Agency (JAXA)—and investigate their roles in helping Japan's industry by examining their patents. First, the background and history of the development of these institutions are described briefly. We employ four measures drawn from patent data (inventor forward citation, examiner forward citation, family size, and generality index) to describe the inventive activities of PRIs. Universities' and firms' patents are used as benchmarks. The impact of the PRIs' research collaboration with the private sector is analyzed as well. We found that each of the three PRIs has been playing a unique role in Japan's innovation system. In addition, we found out that universities' patenting activity has been facing difficulties particularly in recent years. Finally, we discuss the factors that might affect the research outcome.
    Date: 2014–05
  12. By: Milena Klasing Chen (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Sophie Hooge (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Blanche Segrestin (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Armand Hatchuel (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris)
    Abstract: The public transport sector faces several challenges today, due to increasing demand, aggravated by limited funding. Although the dual need for original solutions and cost reductions has been identified, a lack of innovation has been pointed out in literature. Through a systematic review of scholars' literature and its comparison to a low cost approach by a public transport operator, this article aims to provide relevant data on what really counts to drive public transport innovations. We also show that a low cost perspective can bring benefits to the sector as a powerful innovation driver.
    Keywords: low cost; public transport; innovation
    Date: 2014–05
  13. By: Henningsen, Morten S. (Finance Norway); Hægeland, Torbjørn (Statistics Norway); Møen, Jarle (Dept. of Business and Management Science, Norwegian School of Economics)
    Abstract: Empirical examination of whether R&D subsidies crowd out private investments has been hampered by selection problems. A particular worry is that project quality and research intentions may be correlated with the likelihood of receiving subsidies. Using proposal evaluation data to control for research intentions, we do not find strong evidence suggesting that this type of selection creates a severe bias. Proposal evaluation grades strongly predict R&D investments and reduce selection bias in cross-sectional regressions, but there is limited variation in grades within firms over time. Hence, in our sample, unobserved project quality is largely absorbed by firm fixed effects. Our best estimate of the shortrun additionality of R&D subsidies is 1.15, i.e., a oneunit increase in subsidy increases total R&D expenditure in the recipient firm by somewhat more than a unit. We demonstrate, however, that there is measurement error in the subsidy variable. Additionality is therefore likely to be underestimated.
    Keywords: Technology policy; R&D subsidies; input additionality; selection; proxy variables
    JEL: H25 H32 L53 O32 O38
    Date: 2014–04–30
  14. By: A. Minniti; F. Venturini
    Abstract: In recent years, a large body of empirical research has investigated whether the predictions of secondgeneration growth models are consistent with actual data. This strand of literature has focused on the longrun properties of these models by using productivity and innovation data but has not directly assessed the effectiveness of R&D policy in promoting innovation and economic growth. In the present paper, we fill this gap in the literature by providing a unified growth setting that is empirically tested with US manufacturing industry data. Our analysis shows that R&D policy has a persistent, if not permanent, impact on the rate of economic growth and that the economy rapidly adjusts to policy changes. The impact of R&D tax credits on economic growth appears to be long lasting and statistically robust. Conversely, more generous R&D subsidies are associated with an increase in the rate of economic growth in the short run only, indicating that, at best, this policy instrument has only temporary effects. Overall, the evidence regarding the effectiveness of R&D policy provides more support for fully endogenous growth theory than for semi-endogenous growth theory.
    JEL: O3 O38 O4
    Date: 2014–05
  15. By: Daron Acemoglu
    Abstract: This paper revisits the important ideas proposed by Atkinson and Stiglitz’s seminal 1969 paper on technological change. After linking these ideas to the induced innovation literature of the 1960s and the more recent directed technological change literature, it explains how these three complementary but different approaches are useful in the study of a range of current research areas though they may also yield different answers to important questions. It concludes by highlighting several important areas where these ideas can be fruitfully applied in future work.
    JEL: E25 J31 O30 O31 O33
    Date: 2014–04
  16. By: Thomas Gillier (ERPI - Equipe de Recherche sur les Processus Innovatifs - Institut National Polytechnique de Lorraine (INPL) - Ecole Nationale Supérieure en Génie des Systèmes Industriels); Akın Kazakçı (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Gérald Piat (EDF R&D - EDF)
    Abstract: Purpose - Scholars and practitioners have both emphasized the importance of collaboration in innovation context. They have also largely acknowledged that the definition of common purpose is a major driver of successful collaboration, but surprisingly, researchers have put little effort into investigating the process whereby the partners define the common purpose. This research aims to explore the Generation of Common Purpose (GCP) in innovation partnerships. Design/methodology/approach - An action-research approach combined with modeling has been followed. Our research is based on an in-depth qualitative case study of a cross-industry exploratory partnership through which four partners, from very different arenas, aim to collectively define innovation projects based on micro-nanotechnologies. Based on a design reasoning framework, the mechanisms of GCP mechanism are depicted. Findings - Regarding GCP, two main interdependent facets are identified: (1) the
    Keywords: C-K design theory; Cross-industry partnership; Design; Generation of common purpose, Innovation; Innovation partnerships; Partnership; Shared objectives; common goals
    Date: 2014–04–03
  17. By: Wei Jin (College of Public Policy and Administration, Zhejiang University); ZhongXiang Zhang (Department of Public Economics School of Economics, Fudan University)
    Abstract: International diffusion of advanced environment and energy-related technologies has received much attention in recent environmental economics studies. As a much needed complement to the “black box” complex numerical modelling, this paper contributes to developing a simple, intuitive analytical framework to unveil the mechanism of international technology diffusion for energy productivity growth. We draw on the Solow growth model to build a benchmark exogenous framework to explore the basic mechanism of energy technology diffusion. This exogenous model is then extended to a Romer-type endogenous one where the R&D-induced expansion of energy technology varieties is used to represent the deep structure of technology diffusion. We show that the growth rates of energy productivity are the same across countries in the balanced growth path equilibrium, but the cross-country differences in the efficiency of foreign technology absorption and indigenous innovation lead to cross-country divergence in the levels of energy productivity. The economy that has a stronger capacity of assimilating foreign technology diffusion and undertaking indigenous innovation tends to gain a higher level of energy productivity.
    Keywords: Technological Innovation, Energy Technology Diffusion, Solow Growth Model, Endogenous Growth Model
    JEL: Q55 Q58 Q43 Q48 O13 O31 O33 O44 F18
    Date: 2014–04
  18. By: Lee, Keun; Juma, Calestous; Mathews, John
    Abstract: A sustainable pathway for Africa in the twenty-first century is laid out in the setting of the development of innovation capabilities and the capture of latecomer advantages. Africa has missed out on these possibilities in the twentieth century while seei
    Keywords: Africa, sustainable development, innovation capabilities, green growth strategy, latecomer advantages
    Date: 2014
  19. By: Azagra-Caro,Joaquín M.; Tur,Elena M.
    Abstract: The geography of knowledge flows has shown that the probability of a patent applicant rather than the examiner originating a citation depends on differences between citing and cited countries. How the characteristics of the citing country affect that probability has received less attention. Using European Patent Office (EPO) data of over 3,500,000 citations (1997-2007), we find that the probability of applicant citation is higher as national economic and scientific strengths increase, if applicants and examiners come from the same country and if the country belongs to EPO. This ‘country club’ effect is comparable to that found for US Patent and Trademark Office.
    Keywords: citations, Knowledge flows, knowledge spillovers, national biases
    JEL: O30 O33 O34
    Date: 2014–05–15
  20. By: ZHANG Hong-yong
    Abstract: This study empirically analyzes the effect of agglomeration economies on firm-level product innovation (new products), using Chinese firm-level data from 1998 to 2007. In terms of new product introduction and new product output, Chinese firms benefit from urbanization economies (as measured by the number of workers in other industries in the same city and by the diversity of industries in the same city). Conversely, there were no positive effects of localization economies (as measured by the number of other workers working for neighboring firms in the same industry and in the same city). These results suggest that, in China, urbanization economies play an important role in fostering product innovation by urban size and diversity.
    Date: 2014–05
  21. By: Antonio Cubel (Universidad de Valencia (Spain)); Vicente Esteve (Universidad de Valencia, Universidad de Alcalá and Universidad de La Laguna (Spain)); M. Teresa Sanchis (Universidad de Valencia and Instituto Figuerola (Spain)); Juan A. Sanchis-Llopis (Universidad de Valencia and ERI-CES (Spain))
    Abstract: This paper analyses the relationship between total factor productivity (TFP) and innovation-related variables during the second half of the 20th century. We perform this analysis for several European countries (France, Germany, the United Kingdom, and Spain) and the U.S., extending Coe and Helpman’s (1995) empirical specification to include human capital. We use a new dataset of patents data for the past 150 years to calculate the stock of knowledge using the perpetual inventory method. Our time series empirical analysis confirms the heterogeneous relationship between innovation variables (domestic stock of knowledge, imports of knowledge, and human capital) and productivity. Our results reveal the extent to which observed differences in technology adoption patterns and the levels of endowment of such resources can explain differences in TFP dynamics across countries. The estimated coefficients confirm the considerable gap that still exists between the European countries and the U.S. in innovation-related variables. Furthermore, we obtain a finding that may have important implications for innovation policies: the higher the level of investment in human capital, the higher the level of investment in domestic innovation, and the higher the response of TFP to a 1% increase in any of the aforementioned variables.
    Date: 2014–05
  22. By: Derek Eaton (The Centre for International Environmental Studies, The Graduate Institute of International and Development Studies, Geneva)
    Abstract: The trade-offs involved in the extent of appropriability conferred by intellectual property right (IPR) protection to innovators remains an area with many unanswered questions. This paper considers the case of IPRs for product innovations where the product is an intermediate good used to produce a final consumer good. Producers of the final good purchase an innovation from a monopolist, represented in a vertical product differentiation framework. The innovation is subject to an IPR for which the extent of appropriability is determined by a policy maker. The analysis reveals some novel aspects of the traditional innovation versus diffusion tradeoff. More productive producers of the final good benefit from stricter appropriability and the resulting higher level of innovation. Less productive producers, and also consumers, are better off with a moderate level of appropriability. The paper is motivated by the agricultural sector in which an innovator uses genetic resources to produce new crop varieties to be marketed to a farm sector that displays heterogeneity in its ability to profit from the innovation. The scope of the exclusive rights granted over plant varieties has increased in various countries over the past four decades, partly as a result of the TRIPS Agreement, and has been the subject of much policy debate at international, as well as national, levels, partly given potential implications for food security. For these reasons, the model is extended to a two country setting consisting of North and South, which highlights both the interest of the South in maintaining lower levels of appropriability, but also the pressure from farmers in the North for the South to raise its standards. This would not necessarily benefit global consumers.
    Keywords: innovation, intellectual property, agriculture, vertical product differentiation, input markets, trade.
    JEL: Q16 L13 F12
    Date: 2013–05–01
  23. By: Newman, Carol; Rand, John; Tarp, Finn; Thi Tue Anh, Nguyen
    Abstract: In this paper, we investigate the relationship between exporting and productivity in the case of Vietnam using an extensive firm level panel dataset for the period 2005-11. We separate out productivity effects of exporting due to self-selection allowing u
    Keywords: learning by exporting, self-selection, productivity, Vietnam, firm ownership, innovation
    Date: 2014
  24. By: G. Dosi; M. Grazzi; D. Moschella
    Abstract: This paper examines the determinants of international competitiveness at the level of sectors and firms. First, we address the relation between cost-related and technological competition in a sample of fifteen OECD countries. Results suggest that the countries' sectoral market shares are indeed mainly shaped by technological factors (proxied by investment intensity and patents) while cost advantages/disadvantages do not seem to play any significant role. Next, we attempt to identify the underlying dynamics at the firm level. We do that for a single country, Italy, using a large panel of Italian firms, over nearly two decades. Results show that also at micro level in most sectors investments and patents correlate positively both with the probability of being an exporter and with the capacity to acquire and to increase export market shares. The evidence on costs is more mixed. A simple measure like total labour compensation is positively correlated with the probability of being an exporter, while unit labour costs show a negative correlation only in some manufacturing sectors.
    JEL: D22 F10 F14 F19 L25 O32
    Date: 2014–05
  25. By: Ralph S.J. Koijen; Tomas J. Philipson; Harald Uhlig
    Abstract: We provide a theoretical and empirical analysis of the link between financial and real health care markets. We document a “medical innovation premium” of 4-6% annually for equity of medical firms and analyze the implications it has for the growth of the health care sector. We interpret the premium as compensating investors for government-induced proft risk. We provide supportive evidence for this hypothesis through company filings and abnormal return patterns surrounding threats of government intervention. We quantify the implications of the premium for growth in real health care spending by calibrating our model to match historical trends. Policies that had removed government risk would have lead to more than a doubling of medical R&D and would have increased the current share of health care spending by 4% of GDP, with a predicted long run share of 38%.
    JEL: G0 I0
    Date: 2014–04
  26. By: Giovanni Peri; Kevin Shih; Chad Sparber
    Abstract: Scientists, Technology professionals, Engineers, and Mathematicians (STEM workers) are fundamental inputs in scientific innovation and technological adoption, the main drivers of productivity growth in the U.S. In this paper we identify the effect of STEM worker growth on the wages and employment of college and non-college educated native workers in 219 U.S. cities from 1990 to 2010. In order to identify a supply-driven and heterogeneous increase in STEM workers across U.S. cities, we use the distribution of foreign-born STEM workers in 1980 and exploit the introduction and variation of the H-1B visa program granting entry to foreign-born college educated (mainly STEM) workers. We find that H-1B-driven increases in STEM workers in a city were associated with significant increases in wages paid to college educated natives. Wage increases for non-college educated natives are smaller but still significant. We do not find significant effects on employment. We also find that STEM workers increased housing rents for college graduates, which eroded part of their wage gains. Together, these results imply a significant effect of foreign STEM on total factor productivity growth in the average US city between 1990 and 2010.
    JEL: F22 J61 O33 R10
    Date: 2014–05
  27. By: Derek Eaton (The Centre for International Environmental Studies, The Graduate Institute of International and Development Studies, Geneva)
    Abstract: The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) has continued to be fiercely debated between North and South, par- ticularly with respect to its provisions for the agricultural sector. Article 27.3(b) of the TRIPS Agreement requires WTO member countries to offer some form of intellectual property protection for new plant varieties, either in the form of patents (common in the U.S.) or plant breeder's rights (PBR). This paper analyzes the effects of the introduction of PBRs in almost 80 importing countries on the value of exports of agricultural seeds and planting material from 10 exporting EU countries, including all principal traditional exporters of seeds, as well as the US. A dynamic penalized fixed effects quan- tile regression model, based on a general specication for the gravity model for international trade, is estimated using panel data covering 19 years (1989-2007) of export flows in order to assess the effect of International Convention on the Protection of New Varieties of Plants (UPOV) membership on seed imports. Basing inference on the panel bootstrap, we find no signicant effect from UPOV membership on seed imports.
    Keywords: agriculture, inputs, trade, intellectual property rights
    JEL: F13 O34 Q17
    Date: 2013–07–25
  28. By: Francesco Venturini; Ana Rincon-Aznar; Dr Michela Vecchi
    Abstract: We analyse the impact of ICT spillovers on productivity using company data for the U.S. We account for inter- and intra-industry spillovers and assess the role played by firm’s absorptive capacity. Our results show that intra-industry ICT spillovers have a contemporaneous negative effect that turns positive 5 years after the initial investment. For inter-industry spillovers both contemporaneous and lagged effects are positive and significant. In the short run, companies’ innovative effort is complementary to ICT spillovers, but such complementarity disappears with the more pervasive adoption and diffusion of the technology.
    Date: 2013–11
  29. By: Javad Sadeghzadeh
    Abstract: This paper examines TFP effects of size-dependent subsidies that generate misallocation but also incentivize technology adoption at the establishment-level in the context of a model with heterogeneous establishments and endogenous technology adoption. I focus on the subsidy program initiated in 2005 in Indian Iron and Steel industry which was directed to larger plants. Using plant-level data, I found that there was an acceleration of TFP growth but only among plants that used more productive technologies. Instead, I observed a larger reallocation across plants with less productive technologies after the policy change. I used a variant of the Lucas (1978) span-of-control framework with heterogeneous plants and endogenous technology choice at the establishment-level to explore if the subsidy policy contributed to the observed productivity growth. My findings indicate that size-dependent subsidies can increase aggregate TFP if the policy encourages technology adoption at the establishment-level. My calibrated model predicts that the subsidy program in Indiaâs Iron and Steel sector accounted for 1/5 of the observed aggregate TFP growth through three direct channels: First, the subsidy introduces idiosyncracy in the prices faced by individual plants causing resource misallocation (misallocation effect: -2%), Second, the subsidized plants with standard technology switch to the more efficient technology (technology upgrade effect: 49%), and finally, plants make new decisions on occupation and technology use (selection effect: 53%).
    JEL: O11 O14
    Date: 2014–05–05

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