nep-ino New Economics Papers
on Innovation
Issue of 2018‒02‒19
twenty-one papers chosen by
Uwe Cantner
University of Jena

  1. AI as the next GPT: a Political-Economy Perspective By Manuel Trajtenberg
  2. How hybrid change agents moderate innovation complementarities By Christian Rupietta; Johannes Meuer; Uschi Backes-Gellner
  3. Heterogeneous R&D spillovers and sustainable growth: Limits to efficient regulation By Anton Bondarev
  4. Estimating the benefits of R&D subsidies for Germany By Koehler, Mila
  5. Schumpeterian Creative Class Competition, Innovation Policy, and Regional Economic Growth By Batabyal, Amitrajeet; Yoo, Seung Jick
  6. Innovative events By Max Nathan; Anna Rosso
  8. Sustainable innovations: Theories, conflicts and strategies By Kropp, Cordula
  9. What induces firms to license foreign technologies? International survey evidence By Dohse, Dirk; Goel, Rajeev K.; Nelson, Michael A.
  10. Countries’ attractiveness: An analysis of EU firms’ decisions to (de)localize R&D activities By Michele Cincera; Anabela Marques Santos
  11. Global warming and technical change: Multiple steady-states and policy options By Anton Bondarev; Alfred Greiner
  12. Public procurement as policy instrument for innovation By Czarnitzki, Dirk; Hünermund, Paul; Moshgbar, Nima
  13. Patent-based Estimation Procedure of Private R&D: The Case of Climate Change and Mitigation Technologies in Europe By Francesco Pasimeni; Alessandro Fiorini; Aliki Georgakaki
  14. Higher Education for Smart Specialisation Towards strategic partnerships for innovation By John Edwards; Elisabetta Marinelli; Eskarne Arregui Pabollet; Louise Kempton
  15. From R&D to market: using trademarks to capture the market capability of top R&D investors By Castaldi Carolina; Mafini Dosso
  16. Changing demand for general skills, technological uncertainty, and economic growth By Masashi Tanaka
  17. Ideas production and international knowledge spillovers: digging deeper into emerging countries By Kul B. Luintel; Mosahid Khan
  18. Robust policy schemes for R&D games with asymmetric information By Anton Bondarev
  19. Testing a model of UK growth - a causal role for R&D subsidies By Minford, Lucy; Meenagh, David
  20. A portrait of innovative start-ups across countries By Stefano Breschi; Julie Lassébie; Carlo Menon
  21. Final report on the collection of patents and business indicators by economic sector: Societal Grand Challenges and Key Enabling Technologies By Rainer Frietsch; Andreas Kladroba; Paresa Markianidou; Peter Neuhausler; Viola Peter; Julien Ravet; Olivier Rothengatter; Julia Schneider

  1. By: Manuel Trajtenberg
    Abstract: History suggests that dismal prophecies regarding the impact of great technological advances rarely come to pass. Yet, as many occupations will indeed vanish with the advent of AI as the new General Purpose Technology (GPT), we should search for ways to ameliorate the detrimental effects of AI, and enhance its positive ones, particularly in: (1) education and skills development: revamp the centuries-old “factory model” of education, and develop instead skills relevant for an AI-based economy – analytical, creative, interpersonal, and emotional. (2) The professionalization of personal care occupations, particularly in healthcare and education; these are to provide the bulk of future employment growth, yet as performed today involve little training and technology, and confer low wages. New, higher standards and academic requirements could be set for these occupations, which would enable AI to benefit both providers and users. (3) Affect the direction of technical advance – we distinguish between “human-enhancing innovations” (HEI), that magnify and enhance sensory, motoric, and other such human capabilities, and “human-replacing innovations” (HRI), which replace human intervention, and often leave for humans mostly “dumb” jobs. AI-based HEI’s have the potential to unleash a new wave of creativity and productivity, particularly in services, whereas HRI’s might just decrease employment and give rise to unworthy jobs.
    JEL: J24 O3 O33 O38
    Date: 2018–01
  2. By: Christian Rupietta (University of Wuppertal); Johannes Meuer (ETH Zurich); Uschi Backes-Gellner (University of Zurich)
    Abstract: Amounting evidence shows how, that is the development and implementation of new organizational practices, processes, and structures, increase firms' propensity to develop new and improve existing products and processes. When investigating the initiators of organizational innovation, most research has focused on internal and external change agents at upper echelons neglecting hybrid change agents at lower echelons. We argue that hybrid change agents, because of their unique ability to integrate external and internal knowledge, are particularly important for organizational innovation and may positively influence the technological innovation process. We examine how apprentices in the Swiss VET system, key individuals who integrate external knowledge through school-based education with internal knowledge through on-the-job training, moderate organizational innovation's influence on technological innovation. Drawing on a sample of 1,240 firms, we show that apprentices leverage the positive effect of innovations in a firm's business processes and organization of work on incremental innovations. We contribute to the literature on complementarities between organizational and technological innovation by revealing how different types of organizational innovation affect technological innovation across the innovation process. Moreover, by revealing the significant role of apprentices, as hybrid change agents at the lower echelons, for a firm's innovation activities, we also contribute to the current debate on the salience of VET systems for a knowledge-based economy.
    Keywords: Hybrid change agents, technological innovation processes, organizational innovation, Vocational Education and Training (VET), apprenticeships
    Date: 2018–01
  3. By: Anton Bondarev (University of Basel)
    Abstract: This paper introduces heterogeneity of cross-technologies interactions into the double-differentiated R&D-based endogenous growth model. In this model new technologies appear continuously and older are outdated generating structural change. All technologies may interact with each other through knowledge spillovers which are technology-specific and this results in innovations' heterogeneity. The conditions on the shape of these interactions for the existence of the (sustained) growth path in the decentralized economy as well as for the social planner's problem are estab- lished. Next the necessity for government interventions depending on the complexity of these interactions is studied. At last the scale and duration of interventions are demonstrated to be functions of spectral properties of the interactions operator.
    Keywords: endogenous structural change; endogenous growth; technological spillovers; R&D policy; government regulation; dynamic stability; spectral theory; optimal control
    JEL: C61 O32 O38 O41 H3
    Date: 2018
  4. By: Koehler, Mila
    Abstract: In Germany, R&D subsidies are an important tool to support innovation in the private sector. This paper studies the welfare effects of R&D subsidies distributed through the German federal government's thematic R&D programs between 1994 and 2011. The analysis is based on a structural model of the R&D subsidy process which allows to estimate the benefits of R&D subsides to the German economy. The model takes into account heterogeneous application costs of firms and identifies the effect of the subsidy on the federal government's utility as well as on firm profits. Assuming a welfare-maximizing federal government, the estimated average social rate of return is 34% for Germany in the period 1994 to 2011. Thereby effects on firm profits are similar to effects on spillovers to the rest of the German economy. Besides results show that the subsidy rate decision in Germany remained remarkably stable over time, and that application costs as well as the marginal profitability of subsidized R&D projects are lower after the year 2000 compared to the years before.
    Keywords: R&D,Innovation,R&D Subsidies,Innovation Policy,Welfare Economics
    JEL: D61 H25 L59 O31 O38
    Date: 2018
  5. By: Batabyal, Amitrajeet; Yoo, Seung Jick
    Abstract: We focus on a region that is creative in the sense of Richard Florida. The creative class is broadly composed of existing and candidate entrepreneurs. The general question we analyze concerns the effects of Schumpeterian competition between existing and candidate entrepreneurs on economic growth and innovation policy in this region. We perform four specific tasks. First, when the flow rate of innovation function for the existing entrepreneurs is strictly concave, we delineate the circumstances in which competition between existing and candidate entrepreneurs leads to a unique balanced growth path (BGP) equilibrium. Second, we examine whether it is possible for the BGP equilibrium to involve different levels of R&D expenditures by the existing entrepreneurs. Third, we show how the BGP equilibrium is altered when the flow rate of innovation function for the existing entrepreneurs is constant. Finally, we study the impact that taxes and subsidies on R&D by existing and candidate entrepreneurs have on R&D expenditures and regional economic growth.
    Keywords: Creative Class, Creative Destruction, Economic Growth, Innovation Policy, R&D
    JEL: O31 O38 R11
    Date: 2017–12–03
  6. By: Max Nathan (University of Birmingham); Anna Rosso (University of Milan)
    Abstract: Policymakers need to understand innovation in high-profile sectors like technology. This can be surprisingly hard to observe. We combine UK administrative microdata, media and website content to develop experimental measures of firm innovation – new product/service launches – that complement existing metrics. We then explore the innovative performance of technology sector SMEs – firms also of great policy interest – using panel fixed effects settings, comparing conventional and machine-learning-based definitions of industry space. For companies with event coverage, tech SMEs are substantially more launch-active than non-tech firms, with suggestive evidence of firm-city interactions. We use instruments and reweighting to handle underlying event exposure probabilities.
    Keywords: innovation, ICT, data science
    JEL: L86
    Date: 2017–10–09
  7. By: Bettina Peters; Rebecca Riley; Iulia Siedschlag; Priit Vahter; John McQuinn
    Abstract: This paper examines the links between internationalisation, innovation and productivity in service enterprises. For this purpose, we use micro data from the Community Innovation Survey 2008 in Germany, Ireland and the United Kingdom, and estimate an augmented structural model. Our empirical evidence highlights the importance of internationalisation in the context of innovation outputs in all three countries. Our results indicate that innovation in service enterprises is linked to higher productivity. In all three countries analysed, among the innovation types that we consider, the strongest link between innovation and productivity was found with marketing innovations.
    Keywords: internationalisation of services; innovation; productivity
    JEL: L25 O31
    Date: 2018
  8. By: Kropp, Cordula
    Abstract: Sustainable innovations can help to find ways of addressing major challenges such as global warming and resource consumption. This article begins by clarifying the specific inconsistencies within the concept, before introducing the research on sustainability-oriented innovation processes. This research is geared in part towards sustainability innovations in organisations and in part towards overarching processes of societal transformation for sustainable development. The article concludes by discussing strategies for promoting sustainable innovation and drawing consequences for the sustainable rebuilding of infrastructure.
    Date: 2018
  9. By: Dohse, Dirk; Goel, Rajeev K.; Nelson, Michael A.
    Abstract: The paper provides firm-level insights into the drivers of foreign technology licensing from the perspective of the licensee, using data across 114 nations. Drawing on the theoretical foundations related to knowledge spillovers, results show that manufacturing firms with own R&D capabilities were more likely to license foreign technologies, as were larger firms and those situated in the nations' main business city. Greater literacy facilitated foreign technology licensing, while overall economic prosperity of a nation did not have a significant impact. Interestingly, higher domestic interest rates, related to capital costs and to overall monetary policy, induced firms to license technology from abroad. Finally, some institutions like greater economic freedom aided technology licensing, while others like strong patent protection were not found to have a sizable impact.
    Keywords: technology licensing,R&D,firm size,location,taxes,informal competition
    JEL: L24 O33 O57
    Date: 2018
  10. By: Michele Cincera; Anabela Marques Santos
    Abstract: The aim of the paper is to explore which factors explain the reasons for firms’ decisions to delocalize their R&D activities outside or within the EU. Special attention is given to the influence of public policies to support R&D on the decisions to (de)localize R&D activities. The main source of information is “The EU survey on R&D Investment Business Trends” for the years 2007-2013. The methodology is based on a descriptive analysis of these surveys, on benchmarking with other economic studies in the field and a SWOT analysis of R&D activity location in the EU. The analysis reveals that the quality of R&D personnel and access to network knowledge (with firms, universities and public organizations) are the most important factors for locating R&D activities in a given region or country. Public support for R&D appears to be relegated to a secondary position in the decision to locate R&D activities.
    Keywords: R&D localization; public support; Europe
    Date: 2017–12
  11. By: Anton Bondarev; Alfred Greiner (University of Basel)
    Abstract: In this paper we develop an economic growth model that includes anthropogenicclimate change. We include a publicly funded research sector that creates new technologies and simultaneously expands the productivities of existing technologies. The environment is affected by R&D activities both negatively, through the increase of output from productivity growth, as well as positively as new technologies are less harmful for the environment. We find that there may exist two different steadystates of the economy, depending on the amount of research spending: one with less new technologies being developed and the other with more technologies. Thus, a lock-in effect may arise that, however, can be overcome by raising R&D spending sufficiently such that the steady-state becomes unique. We derive the combinations of fiscal policy instruments for which that can be achieved and we study the implications for the economy and for the environment. In particular, the double dividend hypothesis may hold only under some specific conditions.
    Keywords: Climate change, doubly-differentiated R&D, double dividend, fiscal policy instruments, technology lock-in
    JEL: C61 C62 O38 O44 Q54 Q58
    Date: 2018
  12. By: Czarnitzki, Dirk; Hünermund, Paul; Moshgbar, Nima
    Abstract: The use of public procurement to promote private innovation activities has attracted increasing attention recently. Germany implemented a legal change in its procurement framework in 2009, which allowed government agencies to specify innovative aspects of procured products as selection criteria in tender calls. We analyze a representative sample of German firms to investigate whether this reform stimulated innovation in the business sector. Across a wide set of specifications - OLS, nearest-neighbor matching, IV regressions and difference-in-differences - we find a robust and significant effect of innovationdirected public procurement on turnover from new products and services. However, our results show that the effect is largely attributable to innovations of more incremental nature rather than market novelties.
    Keywords: Public Procurement of Innovation,Public Procurement with Contracted Innovation,Technical Change,Research and Development,Econometric Policy Evaluation
    JEL: H57 O38
    Date: 2018
  13. By: Francesco Pasimeni (European Commission, JRC , Directorate C7, Knowledge for Energy Union, PO Box 2, NL-1755 ZG Petten, Netherlands; SPRU, University of Sussex, UK); Alessandro Fiorini (European Commission, JRC , Directorate C7, Knowledge for Energy Union, PO Box 2, NL-1755 ZG Petten, Netherlands); Aliki Georgakaki (European Commission, JRC , Directorate C7, Knowledge for Energy Union, PO Box 2, NL-1755 ZG Petten, Netherlands)
    Abstract: Information on R&D expenditure of the private sector is very limited, both in term of availability and data quality, especially when interest focuses on Climate Change Mitigation Technologies (CCMTs). This has an impact on the robustness of quantitative analyses, and, consequently, on the insights deriving from them. This paper proposes a methodology to estimate R&D expenditure in firms simultaneously active in multiple technology sectors, with the focus on those contributing to the development of CCMTs. The methodological approach is applied to measure how the private sector invests in R&D dedicated to CCMTs, and how this differentiates among European countries. Further the paper proposes metrics to analyse the geographical distribution of the R&D expenditures in Multinational Corporations (MNCs) across subsidiaries located in Europe. Early findings are formulated into useful insights for stakeholders and policy makers.
    Keywords: R&D; Patent; Invention; Climate change mitigation technologies; Energy sector
    JEL: C81 O32 O34 O38 Q48
    Date: 2018–01
  14. By: John Edwards (European Commission - JRC); Elisabetta Marinelli (European Commission - JRC); Eskarne Arregui Pabollet (European Commission - JRC); Louise Kempton
    Abstract: The Policy Brief analyses three elements: - S3 Platform survey data on institutions and smart specialisation - ESF programming data - HESS pilot case studies
    Keywords: Higher Education Institutions, Smart Specialisation, Innovation
    Date: 2017–12
  15. By: Castaldi Carolina (School of Innovation Sciences, Eindhoven University of Technology); Mafini Dosso (European Commission - JRC)
    Abstract: This paper investigates the links between the market capability of top corporate R&D investors (EU Industrial R&D Investment Scoreboards), as captured by trademark data and their economic performance in terms of net sales growth. It provides empirical evidence to better understand the extent to which companies, operating in different industrial sectors, combine technological capabilities with commercialization efforts to generate and appropriate the economic returns of their R&D investments. This paper shows how different dimensions of firms’ market capabilities can be captured through trademark indicators. The results suggest that complementing R&D efforts and patenting activities with strong and specific market capabilities can indeed yield significant growth premiums. Moreover, offering services seems to pay off depending on the intensity of R&D investments. Yet, a quantile regression approach and a series of robustness checks indicate that such effects differ across the quantiles of the conditional sales growth distribution.
    Keywords: R&D, trademarks, innovation, sales, services
    JEL: O32 O34 L10
    Date: 2018–01
  16. By: Masashi Tanaka (Graduate School of Economics, Osaka University)
    Abstract: We develop a simple endogenous growth model featuring individuals f choices between general and firm-specific skills, endogenous technological innovation, and a government subsidy for education. General skills are less productive than are specific skills, but they enable workers to operate all technologies in the economy. We show that demand for general skills increases as countries catch up to the world technology frontier. Further, using aggregated data for 12 European OECD counties, we calibrate the model and compare the theoretical prediction with the data. In cross-country comparisons, we find that the returns on general skills and the impact of general education expenditure on GDP are higher in countries with higher total factor productivity. These findings support our theoretical argument of the positive relationship between firms f demand for general skills and countries f stages of development.
    Keywords: General and specific skills, Technological uncertainty, Education policy, Distance to world technology frontier
    JEL: J24 O33 O40 I22
    Date: 2018–01
  17. By: Kul B. Luintel; Mosahid Khan
    Abstract: Research and development (R&D) activities of emerging countries (EMEs) have increased considerably in recent years. How important are knowledge transfers from developed countries and other emerging countries? This wide-ranging but rigorous macro-level study of 31 EMEs provides some much-needed evidence.
    Date: 2017–11
  18. By: Anton Bondarev (University of Basel)
    Abstract: We consider an abstract setting of the differential r&d game, where participating firms are allowed for strategic behavior. We assume the information asymmetry across those firms and the government, which seeks to support newer technologies in a socially optimal manner. We develop a general theory of robust subsidies under such one-sided uncertainty and establish results on relative optimality, duration and size of different policy tools available to the government. It turns out that there might exist multiple sets of second-best robust policies, but there always exist a naturally induced ordering across such sets, implying the optimal choice of a policy exists for the government under different uncertainty levels.
    Keywords: technology lock-in, technological change, strategic interaction, uncertainty, robust policy sets, uncertainty thresholds, robust welfare improving policy, axiom of choice
    JEL: C02 C61 O31 O38
    Date: 2018
  19. By: Minford, Lucy (Swansean University); Meenagh, David (Cardiff Business School)
    Abstract: We show that a DSGE model in which subsidies to private sector R&D stimulate economic growth, following the predictions of semi-endogenous growth theory, can account for the joint behaviour of UK output and total factor productivity for 1981-2010. R&D subsidies are measured as government- funded R&D performed by the private sector as a proportion of total private sector R&D. We estimate and test the performance of the model using Indirect Inference, and also investigate the robustness of the results using a Monte Carlo exercise. Our f•ndings indicate that sharp cuts in R&D subsidies tend to have highly persistent growth e¤ects in the UK.
    Keywords: R&D, subsidies, economic growth, government policy.
    JEL: E00 O00 O38 O50
    Date: 2018–01
  20. By: Stefano Breschi; Julie Lassébie; Carlo Menon (OECD)
    Abstract: The report presents new cross-country descriptive evidence on innovative start-ups and related venture capital investments drawing upon Crunchbase, a new dataset that is unprecedented in terms of scope and comprehensiveness. The analysis employs a mix of different statistical techniques (descriptive graphics, econometric analysis, and machine learning) to highlight a number of findings. First, there are significant cross-country differences in the professional and educational background of start-ups’ founders, notably the share of founders with previous academic experience and in the share of “serial entrepreneurs”. Conversely, the founders’ average age is rather constant across countries, but shows a fair degree of variability across sectors. Second, IP assets, and in particular the presence of an inventor in the team of founders, are strongly associated with start-ups’ success. Finally, female founders are less likely to receive funding, receive lower amounts when they do receive financing, and have a lower probability of successful exit, when other factors are controlled for.
    Date: 2018–02–08
  21. By: Rainer Frietsch (Fraunhofer Institute for Systems and Innovation Research ISI); Andreas Kladroba; Paresa Markianidou; Peter Neuhausler; Viola Peter; Julien Ravet; Olivier Rothengatter; Julia Schneider
    Abstract: In this report, information is provided on business R&D expenditures and patenting structures within Key Enabling Technologies and Societal Grand Challenges. The main challenge hereby was to estimate BERD, value added and employment at the technological level of KETs and SGCs as these indicators are only available at the sectoral (NACE 2-digit) level. The employed method uses the (weighted) distribution of technology-specific patents per sector to re-allocate BERD and value added by technology fields. While the strong correlation between patents and R&D expenditures is a proof of the use of this approach for BERD, the connection between patents and value added is much smaller. For this indicator the estimated values are therefore to be cautiously interpreted. Yet, technology specific data on value added is not available. Variations across countries, could partly be taken into account by employing four country groups.
    Keywords: KET, SGC, BERD, R&D expenditure, patents
    Date: 2017–12

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