nep-ino New Economics Papers
on Innovation
Issue of 2018‒03‒05
fifteen papers chosen by
Uwe Cantner
University of Jena

  1. Mission (im)possible? The role of innovation (and innovation policy) in supporting structural change & sustainability transitions By Jan Fagerberg
  2. Inter-firm Technological Proximity and Knowledge Spillovers By Koki Oikawa
  3. The impact of EUREKA projects on the economic performance of R&D SMEs By Michele Cincera; Gilles Eric Fombasso Toyem
  4. Technology Polarization By Koki Oikawa; Minoru Kitahara
  5. Government Debt and the Returns to Innovation By Croce, Mariano Massimiliano; Nguyen, Thiên Tung; Raymond, Steve; Schmid, Lukas
  6. Social innovation labs – instrumente de schimbare socială By Tirziu, Andreea-Maria
  7. Public financial support and innovation in Colombian manufacturing firms By Barrios, Fernando; Forero, Clemente; Perry, Guillermo
  8. Weaker jobs, weaker innovation. Exploring the temporary employment-product innovation nexus By Armanda Cetrulo; Valeria Cirillo; Dario Guarascio
  9. Threshold Policy Effects and Directed Technical Change in Energy Innovation By Lionel Nesta; Elena Verdolini; Francesco Vona
  10. The 2017 EU Industrial R&D Investment Scoreboard By Hector Hernandez; Nicola Grassano; Alexander Tuebke; Lesley Potters; Sara Amoroso; Mafini Dosso; Petros Gkotsis; Antonio Vezzani
  11. Cohesion Policy Incentives for Collaborative Industrial Research. The Evaluation of a Smart Specialisation Forerunner Programme By Riccardo Crescenzi; Mara Giua; Guido de Blasio
  12. Biased Technological Change and Employment Reallocation By Zsófia L. Bárány; Christian Siegel
  13. R&D in Clean Technology: A Project Choice Model with Learning By Koki Oikawa
  14. Designing Dynamic Subsidies to Spur Adoption of New Technologies By Ashley Langer; Derek Lemoine
  15. SMEs and Start-Ups. Importance and Support Policies in European Union and Romania By Herte, Anamaria Diana

  1. By: Jan Fagerberg (TIK Centre for Technology, Innovation and Culture, University of Oslo)
    Abstract: The topics addressed in this paper concern the (much-needed) transition to sustainability, the structural changes it entails and what role (innovation) policy can play in speeding up such changes. While it is easy to argue that innovation must play an important role in the transition towards sustainability, it is more challenging to provide good models for how policy may help in mobilizing innovation for this purpose. Such models, it is argued, needs to be based on the accumulated knowledge base on the role of innovation in social and economic change. The paper therefore starts by distilling some important insights on innovation from the accumulated research on this topic, and, with this in mind, discusses various policy approaches that have been suggested for influencing innovation and sustainability transitions. To allow for a more in-depth discussion the paper then goes into more detail about three cases in which policy arguably had a large impact, namely renewable energy in Denmark and Germany and electric cars in Norway. The final part of the paper sums up the discussion about the role of (innovation) policies in sustainability transitions.
    Date: 2018–02
  2. By: Koki Oikawa
    Abstract: This paper has two objectives. One is to survey previous studies concerning indicators of technological proximity and distance to identify technological relationships between firms, particularly in terms of spillovers of technology and knowledge. The other objective is to reexamine the spillover effect in research and development by combining the traditional technological proximity with a measurement of within-field technological relationships, which is based on patent citation overlaps. I find that the average technological proximity is increasing over these three decades in the United States and within-field technological proximity shows sizable variations, and that the spillover effect is underestimated unless the changes in within- field proximities are taken into account.Length: 27 pages
  3. By: Michele Cincera; Gilles Eric Fombasso Toyem
    Abstract: While the benefits of innovative activities are universally acknowledged, current research on how and when governments should intervene to assist firms still has substantial knowledge gaps. In this paper, we consider two forms of government intervention, namely EUREKA network and cluster technological collaborative projects, and assess their impact on the performance of beneficiary firms over the period 2005-2015. The methodology implemented consists in comparing the beneficiaries of projects (which are typically R&D SMEs) with a similar control group, using the difference-in-differences estimation technique. We find that beneficiaries of both network and cluster projects have created on average more jobs and have increased their sales more than non-funded firms over the period of study. We also find that smaller R&D consortia (i.e. network projects) have a positive and greater influence in terms of commercialisation, whereas bigger consortia (i.e. cluster projects) have a positive and greater influence in terms of employment growth. In general, projects of shorter duration (i.e. from one to two years) are those showing the best outcomes compared to projects of longer duration (i.e. from three to seven years).
    Keywords: EUREKA programme, R&D SMEs, Counterfactual analysis, Diff-in-diff estimation, Employment growth, Turnover growth
    Date: 2018–02
  4. By: Koki Oikawa; Minoru Kitahara
    Abstract: We construct a new method to describe firm distributions within technology fields and investigate the relationship between those distributions and aggregate innovation. To locate firms on a technology space, we apply multidimensional scaling for the inter-firm technological dissimilarity matrices that are computed from patent citation overlaps among firms using the NBER US patent dataset. Our estimated firm distributions show increasing trends in technological distance and polarization on average, where we follow Duclos, Esteban and Ray (2004) to measure polarization. We construct a model of inter-group competition in which polarization stimulates aggregate R&D. The model fits data before 1990 but the impact of polarization is reversed after that. We attribute the structural change to the major patent reform in the United States in 1980s.
  5. By: Croce, Mariano Massimiliano; Nguyen, Thiên Tung; Raymond, Steve; Schmid, Lukas
    Abstract: Elevated levels of government debt raise concerns about their effects on long-term growth prospects. Using the cross section of US stock returns, we show that (i) high-R&D firms are more exposed to government debt and pay higher expected returns than low-R&D firms; and (ii) higher levels of the debt-to-GDP ratio predict higher risk premia for high-R&D firms. Furthermore, rises in the cost of capital for innovation-intensive firms predict declines in subsequent productivity and economic growth. We propose a production-based asset pricing model with endogenous innovation and fiscal policy shocks that can rationalize key aspects of the empirical evidence. Our study highlights a novel and distinct risk channel shaping the link between government debt and future growth.
    Keywords: Cross Section of Stock Returns; Fiscal Uncertainty; Government Debt; growth; predictability; R&D
    Date: 2018–01
  6. By: Tirziu, Andreea-Maria
    Abstract: In an era in which society is increasingly based on knowledge and digital technologies have become indispensable to day-to-day activities, social change becomes a problem whose solving can no longer wait for postponement. Objectives: This paper aims to provide a framework for the development of social innovation labs as tools of social change, social innovation bringing innumerable benefits to individuals' lives. Preliminary studies: The paper presents a part of the specialized literature focusing on the concept of social innovation, focusing on social innovation laboratories. Approach: The methodology used for carrying out the research is bibliographic - opting for studying the works of the specialists in the field, both from Romania and abroad, as well as empirical - by building a case study on examples of good practices regarding these living labs. Results: Through social innovation labs, individuals form connections with each other, mobilizing themselves to achieve a common goal - to create a better future. Value: Research shows that social innovation laboratories behave like normal laboratories, so they invent and experiment in finding solutions to the challenges of today's world. Often they generate promising solutions. However, for these solutions to be successful, it must not be forgotten that the essential element is the human component. Therefore, there must be taken into account the capacity and willingness of individuals to collaborate, not only by electronic means, but also by the traditional methods of participation in the process of social change through innovation.
    Keywords: social innovation, social change, living labs
    Date: 2017
  7. By: Barrios, Fernando; Forero, Clemente; Perry, Guillermo
    Abstract: We evaluate the impact of public financial support, both subsidies and credit, on different types of innovation in Colombian industry. We compare it with the effects of financing innovation with own resources and with private loans, and analyze the issue of crowding-out, for different classes of innovation. To control for potential selection bias, we apply Propensity Score Matching (PSM) techniques to a sample of 9173 manufacturing firms for the period 2011-2012, combining data from two available sources (Development and Technological Innovation Survey –EDIT6- and Annual Manufacturing Survey –EAM-). Results show that public financial support has a significant positive effect on products new for the international market and on process innovations. We further find that allocation of own resources of the firm to innovation activities has a positive effect on a wide variety of forms of innovation. Notwithstanding, its impact is substantially smaller than that of public funding in the cases of products new for the international market and on new processes. Commercial loans for innovation activities have no significant effects on either product or process innovations. Finally, we find that public funding increases the probability of allocating own resources to finance innovation activities, but reduces the probability of using private external sources.
    Keywords: Desarrollo, Economía, Finanzas públicas, Investigación socioeconómica, Sector financiero,
    Date: 2018
  8. By: Armanda Cetrulo; Valeria Cirillo; Dario Guarascio
    Abstract: This work explores the relationship between temporary employment and product innovation focusing on five major European economies (France, Germany, Italy, Spain and the Netherlands) observed between 1998 and 2012. Building on the conceptual framework proposed by Kleinknecht et al. (2014), the analysis distinguishes sectors according to their technological characteristics and regimes finding that industries using temporary employment tend to have a weaker product innovation propensity. The negative correlation between temporary employment and innovation is stronger in medium and hightech sectors, identified using both the "Cumulativeness" proxy stemming from Peneder's classification (Peneder, 2010) as well as distinguishing between different Schumpeterian regimes - Schumpeter Mark I vs II - of knowledge accumulation.
    Keywords: product innovation, labor market flexibility, temporary employment
    Date: 2018–02–22
  9. By: Lionel Nesta (Université Côte d'Azur, CNRS, Gredeg, & OFCE Sciences Po Paris, France); Elena Verdolini (FEEM & CMCC, Italy); Francesco Vona (OFCE Sciences Po Paris France & Université Côte d'Azur, CNRS, Gredeg,)
    Abstract: This paper analyzes the effect of environmental policies on the direction of energy innovation across countries over the period 1990-2012. Our novelty is to use threshold regression models to allow for discontinuities in policy effectiveness depending on a country's relative competencies in renewable and fossil fuel technologies. We show that the dynamic incentives of environmental policies become effective just above the median level of relative competencies. In this critical second regime, market-based policies are moderately effective in promoting renewable innovation, while commandand-control policies depress fossil based innovation. Finally, market-based policies are more effective to consolidate a green comparative advantage in the last regime. We illustrate how our approach can be used for policy design in laggard countries.
    Keywords: Directed technical change, threshold models, environmental policies, policy mix.
    JEL: Q58 Q55 Q42 Q48 O34
    Date: 2018–01–30
  10. By: Hector Hernandez (European Commission - JRC); Nicola Grassano (European Commission - JRC); Alexander Tuebke (European Commission - JRC); Lesley Potters (European Commission - JRC); Sara Amoroso (European Commission - JRC); Mafini Dosso (European Commission - JRC); Petros Gkotsis (European Commission - JRC); Antonio Vezzani (European Commission - JRC)
    Abstract: The 2017 edition of the EU Industrial R&D Investment Scoreboard (the Scoreboard) comprises the 2500 companies investing the largest sums in R&D in the world in 2016/17. These companies, based in 43 countries, each invested over €24 million in R&D for a total of €741.6bn which is approximately 90% of the world’s business-funded R&D. They include 567 EU companies accounting for 26% of the total, 822 US companies for 39%, 365 Japanese companies for 14%, 376 Chinese for 8% and 370 from the rest-of-the-world (RoW) for 13%. This report analyses the main changes in companies’ R&D and economic indicators over the past year and their performance over the past ten years. It also includes results from additional complementary studies on companies’ productivity, their development of ICT-related technologies and scientific publication activity.
    Keywords: Industrial R&D, top R&D investors, innovation, company performance, economic and innovation performance
    Date: 2017–12
  11. By: Riccardo Crescenzi; Mara Giua; Guido de Blasio
    Abstract: This paper evaluates a program of subsidies for Collaborative Industrial Research (co-) funded by the EU Cohesion Policy in Italy mobilizing over 1 billion euros. This program anticipated in the 2007-2013 funding cycle some of the key features of Smart Specialization Strategy (S3) programmes, offering evidence-based insights on potential challenges to the practical application of the S3 approach. The programme was not successful in boosting investments, value added or employment of beneficiary firms. The collaborative dimension of the projects added limited value and a more generous level funding would have not improved effectiveness. However, positive impacts emerged in low tech sectors.
    Keywords: Cohesion Policy, Smart Specialisation, Policy Evaluation, Innovation, European Union
    JEL: O18 R11 R58
    Date: 2018–02
  12. By: Zsófia L. Bárány; Christian Siegel
    Abstract: To study the drivers of the employment reallocation across sectors and occupations between 1960 and 2010 in the US we propose a model where technology evolves at the sector-occupation cell level. This framework allows us to quantify the bias of technology across sectors and across occupations. We implement a novel method to extract changes in sector-occupation cell productivities from the data. Using a factor model we find that occupation and sector factors jointly explain 74-87 percent of cell productivity changes, with the occupation component being by far the most important. While in our general equilibrium model both factors imply similar reallocations of labor across sectors and occupations, quantitatively the bias in technological change across occupations is much more important than the bias across sectors.
    Keywords: biased technological change; structural change; employment polarization
    JEL: O41 O33 J24
    Date: 2018–02
  13. By: Koki Oikawa
    Abstract: In this study, we investigate the qualitative and quantitative effects of an R&D subsidy for clean technology and a Pigouvian tax on a dirty technology on environmental R&D when it is uncertain how long the research takes to complete. The model is formulated as an optimal stopping problem, in which the number of successes required to complete the R&D project is finite and which incorporates learning about the probability of success. We show that the optimal R&D subsidy with the consideration of learning is higher than that without it. We also find that an R&D subsidy performs better than a Pigouvian tax unless the government can induce suppliers to make cost reduction efforts even after the new technology successfully replaces the old one. Moreover, by a two-project model, we show that a uniform subsidy is better than a selective subsidy.
  14. By: Ashley Langer; Derek Lemoine
    Abstract: We analyze the efficient subsidy for durable good technologies. We theoretically demonstrate that a policymaker faces a tension between intertemporally price discriminating by designing a subsidy that increases over time and taking advantage of future technological progress by designing a subsidy that decreases over time. Using new empirical estimates of household preferences for residential solar in California, we show that the efficient subsidy increases strongly over time if households are myopic and is much flatter if households have rational expectations. The regulator's spending increases by 70% when households anticipate future technological progress and future subsidies.
    JEL: H21 H23 H71 Q48
    Date: 2018–02
  15. By: Herte, Anamaria Diana
    Abstract: Small and medium-sized enterprises (SMEs) are considered as being the engine of the European economy. They lead to job creation and economic growth, guaranteeing social stability. Nine out of ten enterprises are SMEs, which generate two out of three new jobs. SMEs also stimulate entrepreneurship and innovation, and are therefore very important for boosting competitiveness and employment. Given their importance to Europe's economy, SMEs are a major objective of the European Union's policy. The European Commission has as its major aim to promote entrepreneurship and improve the business environment for SMEs by enabling them to fully realize their potential in today's globalized economy by giving them the opportunity to access funds through various programs. This paper contains some definitions and interpretations of SMEs and start-ups and aims to outline their importance in the contemporary economy as well as their support policies.
    Keywords: SMEs; Start-up concepts and policies, EU, Romania
    JEL: E60 M21
    Date: 2017–11–23

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