nep-ino New Economics Papers
on Innovation
Issue of 2018‒12‒24
twelve papers chosen by
Uwe Cantner
University of Jena

  1. Understanding AI Driven Innovation by Linked Database of Scientific Articles and Patents By MOTOHASHI Kazuyuki
  2. Firm R&D investment and export market exposure By Peters, Bettina; Roberts, Mark J.; Vuong, Van Anh
  3. Creators’ Income Situation in the Digital Age By Alexander Cuntz
  4. Foresight as a governance tool to help shape the next production revolution By Havas, Attila; Weber, Matthias
  5. High Tech and Venture Capital Inflows: The case of Israel By Razin, Assaf
  6. Does persistence in internationalization and innovation influence firms’ performance? By Iandolo, Stefano; Ferragina, Anna Maria
  7. Working with Academic Partners Effectively in the Context of Open Innovation: The Practice of Huawei By Furner, Adrian; Xu, Yan
  8. Property Rights and Intellectual Property Protection, GDP growth and Well-Being in Latin America By Lahsen, Amina. A; Piper, Alan T.
  9. Brilliant Technologies and Brave Entrepreneurs: A New Narrative for African Manufacturing By Naudé, Wim
  10. Legal Barriers to the Better Use of Health Data to Deliver Pharmaceutical Innovation By Cole, A.; Towse, A.
  11. R&D offshoring and home industry productivity By Gaetan de Rassenfosse; Russell Thomson
  12. Transitional Dynamics in Aggregate Models of Innovative Investment By Atkeson, Andrew; Burstein, Ariel; Chatzikonstantinou, Manolis

  1. By: MOTOHASHI Kazuyuki
    Abstract: The linked dataset of AI research articles and patents reveals that substantial contributions by the public sector are found in AI development. In addition, the role of researchers who are involved both in publication and patent activities, particularly in the private sector, increased over time. That is, open science that is publicly available in research articles, and propriety technology that is protected by patents, are intertwined in AI development. In addition, the impact of AI, combined with big data and IoT, which are defined as "new" IT innovations, is discussed by comparing it with traditional IT, which only consists of the technological progress of computer hardware and software developments. Both new and traditional IT can be understood by using the framework of GPT (general purpose technology), while the organization of new IT innovation can be characterized as an emergence of multiple ecosystems, instead of being organized in the pattern of platform leadership, found in traditional IT.
    Date: 2018–11
  2. By: Peters, Bettina; Roberts, Mark J.; Vuong, Van Anh
    Abstract: In this article we study differences in the returns to R&D investment between firms that sell in international markets and firms that only sell in the domestic market. We use German firm-level data from the high-tech manufacturing sector to estimate a dynamic structural model of a firm's decision to invest in R&D and use it to measure the difference in expected long-run benefit from R&D investment for exporting and domestic firms. The results show that R&D investment leads to a higher rate of product and process innovation among exporting firms and these innovations have a larger impact on productivity improvement in export market sales. As a result, exporting firms have a higher payoff from R&D investment, invest in R&D more frequently than firms that only sell in the domestic market, and, subsequently, have higher rates of productivity growth. The endogenous investment in R&D is an important mechanism that leads to a divergence in the long-run performance of firms that differ in their export market exposure. Simulating the introduction of trade tariffs we find a substantial reduction in firms' productivity growth and incentive to invest in R&D.
    Keywords: R&D choice,Export,Innovation,Productivity,Dynamic structural model
    JEL: F14 L25 O31 O32
    Date: 2018
  3. By: Alexander Cuntz
    Abstract: The digital transformation imposes both opportunities and risks for creativity and for creative employment, with implications for trends in income levels and the distribution of income. First, we consider skill-biased technological change as a determinant of income and labor market outcomes in the arts. Arguably, the IT revolution has changed the demand for certain skills, with creative occupations being more in demand than general employment. Second, we consider declines in the costs of generating new works and artistic experimentation due to digital technologies, and their effect on the barriers to entry in labor markets. Third, we touch upon the rise of online contract labor in certain creative professions as a determinant of income. Here, online platforms can change creators’ access to work opportunities and it may alter the way income is distributed. We find that wage trends for creative workers in the digital age outperform general trends in the population: based on various data sources and various ways to identify creators, we see creators losing less or even gaining a better income position in relative terms. From a policy perspective, results do not lend support to the idea that creators’ income situation has systematically worsened with the rise of the internet and its intermediaries. Evidence on changing distributions of income is ambiguous as trends differ from one country to the next.
    JEL: J24 J28 J31 L82 O15 O33 O34 Z10
    Date: 2018–12
  4. By: Havas, Attila; Weber, Matthias
    Abstract: The next production revolution (NPR; also called Industry 4.0 elsewhere) is likely to trigger complex changes via the interactions of new technologies, materials, processes, and business models. These changes would affect R&D and innovation activities; the labour market; income distribution and well-being; skill requirements; as well as several fields of regulation. Furthermore, digitalisation can be a major enabler of the circular economy. The policy implications of the NPR are so wide-ranging that it is difficult to mention a major policy domain, which would remain untouched by these sweeping changes. The need for policy orchestration is, therefore, rather strong. Foresight, a specific type of forward-looking activities (FLA), can assist policy-makers in dealing with these complex changes. First, it facilitates a systemic approach, considers multiple futures and draws on the diverse set of knowledge of participants. Second, a shared vision, developed – and thus ‘owned’ – by the participants, can reduce the uncertainties generated by NPR, and it helps building commitment among participants as an additional factor to keep up the momentum of orchestrated policy design and implementation. Third, a transformative foresight process, considering and assisting systemic changes triggered by NPR, can contribute to reshaping the prevailing power structures and invigorating policy rationales, decision-making processes, and thus improving the efficacy of policies. FLA projects dealing with NPR issues vary in their thematic coverage and their breadth of participation. Combining these distinctions, four different archetypes of FLA are identified – and illustrated by actual cases – in the paper. The expected impacts on policy-making vary by the type of prospective analyses. Participatory processes mobilise a wider set of knowledge, aspirations, and worldviews compared to an expert-based project. Hence, more novel ideas can be expected, contested from various angles, hence tested more thoroughly, given the diversity of participants. FLA projects focusing on innovation and manufacturing systems consider a broader set of issues than S&T-centred projects. Given the complex issues brought about by the NPR, such a systemic approach seems to be more appropriate as a foundation for devising effective policies. In certain contexts, S&T-centred FLA can also be useful, but different and only more limited benefits and impacts can arise from this approach. Foresight benefits are far from being automatic: the paper considers eight critical factors to achieve those. An astute embedding of foresight into policy-making enhances the likelihood of impact, but foresight recommendations are no substitute for policy decisions and actions.
    Keywords: The next production revolution; Typology of FLA; Expected impacts of FLA; Foresight benefits
    JEL: O25 O30 O33 O38
    Date: 2018–11–15
  5. By: Razin, Assaf
    Abstract: Large capital inflows are understandably viewed as dangerous in emerging markets living with memories of recent currency crises: in Israel foreign capital provided crucial funding for investment in the country's showcase technology sector. Israel is now solidly established as a high-tech powerhouse-a place where budding venture capitalists from emerging market countries flock to learn how to develop an innovation ecosystem. However, the domestic market alone is far too small and homegrown capital formation insufficient to foster that innovation. Globalization has been essential. The paper reviews the crucial role which globalization forces played Israel's transformation from low tech to high tech economy. Special emphasis is placed on foreign direct investment as a driver for the high-tech transformation.
    Keywords: high tech sector; productivity; venture capital
    Date: 2018–12
  6. By: Iandolo, Stefano; Ferragina, Anna Maria
    Abstract: In this paper, we analyze the joint effect of persistency in innovation and export on firms’ total factor productivity (measured in accordance with Levinsohn and Petrin, 2003). For this purpose, we use data on Italian manufacturing firms covering an eight-year time span (1998-2006) which allow us to measure the effect of different time activities, both in innovation and in export and the existence of different pathways linking them. We distinguish between persistent and temporary exporting firms as well as frequent and temporary innovators, to test (through OLS and a two-step system GMM) the existence of any combined learning-by-exporting and learning-by-doing effects. We find that persistent innovation efforts seem to be associated with a permanent presence in foreign markets since persistently innovative and exporting firms have better productivity results than persistently exporting (innovating) firms with no persistent innovation (export). Combining both strategies can be an opportunity to internalize knowledge flows coming from long-lasting exposure to foreign markets.
    Keywords: Export,Innovation,Firms,Productivity,GMM
    JEL: F14 F10 F23 O30 D24
    Date: 2018
  7. By: Furner, Adrian; Xu, Yan
    Abstract: Huawei's Huawei Innovation Research Program (HIRP) has contributed to the development of Huawei from a Chinese start-up to a global ICT leader by lavaraging its cross-border and cross-cultural network connecting world-class scholars. With the help of HIRP, Huawei has acheived a large number of breakthroughs in both fundamental research and technology applications. The HIRP has acted as a systematic and transferable model to address the challenges of Academic-Industry partnership, with three consistent and consecutive approaches, namely shared objectives; relationship multiplier and portfolio-level connections. Our focus on the relationship as a key value differentiator has reduced the mismatch between Huawei and academia.This enhanced access to high quality academic partners enables the innovation of many game-changing technologies and leads to a Better Connected World.
    Date: 2018
  8. By: Lahsen, Amina. A; Piper, Alan T.
    Abstract: A central argument for increased protections of property rights (PR) is the role they play in encouraging economic transactions, investment and economic growth. Likewise, the utilitarian justification of intellectual property laws is that such rights promote creative inventions and innovation, and thus can make a nation better off. A further argument is psychological: it has also been argued (though rarely tested) that enhanced rights contribute to increases in well-being enjoyed by a county’s citizens. Many Latin American countries have made efforts to improve property rights (and their enforcement) in the recent past, with varying success. Using three data sources (the Latinobarometer, the World Bank, and the World Economic Forum’s Global Competitive Index), this investigation considers the relationship between property rights and intellectual property protection, economic growth, and well-being. The results, which are heterogeneous with respect to labour force status, suggest that policy makers in Latin America should pursue improvements in property rights if they wish to improve citizen well-being while also promoting economic growth.
    Keywords: Property rights; Intellectual property protection; Economic Growth; Latin America; Life Satisfaction; Latinobarometer
    JEL: D23 I31 N36 O34
    Date: 2018–11
  9. By: Naudé, Wim (Maastricht University)
    Abstract: In this paper I argue that the manufacturing sector still has an important role to play in Africa's development. Despite failing to industrialize in the past, there may be a new window of opportunity. This is due to the convergence of what has been called 'brilliant' new technologies associated with the Fourth Industrial Revolution (4IR) and a resurgence of start-up entrepreneurship. In this light I (i) show why manufacturing is vital for African economies, (ii) critically analyse the nature and impact, both in terms of opportunities and risks, of the new technologies associated with the 4IR for Africa; (iii) describe the resurgence of technological start-up entrepreneurship in Africa and (iv) call for policy support in the form of complimentary investments and regulations to allow entrepreneurs to utilize opportunities and to minimize threats. In short, a new narrative for African manufacturing is possible.
    Keywords: technology, industry 4.0, entrepreneurship, development, Africa
    JEL: O33 O14 O55 L52 L26
    Date: 2018–11
  10. By: Cole, A.; Towse, A.
    Abstract: The proliferation of health data in our ever more digitalised world of health care creates opportunities for better research around – and delivery of – pharmaceutical innovation. However, these opportunities may be constrained around the legal barriers to the use of health data for these purposes, which are poorly understood, particularly in relation to the new General Data Protection Regulation (GDPR). In this consulting report, sponsored by the European Federation of Pharmaceutical Industries and Associations (EFPIA), we summarise research evaluating the main legal barriers to the better use of health data for pharmaceutical innovation. Issues are evaluated according to barriers arising in utilising data to support six key activities across the lifecycle of a medicine - Epidemiology and pharmacoepidemiology - Identifying unmet need; Pharmacogenetics; Interventional studies; Non-interventional studies; Pharmacovigilance, and; Managed entry agreements. We conclude that the GDPR does not create new legal barriers, and that most issues identified are in fact uncertainties rather than barriers per se. There is a strong case for industry to deal proactively with the uncertainties, sharing good practice and engendering trust by co-creating a code of conduct, and promoting a shared understanding of the value to society of pharmaceutical research.
    Keywords: Economics of innovation; Measuring and valuing outcomes
    JEL: I1
    Date: 2018–12–01
  11. By: Gaetan de Rassenfosse (Ecole polytechnique federale de Lausanne); Russell Thomson (Swinburne University of Technology)
    Abstract: Offshoring R&D commonly invokes concerns regarding the loss of high value jobs and a hollowing out of technological capabilities, but it can also benefit domestic firms by enabling them to tap into the global technological frontier. We study the effect of R&D offshoring on industrial productivity in the home country using industry-level data for 18 OECD countries over a 26-year period. Simultaneity between productivity and R&D offshoring is addressed by using foreign tax policy as an instrument for offshored R&D. We show that R&D offshoring contributes positively to productivity in the home country, irrespective of the host country destination.
    Keywords: R&D offshoring, globalization, productivity, foreign R&D
    JEL: F23 O25 O33 O47 L6
    Date: 2018–12
  12. By: Atkeson, Andrew (Federal Reserve Bank of Minneapolis); Burstein, Ariel (UCLA); Chatzikonstantinou, Manolis (UCLA)
    Abstract: What quantitative lessons can we learn from models of endogenous technical change through innovative investments by firms for the impact of changes in the economic environment on the dynamics of aggregate productivity in the short, medium, and long run? We present a unifying model that nests a number of canonical models in the literature and characterize their positive implications for the transitional dynamics of aggregate productivity and their welfare implications in terms of two sufficient statistics. We review the current state of measurement of these two sufficient statistics and discuss the range of positive and normative quantitative implications of our model for a wide array of counterfactual experiments, including the link between a decline in the entry rate of new firms and a slowdown in the growth of aggregate productivity given that measurement. We conclude with a summary of the lessons learned from our analysis to help direct future research aimed at building models of endogenous productivity growth useful for quantitative analysis.
    Keywords: Endogenous growth; Innovative investment; Transitional dynamics
    JEL: O3 O4
    Date: 2018–11–30

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