nep-ino New Economics Papers
on Innovation
Issue of 2019‒09‒09
nine papers chosen by
Uwe Cantner
University of Jena

  2. Assessing Financing, Innovation and Growth Linkage: New Evidence for Policy By Anabela Santos; Michele Cincera; Giovanni Cerulli
  3. Synergizing Ventures By Ufuk Akcigit; Emin Dinlersoz; Jeremy Greenwood; Veronika Penciakova
  4. Decentralising the Patent System By Gaetan de Rassenfosse; Kyle Higham
  5. Intended and unintended effects of public incentives for innovation. Quasi-experimental evidence from Italy By Mellace, Giovanni; Ventura, Marco
  6. Migration, Innovation, and Growth: An African Story? By Mbaye, Linguère Mously; Tani, Massimiliano
  7. Imported intermediates, technological capabilities and exports: Evidence from Brazilian firm-level data By Torres Mazzi, Caio; Foster-McGregor, Neil
  8. The probability of automation of occupations in Italy By Emilia Filippi; Sandro Trento
  9. Determinants of Productivity Gap in the European Union: A Multilevel Perspective By Bruno, Randolph Luca; Douarin, Elodie; Korosteleva, Julia; Radosevic, Slavo

  1. By: Manveen Singh (Jindal Global Law School, O.P. Jindal Global University)
    Abstract: Standards and standards-setting organizations (SSOs) have played a crucial role in shaping the innovation landscape for over three decades, especially in the information and communication technologies (ICT) sector. The advancement in mobile telecommunication and the Internet has led to a fundamental change in the way individuals communicate with each other. Devices such as smartphones, tablets, laptops and smart watches bear complex mechanical and technological features and perform multiple functionalities by connecting seamlessly. However, in order for the interoperability of these devices and their functionalities to come through, there is a requirement of a common set of specifications and interfaces, in the form of standards. Standards are widely acknowledged to be the mainstay of modern economy and can lead to an increase in the value of consumer products, as well as increased rates of innovation. The setting of standards and commercializing of innovation at large is facilitated by voluntary associations called SSOs. Competing firms come together under the auspices of SSOs to collaboratively select and adopt uniform technical standards. It is worth noting that the benefits brought about by these standards have a greater visibility in the ICT sector, primarily on account of two reasons. First, in order to make complex technologies work, there is a requirement of hundreds of thousands of patents. Second, there is a strong need for devices and networks to interoperate in the ICT sector, which makes it absolutely necessary to develop common technical standards.SSOs are further tasked with the responsibility of fostering a regime of rapid technological innovation by balancing the interests of their members; their membership comprising of patent owners or standard essential patent (SEP) holders on one hand and implementers or licensees on the other. While the patent owners are involved in research and development (R&D) and look to maximize their earnings from licensing out their SEPs, the implementers look to seek licenses from SEP holders on terms that are fair, reasonable and non-discriminatory (FRAND), in order to use the patented technology in the manufacturing of standard-compliant end-use products. There is yet, a third category of member companies that are vertically integrated and besides owning SEPs, also operate actively in the downstream market. As members of SSOs, these firms compete in the market on both, horizontal and vertical levels, which gives rise to a possible likelihood of collusion albeit theoretically. It is because of this aspect of standard-setting, that the role of SSOs becomes extremely important.A pertinent question that arises then is, what are SSOs and how do they function? Furthermore, what is the legality of SSOs and how have they helped in the evolution of industry standards? In an attempt to answer the aforementioned questions, the focus of this paper shall center around standardization and standard-setting organizations, while tracing the evolution of standards and standard-setting activities in the ICT sector.
    Keywords: Standards, standardization, SSO, patents, SEP, technology
    JEL: O30
    Date: 2019–07
  2. By: Anabela Santos; Michele Cincera; Giovanni Cerulli
    Abstract: Financing, innovation and growth linkage is a multi-stage process. First, access to finance has a leverage effect on innovation and secondly this additional innovation has an impact on growth. However, few authors have assessed the effect of these three components at the same time. Furthermore, the scientific literature usually focuses more on assessing only the effect of one type of source of financing, such as public support or venture capital, on innovation or firm growth. The aim of the present study is to go further and to assess the effect of eight different sources of financing (internal funds, bank loan, credit line, trade credit, grants, equity, leasing and factoring) on innovation and then on firm growth. Using data from the Survey on the Access to Finance of Enterprises and a three-step econometric approach, the study provides evidence that external sources of financing have a positive effect on innovation and then an additional effect on firm growth (turnover and employment). However, not all sources of external financing have the same impact.Equity financing has a larger effect on the strategic decision to innovate, and the highest output additionality on firm turnover growth, when compared to the effects of other sources of financing.Grants registered a moderate effect on innovation and on output additionality on firm growth (both turnover and employment) and its effect does not appear to be statistically different from other financing instruments (excluding equity). Moreover, grants show higher employment growth than turnover. Furthermore, the number of financing instruments used together also seems to matter, revealing that a financing instrument used alone has no effect on innovation. Our findings suggest that state aid to promote R&D and innovation needs to rely on sounder public/private support integration for it to be successful. All these conclusions could be particularly useful for policy-makers since recommendations for a European Innovation CouncilKeywordsFinancing; Innovation; Firm growth; Europe
    Keywords: Innovation, Microfinance, Microfinance in Europe
    Date: 2019
  3. By: Ufuk Akcigit; Emin Dinlersoz; Jeremy Greenwood; Veronika Penciakova
    Abstract: Venture capital (VC) and growth are examined both empirically and theoretically. Empirically, VC-backed startups have higher early growth rates and initial patent quality than non-VC-backed ones. VC-backing increases a startup’s likelihood of reaching the right tails of the firm size and innovation distributions. Furthermore, outcomes are better for startups matched with more experienced venture capitalists. An endogenous growth model, where venture capitalists provide both expertise and financing for business startups, is constructed to match these facts. The presence of venture capital, the degree of assortative matching between startups and financiers, and the taxation of VC-backed startups matter significantly for growth.
    JEL: G24 O31 O32 O40
    Date: 2019–08
  4. By: Gaetan de Rassenfosse (Ecole polytechnique federale de Lausanne); Kyle Higham (Ecole polytechnique federale de Lausanne)
    Abstract: This paper proposes a substantive re-think of the modern patent system. The patent system has come under intensive criticism in the past, and many scholars have proposed ways to improve it. Ideas for improvement include, e.g., prior-art bounties, contracting out examination and dynamic fee setting. However, many of these ideas have gone unheeded due to the cost of administering them and the rigidity of the patent system. We explore how distributed ledger technologies enable these major changes.
    Keywords: blockchain, distributed ledger, intellectual property, patent, smart contract
    JEL: K11 K23 L24 O34 O38
    Date: 2019–09
  5. By: Mellace, Giovanni (Department of Business and Economics); Ventura, Marco (Department of Economics and Law)
    Abstract: This paper provides an extensive empirical evaluation of a policy introduced in Italy at the end of 2012 to incentivize young innovative start-up firms. Using a Regression Discontinuity Design (RDD) we estimate the causal effects of the policy on the firms’ share of intangible assets, turnover, number of employees, and number of partners. Our results indicate that two years after its implementation the policy was effective only in increasing the number of partners, thus attracting private investments, but failed, at least in the short run, in boosting innovation or increasing employment. It follows that the new investors generated by the policy might have been attracted only by the tax benefit and had little interest in innovation.
    Keywords: Policy evaluation; regression discontinuity design; incentives to innovations
    JEL: C21 H32 L52 O31
    Date: 2019–08–28
  6. By: Mbaye, Linguère Mously (African Development Bank); Tani, Massimiliano (University of New South Wales)
    Abstract: This chapter brings new evidence on the relationship between short-term labour mobility, as proxied by tourism flows, and innovation in Africa. Using data from 34 African countries over the period 2011-2016 sourced from the World Bank’s Enterprise Survey, we find that short–term mobility positively contributes to innovation, making this a potentially effective channel for economic development alongside established determinants such as investments in R&D, foreign direct investments, and trade. Short-term labour mobility thus emerges in Africa, too, as a prospective policy lever to generate new productive knowledge and promote sustainable economic growth.
    Keywords: Africa, innovation, business visits, labour mobility, migration
    JEL: J61 O15 O33
    Date: 2019–08
  7. By: Torres Mazzi, Caio (UNU-MERIT); Foster-McGregor, Neil (UNU-MERIT)
    Abstract: This paper explores how technological capabilities influence the relationship between imported inputs and the export performance of firms. We apply threshold regression techniques to a representative dataset of Brazilian firms and find a strong positive influence of innovation skills on the relationship between imported intermediates and export revenues. We further find that the complementarities between importing and exporting are stronger for firms that export products with a higher scope for quality differentiation. We also observe that technological capabilities are directly correlated with export performance, confirming the view that innovation positively influences firms' international competitiveness. This relationship is not found to be significant for firms that export products with a low scope for quality differentiation and that export to lower income non-OECD markets. Overall, our results suggest that technological capabilities and the quality of imported inputs not only benefit firms directly but also complement each other in enhancing export competitiveness.
    Keywords: imports, exports, productivity, innovation, technological capabilities, Brazil
    JEL: F14 O31 O33 O47
    Date: 2019–08–28
  8. By: Emilia Filippi; Sandro Trento
    Abstract: There is a rising concern for technological unemployment due to the current digital revolution. In order to estimate the probability of automation of occupations we applied two methods: occupation-based approach [Frey and Osborne (2017]) and task-based approach [Nedelkoska and Quintini (2018)]. We found that occupations with a high risk of automation require many routine activities, whereas occupations at low risk require abilities like perception, manipulation, creative intelligence and social intelligence. In Italy, based on the occupation-based approach, 33.2% of workers face a high risk of replacement; this percentage decrease at 18.1% if we apply the task-based approach. Male workers appear to face a higher risk of replacement than female ones. Actual automation may be lower than expected as it depends on many factors, such as technical feasibility, economic benefits that can be obtained and job creation thanks to technology itself. Finally, we stress the importance to adopt some policies; education and training of employees seems to be the most effective one.
    Keywords: technological change and unemployment; automation of occupations; skills and human capital
    JEL: E24 J24 J62 J64 O33 O39
    Date: 2019
  9. By: Bruno, Randolph Luca (University College London); Douarin, Elodie (University College London); Korosteleva, Julia (University College London); Radosevic, Slavo (University College London)
    Abstract: The paper explores the determinants of productivity gap within the European Union in four industrial manufacturing sectors (computers, chemicals, basic metals and food) of strong macroeconomic significance and varied 'Research and Development' (R&D) intensity. Our analysis reveals that some of the most important factors determining productivity gap across the EU are related to technology gap variables - R&D intensity and R&D embedded in purchased equipment and machinery - and how they interact. While the signs for both R&D and embedded R&D are as expected and our results emphasise the relevance of technology for closing the productivity gap, this is not the case with the interaction between these two variables. The estimates for the interaction terms are indeed very significant and consistently negative in three out of four sectors. This negative relationship suggests that there is no complementarity between these two modes of technology acquisition - R&D and embedded R&D investments - which are however each separately crucial for catching up. In policy terms, this situation suggests that there is a lack of coordination between R&D policy and technology transfer (FDI, trade and industrial policy). Given that, our results also show a widening productivity gap between the countries of the EU periphery (South and East) and the rest of the sample.
    Keywords: productivity, technology gap, multilevel analysis, European Union
    JEL: L60 O33
    Date: 2019–08

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