nep-ino New Economics Papers
on Innovation
Issue of 2019‒09‒23
eleven papers chosen by
Uwe Cantner
University of Jena

  1. The decline in entrepreneurship in the West: Is complexity ossifying the economy? By Naudé, Wim
  2. Testing the employment and skill impact of new technologies: A survey and some methodological issues By Barbieri, Laura; Mussida, Chiara; Piva, Mariacristina; Vivarelli, Marco
  3. Japan's productivity and GDP growth: The role of GBAORD, public and foreign R&D By Ziesemer, Thomas
  4. Emerging and Disappearing Work, Thriving and Declining Firms By Enghin Atalay; sarada sarada
  5. The link between coworking space demand and venture capital financing: Empirical evidence from European office market By Felix Gauger; Jan-Oliver Strych; Andreas Pfnür
  6. Occupational exposure to capital-embodied technology By julieta caunedo; David Jaume; Elisa Keller
  7. European Immigrants and the United States’ Rise to the Technological Frontier By Costas Arkolakis; Michael Peters; Sun Kyoung Lee
  8. Endogenous TFP, business cycle persistence and the productivity slowdown By Schmöller, Michaela; Spitzer, Martin
  9. Modern industrial policy in Latin America: Lessons from cluster development policies By Pietrobelli, Carlo
  10. Innovation and Inequality from Stagnation to Growth By Chu, Angus C.; Peretto, Pietro
  11. Looking forward via the Past: An Investigation of the Evolution of the Knowledge Base of Robotics Firms. By Estolatan, Eric; Geuna, Aldo

  1. By: Naudé, Wim (UNU-MERIT, Maastricht University, RWTH Aachen, and IZa, Bonn.)
    Abstract: Entrepreneurship in most advanced economies is in decline. This comes as a surprise: many scholars have expected an upsurge in entrepreneurship. What are the reasons for the decline? In this paper I first document the extent of the decline in terms of entrepreneurial entry rates; the share of young and small firms; and in terms of labor market mobility and in innovativeness. I then critically discuss the explanations that have been offered in the literature: slow population growth, market concentration, zombie-firm congestion, slower diffusion of knowledge, and burdensome business regulations. While having merit, these explanations are largely supply-side oriented and moreover fail to explain why the decline in entrepreneurship is associated with high levels of economic complexity. I argue that we need to consider the potential of negative scale effects and evolutionary pressures from rising complexity, as well as long-run changes in aggregate demand and energy costs. Whether the decline in entrepreneurship and the ossification of the economy is undesirable, is a point for debate, calling for more research and more attention to entrepreneurship in growth theories.
    Keywords: Entrepreneurship, start-ups, development, economic complexity, growth theory
    JEL: O47 O33 J24 E21 E25
    Date: 2019–09–11
  2. By: Barbieri, Laura (Università Cattolica di Piacenza); Mussida, Chiara (Università Cattolica di Piacenza); Piva, Mariacristina (Università Cattolica di Piacenza); Vivarelli, Marco (Università Cattolica di Milano)
    Abstract: The present technological revolution, characterized by the pervasive and growing presence of robots, automation, Artificial Intelligence and machine learning, is going to transform societies and economic systems. However, this is not the first technological revolution humankind has been facing, but it is probably the very first one with such an accelerated diffusion pace involving all the industrial sectors. Studying its mechanisms and consequences (will the world turn into a jobless society or not?), mainly considering the labor market dynamics, is a crucial matter. This paper aims at providing an updated picture of main empirical evidence on the relationship between new technologies and employment both in terms of overall consequences on the number of employees, tasks required, and wage/inequality effect.
    Keywords: technology, innovation, employment, skill, task, routine
    JEL: O33
    Date: 2019–09–11
  3. By: Ziesemer, Thomas (UNU-MERIT)
    Abstract: We analyse the dynamic interaction of Japan's total factor productivity (TFP), GDP, domestic and foreign private and public R&D as well as mission-oriented R&D, GBAORD, in a cointegrated VAR for Japan with data from 1988-2014. Analysis of effects of permanent shocks shows that (i) public R&D, unlike GBAORD, encourages private R&D and TFP, and has high internal rates of return. (ii) Japan's public and private R&D have a statistically significant positive effect on foreign private and public R&D stocks and vice versa. (iii) After transitory GDP shocks, public and private R&D are counter-cyclical and GBAORD is pro-cyclical in Japan.
    Keywords: R&D, productivity, growth, spillovers, vector-auto-regression (VAR)
    JEL: F43 O19 O47 O53
    Date: 2019–09–11
  4. By: Enghin Atalay (University of Wisconsin, Madison); sarada sarada (UNIV OF WISCONSIN-MADISON)
    Abstract: Using the text of vacancy postings from 1940 to 2000, we examine the characteristics of firms which hire for newly emerging and soon-to-be disappearing work practices. To do so, we classify job titles as emerging or disappearing according to the years in which they appear. We verify that emerging work involves higher skill levels and is closer to the technological frontier --- qualities inherent to innovation. We find that, among the set of publicly listed firms, those which post ads for emerging work tend to be younger, more R&D intensive, and have higher future sales growth. Among privately held firms, those which post ads for emerging work are more likely to go public in the future. We then explore heterogeneity in the job vintage-firm performance relationship according to jobs that are in product-related technical fields versus in business related non-technical fields. New technological work correlates with R&D intensity and future sales growth, while survival and publicly traded status is more closely related to having newer vintages of business-related non-technological jobs. Our measures of firm innovativeness can be constructed for all employers, and are not limited to publicly traded firms or to industries in which R&D spending and patenting are prevalent.
    Date: 2019
  5. By: Felix Gauger; Jan-Oliver Strych; Andreas Pfnür
    Abstract: Flexible office space is a game-changer in the real estate industry, forecasting a rapid growth over the next years up to 30.000 flexible offices in 2020 (Gcuc, 2017). Specifically, emerging coworking spaces build a growing field for individuals, entrepreneurs, start-ups, and corporations. The agglomeration of coworking spaces resembles entrepreneurship in incubation centers, but the community aspect among involved firms is strong and invaluable (Bouncken et al. 2018). One of the main reasons to work in coworking spaces is the collaboration and sharing of knowledge, resources, and ideas (Spinuzzi, 2012). This can breed new venture concepts, support the growth in an early start-up stage, and accelerate successful business models. However, entrepreneurs require capital, which is a challenge to obtain. Venture Capital (VC) is considered as a fundamental source of finance for entrepreneurial firms (Colombo et al. 2018). So far, there has been no research on the relationship between venture capital investments in firms using coworking spaces. Previous literature lacks the understanding of how coworking spaces support entrepreneurial activities and how this affects the raise of external equity. Our study aims at understanding the connection between coworking spaces with venture capital investments and spatial founding activities.Our research focuses on addressing the question of whether there is a substitutional or complementary relation between firms’ funding by venture capitalists and their use of coworking spaces?We examine the relationship between the existence of coworking spaces with VC investments and founding activities in the European Union to illuminate the macroeconomic impact of this recently emerged form of business model, transforming the real estate office market. First, we employed a webcrawler identifying coworking spaces throughout the big cities in Europe to generate data for the study. We then determined the size and founding date of each space and aggregated the data per city in order to conduct a panel over 9 years. Furthermore, we compiled VC data via the platform crunchbase. Using the crunchbase API we were able to obtain and compile global investments and funding information. Applying econometric methods, we identified the relation of VC and coworking spaces at a global and country-specific level using a regression analysis and addressing the endogeneity problem. The novelty of our research provides a new spatial component to the venture capital and innovation literature by showing how the physical organization of work affects entrepreneurial activities.The results are threefold. First, VC investors get guidance on where to supply venture capital, as venture capitalists tend to invest within a spatial proximity to the venue. Second, coworking operators can benefit from this analysis in order to attract venture capital and provide an ideal entrepreneurial environment. Third, from an urban perspective, the results influence cities and policy-makers. We show the impact of flexible office space and accelerators for entrepreneurial activities and the determining factors for capital inflow into a city, which is an important variable for economic growth.
    Keywords: Coworking spaces; flexible office space; venture capital; wework; work environments
    JEL: R3
    Date: 2019–01–01
  6. By: julieta caunedo (Cornell University); David Jaume (Cornell University); Elisa Keller (University of Exeter)
    Abstract: What is the effect of technological change on income inequality? A vast literature suggests that skill-biased technological change (SBTC) is a mayor driver of income inequality. However, SBTC is a black box, much like total factor productivity (TFP) is to growth theory. To make progress on the effect of technology on inequality we need measurement. Theoretically, SBTC can be driven by capital-embodied technological change to the extent that capital and skills are complementary. In this paper, we explore the relationship between technological advancement and inequality by building measures of capital-embodied technological change at the occupation level. We document substantial heterogeneity in the degree of capital-skill complementarity across occupations. Importantly, we show that the role assigned to SBTC for the raise in employment in skill intensive occupations over the last 35 years is almost exclusively accounted for capital-embodied technological change. Finally, we show that the raise in the skill-premium over the same period is accounted for the dynamics of the capital labor ratio and factor complementarity in two occupations: technicians and low-skill services.
    Date: 2019
  7. By: Costas Arkolakis (Yale University); Michael Peters (Yale University); Sun Kyoung Lee (Columbia University)
    Abstract: What is the role of immigrants on (American) Growth? To answer this perplex question, we undertake a massive effort of collecting, digitizing, and harmonizing micro and macro economic data from the 19th and early 20th century. The data originate from the historical manufacturing and demographic census of the United States, immigration records datasets and the universe of US patents. To analyze the counterfactual implications of alternative allocations of immigrants, we develop a dynamical trade model where heterogenous firms make innovation and exporting decisions across space and time. The model predicts that the timing and the spatial allocation of immigrant arrivals affect the path of growth outcomes for each location and the aggregate US economy. We use the structural equations arising from the model to interpret empirical findings from the difference-in-difference analysis for the importance of the influx of skilled immigrants on the differential growth of US counties. Counterfactual scenarios of alternative allocation of skilled immigrants from different countries across space and time reveal the economic impact of barriers to migration to the United States economy.
    Date: 2019
  8. By: Schmöller, Michaela; Spitzer, Martin
    Abstract: This paper analyses the procyclicality of euro area total factor productivity and its role in business cycle amplification by estimating a medium-scale DSGE model with endogenous productivity mechanism on euro area data. Total factor productivity evolves endogenously as a consequence of costly investment in R&D and adoption of new technologies. We find that the endogeneity of TFP induces a high degree of persistence in the euro area business cycle via a feedback mechanism between overall economic conditions and investment in productivity-enhancing technologies. As to the sources of the euro area productivity slowdown, we conclude that a decrease in the efficiency of R&D investment is among the key factors generating the pre-crisis productivity slowdown, while starting from the Great Recession an increase in liquidity demand is identified as the most important driving force. The endogenous technology mechanism further exerts a dampening effect on the inflation response over the business cycle which helps rationalizing both the negligible fall in inflation during the Great Recession and the sluggish increase of inflation in the subsequent recovery.
    JEL: E24 E32 O31
    Date: 2019–09–18
  9. By: Pietrobelli, Carlo (UNU-MERIT, and University of Roma Tre)
    Abstract: Industrial clusters have developed in many regions and countries of Latin America. Active public policies have often supported them at the national (federal) and local levels, sometimes with the financial and technical assistance of international organizations. These experiences have been most remarkable, and share several elements of the 'modern' industrial policies that enjoy an increasing consensus in the literature. The vast experience of locally based forms of active policies that have proliferated in Latin America reflects a modern approach to industrial policies, and an example for other developing countries. Such approach has typically included clever interactions of private and government sectors, a process of search and discovery of the necessary public policy inputs, and an interactive design and implementation of these policies.
    Keywords: Industrial policy, innovation policy, innovation and learning, cluster development, industrial clusters
    JEL: O25 O43 L14
    Date: 2019–09–11
  10. By: Chu, Angus C.; Peretto, Pietro
    Abstract: This study explores the evolution of income inequality in an economy featuring an endogenous transition from stagnation to growth. We incorporate heterogenous households into a Schumpeterian model of endogenous takeoff. In the pre-industrial era, the economy is in stagnation, and income inequality is determined by an unequal distribution of land ownership and remains stationary. When takeoff occurs, the economy experiences innovation and economic growth. In this industrial era, income inequality gradually rises until the economy reaches the balanced growth path. Finally, we calibrate the model for a quantitative analysis and compare the simulation results to historical data in the UK.
    Keywords: income inequality; innovation; economic growth; endogenous takeoff
    JEL: D3 O3 O4
    Date: 2019–09
  11. By: Estolatan, Eric; Geuna, Aldo (University of Turin)
    Abstract: The case studies described in this paper investigate the evolution of the knowledge bases of the two leading EU robotics firms - KUKA and COMAU. The analysis adopts an evolutionary perspective and a systems approach to examine a set of derived patent-based measures to explore firm behavior in technological knowledge search and accumulation. The investigation is supplemented by analyses of the firms' historical archives, firm strategies and prevailing economic context at selected periods. Our findings suggest that while these enterprises maintain an outwardlooking innovation propensity and a diversified knowledge base they tend to have a higher preference for continuity and stability of their existing technical knowledge sets. The two companies studied exhibit partially different responses to the common and on-going broader change in the robotics industry (i.e. the emergence of artificial intelligence and ICT for application to robotics); KUKA is shown to be more outward-looking than COMAU. Internal restructuring, economic shocks and firm specificities are found to be stronger catalysts of change than external technology-based stimuli.
    Date: 2019–06

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