nep-ino New Economics Papers
on Innovation
Issue of 2019‒11‒11
eleven papers chosen by
Uwe Cantner
University of Jena

  1. Migrant Inventors and the Technological Advantage of Nations By Dany Bahar; Prithwiraj Choudhury; Hillel Rapoport
  2. Patenting Government Funded Innovations as a Strategy to Increase Budget for Academic Vaccine R&D By Songane, Mario
  3. Synergizing Ventures By Akcigit, Ufuk; Dinlersoz, Emin M.; Greenwood, Jeremy; Penciakova, Veronika
  4. The survival of start-ups in time of crisis. A machine learning approach to measure innovation By Marco Guerzoni; Consuelo R. Nava; Massimiliano Nuccio
  5. Disruptive Innovation by Heterogeneous Incumbents and Economic Growth: When do incumbents switch to new technology? By Ohki, Kazuyoshi
  6. New empirics about innovation and inequality in Europe By Antonio Biurrun-Santamaria
  7. A Cross-Country Analysis of ICT: Diffusion, Economic Growth and Global Competitiveness By Banerjee, Aniruddha; Rappoport, Paul; Alleman, James
  8. Competition, technological change and productivity gains: the contribution of information technologies By Ciriani, Stephane; Jeanjean, Francois
  9. What Drives International technology Diffusion? A Gravity Approach By Santacreu, Ana Maria
  10. (Un)Intended Effects of Preferential Tax Regimes: The Case of European Patent Boxes By Marko Koethenbuerger; Federica Liberini; Michael Stimmelmayr
  11. New Technology, Entrepreneurship and the Revival of Manufacturing in Africa: Opportunities for Youth and Women? By Wim Naudé

  1. By: Dany Bahar; Prithwiraj Choudhury; Hillel Rapoport
    Abstract: We investigate the relationship between the presence of migrant inventors and the dynamics of innovation in the migrants’ receiving countries. We find that countries are 25 to 50 percent more likely to gain advantage in patenting in certain technologies given a twofold increase in the number of foreign inventors from other nations that specialize in those same technologies. For the average country in our sample this number corresponds to only 25 inventors and a standard deviation of 135. We deal with endogeneity concerns by using historical migration networks to instrument for stocks of migrant inventors. Our results generalize the evidence of previous studies that show how migrant inventors "import" knowledge from their home countries which translate into higher patenting. We complement our results with micro-evidence showing that migrant inventors are more prevalent in the first bulk of patents of a country in a given technology, as compared to patents filed at later stages. We interpret these results as tangible evidence of migrants facilitating the technology-specific diffusion of knowledge across nations.
    Keywords: Innovation;Migration;Patent;Technology;Knowledge
    JEL: O31 O33 F22
    Date: 2019–10
  2. By: Songane, Mario
    Abstract: Vaccine development is a lengthy, expensive and risky venture, with the research and development (R&D) process costing billions of dollars. The pre-clinical stage of vaccine R&D is largely performed by academic research institutions, then continued by the pharmaceutical industry though licensing agreements, taking the most promising candidates to the clinical testing stage. Governments play a major role in de-risking the early stages of vaccine R&D for the pharmaceutical industry through the funding of research in public institutes and academic research laboratories, and providing loans and tax credit to pharmaceutical companies involved in vaccine R&D. Through these initiatives, governments fuel the industry, shape markets and aid the development of novel products and technologies. Many of the blockbuster vaccines currently on the market benefited greatly from government funding, however, pharmaceutical companies are reaping most of the rewards of the billions of dollars these vaccines generate every year. The present review will discuss the role that government funding and academic research has played in vaccines R&D. Furthermore, it will discuss some of the elaborate schemes pharmaceutical companies use to reduce their tax payments, and how strategies such as patenting government-funded innovations can help ensure that governments receive a share of the generated revenues.
    Keywords: Vaccine; Patent; R&D; Financing; Government
    JEL: I18
    Date: 2019–11–05
  3. By: Akcigit, Ufuk (University of Chicago); Dinlersoz, Emin M. (U.S. Census Bureau); Greenwood, Jeremy (University of Pennsylvania); Penciakova, Veronika (Federal Reserve Bank of Atlanta)
    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.
    Keywords: venture capital; assortative matching; endogenous growth; IPO; management; mergers and acquisitions; research and development; startups; synergies; taxation; patents
    JEL: E13 E22 G24 L26 O16 O31 O40
    Date: 2019–09–01
  4. By: Marco Guerzoni; Consuelo R. Nava; Massimiliano Nuccio
    Abstract: This paper shows how data science can contribute to improving empirical research in economics by leveraging on large datasets and extracting information otherwise unsuitable for a traditional econometric approach. As a test-bed for our framework, machine learning algorithms allow us to create a new holistic measure of innovation built on a 2012 Italian Law aimed at boosting new high-tech firms. We adopt this measure to analyse the impact of innovativeness on a large population of Italian firms which entered the market at the beginning of the 2008 global crisis. The methodological contribution is organised in different steps. First, we train seven supervised learning algorithms to recognise innovative firms on 2013 firmographics data and select a combination of those with best predicting power. Second, we apply the former on the 2008 dataset and predict which firms would have been labelled as innovative according to the definition of the law. Finally, we adopt this new indicator as regressor in a survival model to explain firms' ability to remain in the market after 2008. Results suggest that the group of innovative firms are more likely to survive than the rest of the sample, but the survival premium is likely to depend on location.
    Date: 2019–11
  5. By: Ohki, Kazuyoshi
    Abstract: In this paper, we construct a tractable endogenous growth model to examine heterogeneous incumbents' current technology-switching behavior. Then, we examine the effects of policies such as a subsidy for innovation by incumbents, a subsidy for innovation by entrants, and the extension of patent length. Our setting suggests interesting and counterintuitive results. High quality incumbents tend to be less likely to conduct innovation, which is inconsistent with Schumpeter's hypothesis. A subsidy for innovation by entrants decreases the average quality of differentiated goods. Moreover, it may decrease the growth rate of the economy if the positive spillover of innovation from average quality production is adequately large. Aggregate innovation can be small even when the population size is large if the barriers to entry are extremely high.
    Keywords: Economic Growth, R&D, Firm-Heterogeneity, Innovation by Incumbents, IPR Policy
    JEL: O31 O32 O33 O34 O41
    Date: 2019–10–31
  6. By: Antonio Biurrun-Santamaria (Instituto Complutense de Estudios Internacionales (ICEI), Universidad Complutense de Madrid.)
    Abstract: The increase of internal inequality is one of the consequences of the recent turbulence of the World economy and the crisis’ effects in advanced countries. At the same time, to face the new information age and the phenomena of digitalization and robotization, investment in research and development (R&D) is an indisputable action for economic and social progress. The combination of these two dynamics opens new debates about the still unresolved relationship between innovation and inequality. This paper contrasts the postulates of the existing body of theory and the existing empirical evidence to argue that the positive co-evolution of inequality reduction and technological progress in Europe is not a lineal process, but it requires to analyze its complexity and what sort of combination of factors would best explain it. The findings are based on regressions with panel data from a sample of 20 countries in the period 1995-2017, and they show the relevance of structural and institutional aspects within the European region. In particular, two clusters of countries seem to define a dissimilar behavior in the relationship between inequality and innovation and a virtuous circle defined by the contribution of social protection and innovation policies contributes to a favorable solution of the puzzle between innovation and inequality.
    Keywords: Innovation; Inequality; Institutions; Catching-up.
    Date: 2019
  7. By: Banerjee, Aniruddha; Rappoport, Paul; Alleman, James
    Abstract: Forty years ago, virtually the entire telecommunications sector was state owned, managed and controlled - owned, managed and controlled by the state since their inception. In the mid-1980s a movement towards privatization, liberalization and deregulation took hold. Now the sector has been privatized in most countries and subjected to regulatory reform. The major reform occurred in the late 1990s (Estache et al. 2006). Since then the internet and cellular-mobile industries have advanced significantly. Mobile service has exploded, particularly, in the developing world. This has changed the dynamics of the industry dramatically. The paper updates and expands the research on the contribution of Information and Telecommunications Technology's (ICT) on the growth of Gross Domestic Product (GDP) using cross-country analysis of selected countries. It follows the framework of Czernich (1991), et it use of instrumental variables and Farhadi, et al. (2012) in its use of International Telecommunication Union's (ITU) ICT Development Index (IDI) but enhances the analysis by use of Global Competitiveness Index (GCI) and more recent data. It also uses the Conference Board Total Economic Database. This paper empirically evaluates the impact of ICT on economy growth in selected countries and vice versa. For the 2008-2017 period, it shows lack of evidence causality in both directions. This finding is in contrast to results obtained looking at earlier periods. A central question is, if these results hold going further, what changed? The paper is organized as follows: A brief Literature Review following this Introduction/Overview. It reviews the economic literature of Information and Telecommunications Technology's (ICT)impact on economic growth and development. The third section describes the data. The fourth section describes the methodology and; the results are in the fifth section. The final section presents Future Research and Remaining Questions.
    Date: 2019
  8. By: Ciriani, Stephane; Jeanjean, Francois
    Abstract: This paper addresses the empirical relationship between the level of competition and the rate of productivity growth across thirty sectors of the French production system during the period 1978- 2015. It shows that there exists an optimal level of competition for each sector that is defined by the mark-up that maximizes the growth rate of labor productivity. The information technologies Sectors have the highest mark-ups for maximizing productivity growth. The persistence of nonoptimal mark-ups in French sectors is associated with a 0.4% loss in aggregate average annual labor productivity growth during the period (1.86%). Hence, long-term productivity growth could have reached 2.25% if mark-ups had been at their optimal level. There is a strong significant positive correlation between the optimal mark-up and the rate of Hicks-neutral technical progress in each sector. This finding implies that sectors with high technical progress, as information technologies sectors, require higher mark-ups to maximize their rate of labor productivity growth. Overall, the aggregate economy would benefit from a decrease in the gap between nonoptimal and optimal mark-ups, as such an alignment would foster productivity growth.
    Keywords: Technical progress,productivity growth,mark-up
    JEL: O11 O31 O47 L16
    Date: 2019
  9. By: Santacreu, Ana Maria (Federal Reserve Bank of St. Louis)
    Abstract: We derive a theory-based gravity-type equation that determines the main drivers of international technology diffusion under perfect enforcement of intellectual property rights. We estimate the gravity equation using bilateral royalty payments data for a sample of 53 countries and the period 1995-2012 to infer the amount of technology diffusion predicted by the model. We then analyze differences between the model and the data, and find that they are mainly driven by characteristics of the importing-technology country that are not captured by the model. We explore the role of three channels: (i) imperfect intellectual property rights protection, (ii) the structure of production, and (iii) profit-shifting motives. Controlling for these three channels significantly improves the fit of the model: (i) and (ii) are especially relevant for developing economies, whereas (iii) is important for tax havens.
    Keywords: Technology diffusion; royalty payments; intellectual property rights
    JEL: F12 O33 O41 O47
    Date: 2019–11–04
  10. By: Marko Koethenbuerger; Federica Liberini; Michael Stimmelmayr
    Abstract: Patent boxes have become an increasingly popular tax instrument in the European Union and the US to attract mobile tax bases of multinational enterprises (MNEs) as well as to foster productivity. This paper estimates the size of the (un)intended effects of the new preferential tax regime, which grants a reduction in the tax burden on income from intellectual property. We show that MNE affliates that can benefit from the preferential regime report 8.5 percent higher profits. The profit change splits up into a profit shifting and a productivity effect in proportions 2/3 and 1/3. Surprisingly, the profit shifting effect includes an unintended, reversed profit shifting out of the affiliate. Contrary to expectation, the overall tax base adjustment might lower tax revenues collected from MNEs.
    Date: 2019
  11. By: Wim Naudé (Maastricht University; Professor)
    Abstract: The digitization of the economy and advances in smart materials are transforming the nature of manufacturing. This is often described as features of the “Fourth Industrial Revolution” or Industry 4.0. For African economies, not yet having industrialized, this is of great importance, especially given the challenge of youth job creation and the need for gender equality. A combination of Industry 4.0 technologies and a resurgence in tech-entrepreneurship will have four broad impacts on manufacturing in Africa (i) the sector will continue to grow significantly in terms of value added; (ii) net job creation will be positive; (iii) it will stimulate technological and complex skills development, as well as (iv) investment in supportive infrastructure. The opportunities that these impacts will have for youth and women are outlined in the following report. Youth and women stand to benefit because of the ability of manufacturing to provide quality, high-productivity jobs in urban areas, to stimulate the development of human capital, including gender equality, and to provide, through new technologies that “democratizes” production for small businesses, new opportunities for both male and female entrepreneurs. The author also identifies policy support measures, to help realize these outcomes.
    Keywords: Economic Complexity, Fourth Industrial Revolution, Technology, Employment, Women, Youth
    Date: 2019–05

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