nep-ino New Economics Papers
on Innovation
Issue of 2021‒10‒25
seven papers chosen by
Uwe Cantner
University of Jena

  1. The drivers of SME innovation in the regions of the EU By Hervás-oliver, José-luis; Parrilli, Mario Davide; Rodríguez-pose, Andrés; Sempere-ripoll, Francisca
  2. Geographies of Knowledge Sourcing and the Value of Knowledge in Multilocational Firms By Anthony Frigon; David L. Rigby;
  3. Innovation and trade patterns in the Latin American mining sector By Enrico Alessandri
  4. Patents for Covid-19 vaccines are based on public research: a case study on the privatization of knowledge By Massimo FLORIO
  5. Closing the Innovation Gap in Pink and Black By Lisa D. Cook; Janet Gerson; Jennifer Kuan
  6. The Effects of Taxes on Innovation: Theory and Empirical Evidence By Stefanie Stantcheva
  7. Platform Liability and Innovation By Doh-Shin Jeon; Yassine Lefouili; Leonardo Madio

  1. By: Hervás-oliver, José-luis; Parrilli, Mario Davide; Rodríguez-pose, Andrés; Sempere-ripoll, Francisca
    Abstract: European Union (EU) innovation policies have for long remained mostly research driven. The fundamental goal has been to achieve a rate of R&D investment of 3% of GDP. Small and medium-sized enterprise (SME) innovation, however, relies on a variety of internal sources —both R&D and non-R&D based— and external drivers, such as collaboration with other firms and research centres, and is profoundly influence by location and context. Given this multiplicity of innovation activities, this study argues that innovation policies fundamentally based on a place-blind increase of R&D investment may not deliver the best outcomes in regions where the capacity of SMEs is to benefit from R&D is limited. We posit that collaboration and regional specificities can play a greater role in determining SME innovation, beyond just R&D activities. Using data from the Regional Innovation Scoreboard (RIS), covering 220 regions across 22 European countries, we find that regions in Europe differ significantly in terms of SME innovation depending on their location. SMEs in more innovative regions benefit to a far greater extent from a combination of internal R&D, external collaboration of all sorts, and non-R&D inputs. SMEs in less innovative regions rely fundamentally on external sources and, particularly, on collaboration with other firms. Greater investment in public R&D does not always lead to improvements in regional SME innovation, regardless of context. Collaboration is a central innovation activity that can complement R&D, showing an even stronger effect on SME innovation than R&D. Hence, a more collaboration-based and place-sensitive policy is required to maximise SME innovation across the variety of European regional contexts.
    Keywords: regional innovation; SMEs; R&D; place-based; collaboration; EU regions
    JEL: O31 O32 L11
    Date: 2021–11–01
  2. By: Anthony Frigon; David L. Rigby;
    Abstract: A growing body of research in economic geography, international business management and related fields focuses on geographies of knowledge sourcing. This work examines the organizational structure of innovation activities within the firm, the mechanisms by which knowledge is extracted from various external sources and the geography of these different activities. We augment this literature by exploring knowledge sourcing within multilocational firms operating in the US using a unique dataset matching patent records to firm-level ownership and geographical data. The results add value to existing research in three ways. First, the establishments of multilocational corporations are shown to produce different kinds of knowledge in different locations. Second, the patents generated within a firm’s establishments are linked to the knowledge stocks of the cities where they operate, supporting a vision of geographical knowledge sourcing. Third, the complexity of knowledge produced within the firm as a whole is positively related to the number of establishments in which multilocational firms undertake innovation activities. In sum these data suggest that multilocational firms distribute their innovation activities across locations in order to secure access to local pools of tacit knowledge. The complexity value of firms’ knowledge production is enhanced as a result of this spatial strategy.
    Date: 2021–10
  3. By: Enrico Alessandri (Department of Economics, Society & Politics, Università di Urbino Carlo Bo - Green-University L.Bocconi, Milan)
    Abstract: This paper examines the trade and innovation specialization patterns in the Latin American mining sector, in terms of exports of mining products, of its exports of mining equipment, and of its production of mining technologies (i.e. innovation). Results suggest that Latin American countries are specialised in the extraction and export of mining products (i.e. minerals), and de-specialised in the production of mining equipment and of mining technology, while they heavily rely on imports of equipment and technology. We also find that the mining innovation taking place in Latin America is of relatively low quality. Considering that innovation in the mining sector is supplier-dominated, the weak technological specialisation of Latin American countries in the mining sector reflects mainly the low innovation capacity of local suppliers to mining companies, in comparison to the global average.
    Keywords: Mining innovation; Mining production; Specialization patterns; Patent quality indicators; Local METS (suppliers); Patents; Trade data; Inward FDI; Latin America
    Date: 2021
  4. By: Massimo FLORIO (Department of Economics, Management, and Quantitative Methods, Università degli Studi di Milano (Italy))
    Abstract: The COVID-19 pandemic has forced us to reconsider the relationship between public and private research and development (R&D). The policy issue is whether, over the next 20 years, governments’ only negotiating position on biomedical technologies will be to sign one purchase contract after another and transfer value from tax payers to investors in pharmaceutical companies. Knowledge and technologies that are crucial to Covid-19 vaccine development and production were created with the contribution of governments. Patents filed by pharma companies do not protect the public interest arising from such earlier research. The paper offers a case study on the privatization of knowledge created in the first place by R&D in the public sector or supported by public funds and eventually being appropriated by pharmaceutical corporations.
    Keywords: COVID 19 pandemic, vaccines, public and private R&D, Big Pharma, public funding, USA
    JEL: H51 I11 L32 O32
    Date: 2021–03
  5. By: Lisa D. Cook; Janet Gerson; Jennifer Kuan
    Abstract: Recent research shows the negative impact of discrimination not only on the targets of discrimination but also on the economy as a whole. Racial and gender inequality can limit the entire economy's productive capacity and innovation outcomes. Using new data from NSF's Survey of Earned Doctorates on the scientific workforce from 1980 to 2019, as well as patenting and commercialization data, we examine racial and gender disparities at each stage of the innovation process—education and training, the practice of invention, and commercialization. While improving along certain dimensions over time, we find persistent racial and gender disparities consistent with the current literature. To reverse the negative effects on productive capacity and long-run economic growth, we also discuss the literature on mitigating discriminatory practices at each juncture, which could have significant distributional effects as access to good jobs expands.
    JEL: O31 O33
    Date: 2021–10
  6. By: Stefanie Stantcheva
    Abstract: Income taxes are typically set to raise revenues and redistribute income at the lowest possible efficiency costs, which result from the distortions in individual behaviors that taxes entail. Individuals can respond along many margins, such as labor supply, tax avoidance and evasion, and geographic mobility. But one margin that taxes may affect — innovation — is less frequently considered. Conceptually, taxes reduce the expected net returns to innovation inputs and can reduce innovation. Much like other margins of responses to taxes, this efficiency cost must be taken into account. Innovation is done by a relatively small number of people, but it is nevertheless likely to have widespread benefits. While inventors may have divergent motivations, such as social recognition or the love of discovery, they also face an economic reality. How strongly innovation responds to taxes is an empirical question that has been the subject of a growing body of recent work. In this paper, I study how to account for innovation when setting personal income and capital taxation. I distinguish between two cases: one in which the government can set a differentiated tax on inventors and one in which the government is constrained to set the same tax on all agents. I provide a model that flexibly accounts for the spillovers generated by innovation and the non-pecuniary benefits inventors receive from innovation and derive tax formulas expressed in terms of estimable sufficient statistics. The second part of the paper discusses the empirical evidence on the effects of taxes on the quantity, quality, and location of innovation, as well as tax avoidance and income shifting done through innovation.
    JEL: H2 H23 H24 O3 O4
    Date: 2021–10
  7. By: Doh-Shin Jeon (Toulouse School of Economics, University of Toulouse Capitole, 1, Esplanade de l’Université, 31080 Toulouse, Cedex 06, France); Yassine Lefouili (Toulouse School of Economics, University of Toulouse Capitole, 1, Esplanade de l’Université, 31080 Toulouse, Cedex 06, France); Leonardo Madio (University of Padova, Department of Economics and Management, Via del Santo, 33, 35139 Padova, Italy)
    Abstract: We study an e-commerce platform's incentives to delist IP-infringing products and the effects of introducing a liability regime that induces the platform to increase its screening intensity. We identify conditions under which platform liability is socially desirable (respectively, undesirable) by analyzing its intended and unintended effects on the innovation incentives of brand owners. We show that making the platform liable for the presence of IP-infringing products can lead to a reduction (instead of an increase) in brand owners' innovation if the platform responds to more screening by raising its commission rate. We then consider various extensions that allow us to identify additional forces that strengthen (respectively, weaken) the social desirability of liability. We conclude by presenting some implications for policymakers.
    Keywords: Platforms, Platform Liability, Intellectual Property, Innovation, Delisting
    JEL: L13 L43 L96
    Date: 2021–09

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