nep-ino New Economics Papers
on Innovation
Issue of 2022‒03‒07
eight papers chosen by
Uwe Cantner
University of Jena

  1. Technological interdependencies and employment changes in European industries By Lorenzo Cresti; Giovanni Dosi; Giorgio Fagiolo
  2. How to foster climate innovation in the European Union: Insights from the EIB Online Survey on Climate Innovation By Delanote, Julie; Rückert, Désirée
  3. Caught In The Middle: The Bias Against Startup Innovation With Technical And Commercial Challenges By Ashish Arora; Andrea Fosfuri; Thomas Roende
  4. Are Ideas Really Getting Harder To Find? R&D Capital and the Idea Production Function By Jakub Growiec; Peter McAdam; Jakub Mućk
  5. The effect of climate policy on innovation and economic performance along the supply chain: A firm- and sector-level analysis By Antoine Dechezleprêtre; Tobias Kruse
  6. Advanced digital technologies and industrial resilience during the COVID-19 pandemic: A firm-level perspective By Calza, Elisa; Lavopa, Alejandro; Ligia Zagato
  7. Research equity: Incentivizing high-risk basic research with market mechanisms By Ellgen, Clifford; Kang, Dominique
  8. Innovation and industrial policies for green hydrogen By Emile Cammeraat; Antoine Dechezleprêtre; Guy Lalanne

  1. By: Lorenzo Cresti; Giovanni Dosi; Giorgio Fagiolo
    Abstract: This work addresses the role of inter-sectoral innovation flows, which we frame as technological interdependencies, in determining sectoral employment dynamics. This purpose is achieved through the construction of an indicator capturing the amount of R&D expenditures embodied in the backward linkages of industries. We aim to find out whether having a more integrated production in terms of requiring more technological inputs is related to a lower demand for workers within the sector. We refer to the literature on innovation-employment nexus, inter-sectoral knowledge spillovers and Global Value Chains, building upon structuralist and evolutionary theoretical considerations. We track the flows of embodied technological change between industries taking advantage of the notion of vertically integrated sectors. The relevance of this vertical technological dimension for determining employment dynamics is then tested on a panel data of European industries over the 2008-2014 period. Results show a statistically significant and negative employment impact of the degree of vertical integration in terms of acquisitions of R&D embodied inputs. Combining the role of demand, the double nature of innovation - as product and as process -, together with intersectoral linkages, this work shows that the dependence of a sector from innovation performed by other ones - a proxy for input embodied process innovations - exert a negative effect upon employment.
    Keywords: Input-Output; Sectoral Interdependencies; Employment; Embodied Technological Change; Innovation Diffusion.
    Date: 2022–02–16
  2. By: Delanote, Julie; Rückert, Désirée
    Abstract: Using survey data on climate innovation, we map climate innovation patterns across different regions and technologies, and study the cooperation, protection and reach of climate innovation. Our analysis confirms that there is a strong link between climate innovation and firm performance. We nevertheless observe that European firms seem to suffer from the availability of finance. If European policymakers want to create more successful firms in the climate sector, they should strengthen policies that aim to reduce regulatory uncertainty and work actively to improve access-to finance conditions, in particular for start-ups.
    Keywords: Climate action and environment,Economics
    Date: 2022
  3. By: Ashish Arora; Andrea Fosfuri; Thomas Roende
    Abstract: Startups in IT and life sciences appear to be flourishing. However, startups in other sectors, such as new materials, automation, and eco-innovations, which are often called "deep tech", seem to struggle. We argue that innovations with both technical and commercial challenges, typical of deep tech innovations, are especially disadvantaged in a startup-based innovation system. We develop an analytical model where startups are more efficient at solving technical challenges and incumbents are more efficient at solving commercial challenges. We find that the startup-based system works better for "specialized" innovations, where only one type of challenges is significant. Startups which face both technical and commercial challenges are disadvantaged because they capture a smaller fraction of the value they create. We discuss the implications for various public policies that have been proposed to encourage deep-tech.
    JEL: L26 O31 Q55
    Date: 2022–01
  4. By: Jakub Growiec; Peter McAdam; Jakub Mućk
    Abstract: We supplement the 'Idea Production Function' (IPF) with measures of R&D capital. We construct a time series of R&D capital stock in the US (1968-2019) based on cumulated R&D investment. We estimate the IPF with patent applications as R&D output, allowing for a flexible treatment of unit productivity of R&D capital and R&D labor. We find that the elasticity of substitution between R&D input factors is 0.7-0.8 and significantly below unity. This implies that R&D capital is an essential factor in producing ideas, complementary to R&D labor. We also identify a systematic positive trend in R&D labor productivity at about 1% per year on average and a cyclical trend in R&D capital productivity. Our results suggest that instead of 'ideas getting harder to find', there is an increasing scarcity of R&D capital needed to find them.
    Keywords: R&D, Long-Run Growth, Technical Change, Estimation, CES.
    JEL: O30 O40 O47
    Date: 2022–02
  5. By: Antoine Dechezleprêtre (OECD); Tobias Kruse (OECD)
    Abstract: The paper empirically assesses the effect of climate policy stringency on innovation and economic performance, both directly on regulated sectors and indirectly through supply chain relationships. The analysis is based on a combination of firm- and sector-level data, covering 19 countries and the period from 1990 to 2015. The paper shows that climate policies are effective at inducing innovation in low-carbon technologies in directly regulated sectors. It does not find evidence that climate policies induce significant innovation along the supply chain. In addition, there is no evidence that climate policies – through the channel of clean innovation – either harm or improve the economic performance of regulated firms. This supports the evidence that past climate policies have not been major burdens on firms’ competitiveness, and that clean innovation may enable firms to compensate for the potential costs implied by new environmental regulations.
    Keywords: Firm performance, Low carbon innovation, Policy evaluation, Porter Hypothesis
    JEL: Q55 Q58 O38 L25
    Date: 2022–02–15
  6. By: Calza, Elisa (UNU-MERIT, Maastricht University, and United Nations Industrial Development Organization (UNIDO)); Lavopa, Alejandro (UNU-MERIT, Maastricht University, and United Nations Industrial Development Organization (UNIDO)); Ligia Zagato (United Nations Industrial Development Organization (UNIDO), and School of Oriental and African Studies (SOAS).)
    Abstract: The advanced digital production (ADP) technologies of the fourth industrial revolution (4IR) are expected to reshape the way industrial production takes place. These technologies offer new windows of opportunities for developing countries to catch up with the world technological frontier, but, at the same time, they pose new challenges and risks. This paper uses a novel firm-level data set collected by UNIDO and partners around the world to investigate the extent to which these technologies are diffused in developing countries, the main factors supporting their adoption and the role played by these technologies during the COVID-19 pandemic. Three key findings emerge from the analysis: (1) the diffusion of these technologies is still very limited to a handful of firms; (2) large firms, firms operating within global value chains and firms with existing innovative capabilities are more likely to adopt ADP technologies; and (3) advanced digitalization has contributed to the robustness of firms as they address the COVID-19 crisis and supported their readiness to act and respond quickly and adapt to the new context. The findings of the paper are expected to inform policymakers in the design of industrial recovery policies that can strengthen future industrial resilience in developing and emerging economies.
    Keywords: Industrial development, digital technologies, resilience; fourth industrial revolution, firm-level analysis, COVID-19
    JEL: O12 O14 O33
    Date: 2022–02–17
  7. By: Ellgen, Clifford; Kang, Dominique
    Abstract: Innovation in basic research is vital to scientific progress and technological development; however, such research finds insufficient support in the current research environment. To stimulate high-risk, high-reward basic research, this paper proposes a “research equity” funding model in which funders—such as government agencies and philanthropies—would pay researchers and institutions for completed research: The more valuable the research, the greater the reward. The valuation of completed research could be done with a novel “chess rating” method: A peer reviewer would be presented with a pair of research papers and would decide which of the two is of greater value, and a large number of comparisons would produce a numerical rating to inform payment. Payment based on research value would enable many of the qualities found in healthy markets. Initial capital for basic research would be provided by research institutions, which would be financially incentivized to invest in a diverse body of basic research that includes both low-risk, conservative research and high-risk, innovative research. Institutions would be motivated to demonstrate the value of completed research in their portfolios, which may accelerate recognition of important results. By motivating researchers and institutions to produce and promote valuable research, the research equity model could stimulate more rapid scientific discovery and progress. Notably, the research equity model could coexist with grant funding.
    Date: 2021–10–21
  8. By: Emile Cammeraat (OECD); Antoine Dechezleprêtre (OECD); Guy Lalanne (OECD)
    Abstract: This paper examines the current development of hydrogen technology in the manufacturing sector and the industrial policies enacted to support it across countries. In addition to continued R&D efforts, governments can already lay the ground for the deployment of green hydrogen by implementing five types of policies: 1) supporting R&D and demonstration for green hydrogen to bring down the cost of electrolysers and make them competitive; 2) increasing the supply of renewable electricity; 3) reducing the cost gap between green hydrogen and brown technologies through a comprehensive policy package, such as carbon pricing and the phasing out of inefficient fossil fuel subsidies; 4) reducing uncertainty, for instance by promoting international standardisation, hydrogen infrastructure, and sound regulatory standards; and 5) considering blue hydrogen as a short-term option to facilitate the transition to green hydrogen.
    Date: 2022–02–23

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