nep-ino New Economics Papers
on Innovation
Issue of 2022‒04‒04
five papers chosen by
Uwe Cantner
University of Jena

  1. The determinants of AI innovation across European firms By Igna, Ioana; Venturini, Francesco
  2. Global Knowledge Embeddedness By Holger Graf; Martin Kalthaus
  3. Further Reasons for the “But for” Defense of a Grant-Back Clause and the Attribute of Innovation By Masahito Ambashi
  4. Foreign graduates in Sweden. The role of high tech sectors, STEM disciplines and cultural distance. By Fassio, Claudio; Igna, Ioana
  5. Pricing for Medicine Innovation: A Regulatory Approach to Support Drug Development and Patient Access By Rosie Collington; William Lazonick

  1. By: Igna, Ioana (CIRCLE, Lund University); Venturini, Francesco (University of Perugia)
    Abstract: Using patent data for a panel sample of European companies between 1995 and 2016 we explore whether the innovative success in Artificial Intelligence (AI) is related to earlier firms’ research in the area of Information and Communication Technology (ICT), and identify which company characteristics and external factors shape this performance. We show that AI innovation has been developed by the most prolific firms in the field of ICT, presents strong dynamic returns (learning effects), and benefits from complementaries with knowledge developed in network and communication technologies, high-speed computing and data analysis, and more recently in cognition and imaging. AI patent productivity increases with the scale of research but is lower in presence of narrow and mature technological competencies of the firm. AI innovating companies are found to benefit from spillovers associated with innovations developed in the field of ICT by the business sector; this effect, however, is confined to frontier firms. Our findings suggest that, with the take-off of the new technology, the technological lead of top AI innovators has increased mainly due to the accumulation of internal competencies and the expanding knowledge base. These trends help explain the concentration process of the world’s data market.
    Keywords: AI; ICT; patenting; European firms
    JEL: O31 O32 O34
    Date: 2022–03–02
  2. By: Holger Graf (Friedrich Schiller University Jena, Department of Economics); Martin Kalthaus (Friedrich Schiller University Jena, Department of Economics)
    Abstract: Various forms of interaction during the process of research and innovation constitute a global network of knowledge generation and diffusion. Countries and their research organizations and individual scientists need to be embedded in this network to participate in global knowledge flows and to increase success in idea generation, invention and innovation. In this chapter, we review the literature on two of the most important channels of international knowledge diffusion in the field of science: research collaboration and scientist mobility. We thereby focus on the motives and determinants to collaborate or move internationally, the formation of a global knowledge network and the effects of embeddedness in the network and its influence on aggregate outcomes. From this review, we derive seven stylized facts on global knowledge embeddedness.
    Keywords: scientist mobility, research collaboration, global knowledge network, literature review
    JEL: O33 F60 O15
    Date: 2022–03–08
  3. By: Masahito Ambashi (Institute of Economic Research, Kyoto University)
    Abstract: This study investigates the effect of grant-back clauses in licensing agreements using a different analytical manner from that of Ambashi, Régibeau, and Rockett (2019) (abbreviated by “ARR”). Both this study and theirs focus on attributes of innovations categorized as either “severable” (noninfringing) or “nonseverable” (infringing). The European Commission’s 2004 Technology Transfer Guidelines consider a grant-back clause applied to nonseverable innovation innocuous. In contrast, those guidelines indicate that a grant-back clause that applies to severable innovation should be treated with much greater skepticism. However, this study reveals that this guidance requires further debate concerning prohibitions on territorial restraints and multiple heterogeneous licensees, as well as other factors noted in the work of ARR.
    Keywords: Grant-back clause, Patent, Licensing, Severable and nonseverable innovation
    JEL: O31 O34
    Date: 2022–02
  4. By: Fassio, Claudio (CIRCLE, Lund University); Igna, Ioana (CIRCLE, Lund University)
    Abstract: This paper analyzes the career paths of foreign students in Sweden, after graduation. Matching individual data on foreign graduates in Sweden with information about their employers, we analyze the sectors in which they start their career after graduation in Sweden, during the period 2000-2014. We propose that foreign graduates are attracted by firms operating in sectors employing a higher level of knowledge codification and in expanding sectors with a higher growth of demand for skilled workers. Our findings indicate that foreign graduates are more likely than Swedish ones to work in high-tech sectors, both in manufacturing and services, and in expanding industries, such as the services with low knowledge intensity. Foreign students from more culturally distant locations are more likely to work in high-tech or in expanding sectors. Finally, STEM foreign graduates are the main driver of the propensity to work in high tech manufacturing sectors, but not in high tech services.
    Keywords: foreign graduates; STEM; cultural distance; high tech; occupations
    JEL: J20 O39
    Date: 2021–03–02
  5. By: Rosie Collington (University College London Institute for Innovation and Public Purpose); William Lazonick (The Academic-Industry Research Network)
    Abstract: The United States represents the world's largest market for pharmaceutical drugs. It is also the only advanced economy in the world that does not regulate drug prices. There is no upper threshold for the prices of medicines in the United States. List prices are instead set by manufacturers in negotiation with supply-chain intermediaries, though some federal programs have degrees of discretion in price determinations. In practice, this deregulated system means that drug prices in the United States are generally far higher than in other advanced economies, adversely affecting patient accessibility and system affordability. In this paper, we draw on the "theory of innovative enterprise" to develop a framework that provides both a critique of the existing pricing system in the United States and a foundation for developing a new model of pricing regulation to support safety and effectiveness through drug development as well as accessibility and affordability in the distribution of approved medicines to patients. We introduce a regulatory approach we term "Pricing for Medicine Innovation" (PMI), which departs dramatically from the market-equilibrium assumptions of conventional (neoclassical) economics. The PMI approach recognizes the centrality of collective investments by government agencies and business firms in the productive capabilities that underpin the drug development process. PMI specifies the conditions under which, at the firm level, drug pricing can support both sustained investment in these capabilities and improved patient access. PMI can advance both of these objectives simultaneously by regulating not just the level of corporate profit but also its allocation to reinvestment in the drug development process. PMI suggests that although price caps are likely to improve drug affordability, there remain two potential issues with this pricing approach. Firstly, in an innovation system where a company's sales revenue is the source of its finance for further drug development, price caps may deprive a firm of the means to invest in innovation. Secondly, even with adequate profits available for investment in innovation, a firm that is run to maximize shareholder value will tend to use those profits to fund distributions to shareholders rather than for investment in drug innovation. We argue that, if implemented properly, PMI could both improve the affordability of medicines and enhance the innovative performance of pharmaceutical companies.
    Keywords: Pharmaceuticals, pricing, innovation, strategy, organization, finance, resource allocation, learning, scale, investment, regulation.
    JEL: D2 D4 D8 G3 H3 I11 L2 O3
    Date: 2022–01–28

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