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on Innovation |
| By: | Andreas Teichgraeber; John Van Reenen |
| Abstract: | What research and innovation (R&I) policies should Europe adopt? The world faces a challenge to rebuild after the pandemic, but also faces the same structural slowdown of productivity growth that occurred in the decades before the COVID crisis. We need to have a plan around innovation policy to address the challenge. We show that Europe is less innovative on many dimensions compared to other advanced regions, such as the US and parts of Asia. We review the econometric evidence on R&I policies and argue that there is good evidence for the efficacy of many of them. A mix of R&D subsidies, reinvigorated competition and a big push on expanding the quantity and quality of human capital is needed. These could be bound together around the need for green innovation in order to achieve the mission to radically reduce carbon emissions. |
| Keywords: | innovation, R&D, human capital, Europe |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1832&r= |
| By: | Philippe Aghion; Antonin Bergeaud; Matthieu Lequien; Marc J. Melitz; Thomas Zuber |
| Abstract: | We decompose the "China shock" into two components that induce different adjustments for firms exposed to Chinese exports: a horizontal shock affecting firms selling goods that compete with similar imported Chinese goods, and a vertical shock affecting firms using inputs similar to the imported Chinese goods. Combining French accounting, customs, and patent information at the firm-level, we show that the horizontal shock is detrimental to firms' sales, employment and innovation. Moreover, this negative impact is concentrated on low-productivity firms. By contrast, we find a positive effect - although often not significant - of the vertical shock on firms' sales, employment and innovation. |
| Keywords: | competition shock, patent, firms, import |
| Date: | 2021–08–09 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1787&r= |
| By: | Marc J. Melitz; Stephen J. Redding |
| Abstract: | Two central insights from the Schumpeterian approach to innovation and growth are that the pace of innovation is endogenously determined by the expectation of future profits and that growth is inherently a process of creative destruction. As international trade is a key determinant of firm profitability and survival, it is natural to expect it to play a key role in shaping both incentives to innovate and the rate of creative destruction. In this paper, we review the theoretical and empirical literature on trade and innovation. We highlight four key mechanisms through which international trade affects endogenous innovation and growth:(i) market size; (ii) competition; (iii) comparative advantage; (iv) knowledge spillovers. Each of these mechanisms offers a potential source of dynamic welfare gains in addition to the static welfare gains from trade from conventional trade theory. Recent research has suggested that these dynamic welfare gains from trade can be substantial relative to their static counterparts. Discriminating between alternative mechanisms for these dynamic welfare gains and strengthening the evidence on their quantitative magnitude remain exciting areas of ongoing research. |
| Keywords: | innovation, growth, international trade |
| Date: | 2021–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1777&r= |
| By: | Bellelli, Francesco S.; Xu, Ankai |
| Abstract: | This study investigates how environmental policies impact trade and innovation in environmental goods. We make two major contributions to the economic debate. First, we extract a set of information from the WTO Environmental Database (EDB) through natural language processing techniques that could be useful for future research and policy analysis. Second, we use this data to test a set of economic hypotheses on how environmental measures impact environmental innovation and trade. Our findings show that environmental measures can be an effective tool for stimulating green innovation and trade in green goods. However, policy design matters. Green innovation is most sensitive to R&D expenditure and measures on intellectual property protection and enforcement, whereas trade in green goods increases with environmental subsidies and support measures. Conversely, we find that non-tariff barriers - such as quarantine requirements, import quotas, regulation affecting movement or transit - reduce both imports and exports of environmental goods. Our findings also highlight strong path dependency in innovation. Hence, the earlier the intervention, the greater the accumulated benefits from green innovation. Conversely, delays in intervention increase the cost of transition by further "locking-in" the economy on dirtier exports and technologies. Finally, our result highlight that there is a clear linkage between innovation and trade. Past patents are a strong predictor of future exports, and nations tend to innovate more in technologies related to their exports. We also find evidence of strong technological spillovers across countries and sectors integrated in Global Value Chains (GVC). Hence, integration in environmental goods' GVCs could provide further channels of green technology diffusion and development. |
| Keywords: | trade and environment,environmental policies,innovation |
| JEL: | F14 F18 O38 Q55 Q58 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wtowps:ersd20223&r= |
| By: | Antonio Acconcia; Sergio Beraldo; Carlo Capuano; Marco Stimolo |
| Abstract: | We implement an experimental design based on a duopoly game in which subjects choose whether to cooperate in Research and Development (R&D) activities. We first conduct six experimental markets that differ in both the levels of knowledge spillovers and the intensity of competition. Consistently with the theory, we find that the probability of cooperation increases in the level of spillovers and decreases in that of market competition. We then replicate the experimental markets by providing subsidies to subjects who cooperate. Subsidies relevantly increase the probability of cooperation in focus markets, causing, however, a sensible reduction of R&D investments. Overall, our evidence suggests that, depending on the characteristics of the market, the use of public subsidies might be redundant, for firms would anyway joined their R&D efforts; or counterproductive, inducing firms to significantly reduce R&D investments compared to the non-cooperative scenario. |
| Keywords: | Cooperation in R&D; Public subsidies; knowledge spillovers; market competition. |
| JEL: | L24 O3 |
| Date: | 2022–03–04 |
| URL: | http://d.repec.org/n?u=RePEc:eei:rpaper:eeri_rp_2022_04&r= |
| By: | Probst, Benedict; Touboul, Simon; Glachant, Matthieu; Dechezleprêtre, Antoine |
| Abstract: | Increasing the development and diffusion of climate change mitigation technologies on a global scale is critical to reaching net-zero emissions. We have analysed over a quarter of a million high-value inventions in all major climate change mitigation technologies patented from 1995 to 2017 by inventors located in 170 countries. Our analysis shows an annual growth rate of 10% from 1995 to 2012 in these high-value inventions. Yet, from 2013 to 2017, the growth rate of these inventions fell by around 6% annually, likely driven by declining fossil fuel prices, low carbon prices and increasing technological maturity for some technologies, such as solar photovoltaics. Invention has remained highly concentrated geographically over the past decade, with inventors in Germany, Japan and the United States accounting for more than half of global inventions, and the top ten countries for almost 90%. Except for inventors in China, most middle-income economies have not caught up and remain less specialized in low-carbon technologies than high-income economies. |
| Keywords: | ES/R009708/1 |
| JEL: | R14 J01 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:112775&r= |