nep-ino New Economics Papers
on Innovation
Issue of 2023‒03‒13
twelve papers chosen by
Uwe Cantner
University of Jena

  1. Driving low-carbon innovations for climate neutrality By Chiara Criscuolo; Antoine Dechezleprêtre; Mario Cervantes
  2. Patents that match your standards: firm-level evidence on competition and innovation By Bergeaud, Antonin; Schmidt, Juliane; Zago, Riccardo
  3. From public labs to private firms: magnitude and channels of R&D spillovers By Bergeaud, Antonin; Guillouzouic, Arthur; Henry, Emeric; Malgouyres, Clement
  4. How the green and digital transitions are reshaping the automotive ecosystem By Antoine Dechezleprêtre; Luis Díaz; Milenko Fadic; Guy Lalanne
  5. The economic benefits of early green innovation: Evidence from the automotive sector By Alberto Agnelli; Hélia Costa; Damien Dussaux
  6. A blueprint for building national compute capacity for artificial intelligence By OECD
  7. Localized technological change By Kristiaan Kerstens; Jens Krüger; Zhiyang Shen
  8. Intellectual property rights protection and trade: an empirical analysis By Emmanuelle Auriol; Sara Biancini; Rodrigo Paillacar
  9. How many jobs can be done at home? Not as many as you think! By Crescenzi, Riccardo; Giua, Mara; Rigo, Davide
  10. Assessing the impact of regulations and standards on innovation in the field of AI By Alessio Tartaro; Adam Leon Smith; Patricia Shaw
  11. Technological chance and growth regimes: Assessing the case for universal basic income in an era declining labour shares By Chrisp, Joe; Garcia-Lazaro, Aida; Pearce, Nick
  12. Competing Social Influence in Contested Diffusion: Luther, Erasmus and the Spread of the Protestant Reformation By Sascha O. Becker; Steven Pfaff; Yuan Hsiao; Jared Rubin

  1. By: Chiara Criscuolo; Antoine Dechezleprêtre; Mario Cervantes
    Abstract: The transition to climate neutrality requires cost reductions in existing clean technologies to enable rapid deployment on a large scale, as well as the development of emerging technologies such as green hydrogen. This policy paper argues that science, technology, innovation, and industrial (STI&I) policies focusing on developing and deploying low-carbon technologies are crucial to achieving carbon neutrality. It notes however that the current level of innovation is insufficient to meet the net-zero challenge due to a policy emphasis on deployment rather than research and development (R&D) support. The paper explores the rationale for more ambitious STI&I policies targeted at R&D for climate neutrality and provides policy recommendations for an effective innovation policy for net-zero, including its interaction with the broader climate policy package.
    Keywords: climate change mitigation, innovation policy, low-carbon innovation, technological change
    JEL: O38 Q54 Q55 Q58
    Date: 2023–03–01
  2. By: Bergeaud, Antonin; Schmidt, Juliane; Zago, Riccardo
    Abstract: When a technology becomes the new standard, the firms that are leaders in producing this technology have a competitive advantage. Matching the semantic content of patents to standards and exploiting the exogenous timing of standardization, we show that firms closer to the new technological frontier increase their market share and sales. In addition, if they operate in a very competitive market, these firms also increase their R&D expenses and investment. Yet, these effects are temporary since standardization creates a common technological basis for everyone, which allows followers to catch up and the economy to grow.
    Keywords: standardization; patents; competition; innovation; text mining
    JEL: L15 O31 O33
    Date: 2022–10–24
  3. By: Bergeaud, Antonin; Guillouzouic, Arthur; Henry, Emeric; Malgouyres, Clement
    Abstract: Introducing a new measure of scientific proximity between private firms and public research groups and exploiting a multi-billion euro financing program of academic clusters in France, we provide causal evidence of spillovers from academic research to private sector firms. Firms in the top quartile of exposure to the funding shock increase their R&D effort by 20% compared to the bottom quartile. We exploit reports produced by funded clusters, complemented by data on labor mobility and R&D public-private partnerships, to provide evidence on the channels for these spillovers. We show that spillovers are driven by outsourcing of R&D activities by the private to the public sectors and, to a lesser extent, by labor mobility from one to the other and by informal contacts. We discuss the policy implications of these findings.
    Keywords: knowledge spillovers; policy instruments; technological distance
    JEL: O32 O38 R12
    Date: 2022–10–26
  4. By: Antoine Dechezleprêtre; Luis Díaz; Milenko Fadic; Guy Lalanne
    Abstract: The automotive sector is important across OECD countries in terms of value-added and R&D, but is also heavily affected by the green and the digital transformations. This paper offers a novel and holistic view of the automotive sector and its surrounding ecosystem based on a combination of Inter-Country Input-Output (ICIO) tables, patent data, mergers and acquisitions (M&A) transactions, cross-country micro-distributed data and firm-level balance sheet data. It identifies the boundaries of this industrial ecosystem including connected sectors (e.g. upstream and downstream) as well as knowledge and technology providers (e.g. universities or the digital industry). The paper documents emerging trends at the geographical and technological levels and provides a comprehensive assessment of the ecosystem’s changing microstructure, with a growing role of young and digital-intensive companies. Finally, it provides recommendations for effective public policies to support the automotive ecosystem, with a focus on innovation, competition and the growth of young firms.
    Keywords: automotive, autonomous vehicles, decarbonisation, industrial ecosystems, industrial policy
    JEL: L62 O25 L50 O38 Q58
    Date: 2023–03–01
  5. By: Alberto Agnelli; Hélia Costa; Damien Dussaux
    Abstract: The economic consequences for firms investing in green innovation, and therefore their incentives to innovate, are not well understood. This paper empirically assesses the economic returns on innovation in cleaner vehicles. The analysis uses data on passenger car market shares and patents for car manufacturers operating in eight countries for the period 2005-2021. The results show that, when vehicle fuel prices increase, firms having previously successfully filed patents related to both electric and hybrid vehicles and fuel efficiency experience an increase in their market share. This increase takes place between 7 and 8 years after the patent stock is accumulated for patents related to electric and hybrid vehicles and between 8 and 15 years for patents related to fuel efficiency. The analysis also finds that in contexts where fuel price salience is high, price increases generate larger and earlier competitiveness returns for firms having previously invested in cleaner technologies.
    Keywords: firm performance, fuel prices, fuel taxation, green technology, price salience, technological change
    JEL: O30 Q55 Q48
    Date: 2023–02–22
  6. By: OECD
    Abstract: Artificial intelligence (AI) is transforming economies and promising new opportunities for productivity, growth, and resilience. Countries are responding with national AI strategies to capitalise on these transformations. However, no country today has data on, or a targeted plan for, national AI compute capacity. This policy blind-spot may jeopardise domestic economic goals. This report provides the first blueprint for policy makers to help assess and plan for the national AI compute capacity needed to enable productivity gains and capture AI’s full economic potential. It provides guidance for policy makers on how to develop a national AI compute plan along three dimensions: capacity (availability and use), effectiveness (people, policy, innovation, access), and resilience (security, sovereignty, sustainability). The report also defines AI compute, takes stock of indicators, datasets, and proxies for measuring national AI compute capacity, and identifies obstacles to measuring and benchmarking national AI compute capacity across countries.
    Date: 2023–02–28
  7. By: Kristiaan Kerstens (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique); Jens Krüger; Zhiyang Shen
    Date: 2022–10–14
  8. By: Emmanuelle Auriol (TSE-R - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Sara Biancini (ESSEC Business School and THEMA (UMR 8184) - Economics Department - Essec Business School - THEMA - Théorie économique, modélisation et applications - CNRS - Centre National de la Recherche Scientifique - CY - CY Cergy Paris Université); Rodrigo Paillacar (CY - CY Cergy Paris Université)
    Abstract: The paper proposes an empirical analysis of the determinants of the adoption of Intellectual Property Rights (IPR) and their impact on innovation in manufacturing. The analysis is conducted with panel data covering 112 countries. First we show that IPR protection is U-shaped with respect to a country's market size and inverse-U-shaped with respect to the aggregated market size of its trade partners. Second, reinforcing IPR protection reduces on-the-frontier and inside-the-frontier innovation in developing countries, without necessarily increasing innovation at the global level.
    Keywords: Intellectual Property Rights, Innovation, Developing Countries, Market Potential, Trade
    Date: 2023–02
  9. By: Crescenzi, Riccardo; Giua, Mara; Rigo, Davide
    Abstract: COVID-19 has dramatically accelerated the uptake of work-from-home (WFH) practices worldwide. However, there is no consensus on the importance of this phenomenon for workers and firms. Unique administrative data on the universe of Italian workers make it possible to assess for the first time the actual diffusion of WFH across sectors, regions and rms. Our data show that 12% of workers have in fact worked from home at the peak of the pandemic in 2020, suggesting that existing studies overestimate the share of jobs that can be undertaken remotely by at least 50%. We also provide suggestive evidence that existing studies are unable to account for technological and cultural barriers that in practice prevent firms and workers from adopting WFH practices.
    Keywords: work-from-home; remote work; teleworking; Covid-19; coronavirus
    JEL: R14 J01
    Date: 2022–11–01
  10. By: Alessio Tartaro; Adam Leon Smith; Patricia Shaw
    Abstract: Regulations and standards in the field of artificial intelligence (AI) are necessary to minimise risks and maximise benefits, yet some argue that they stifle innovation. This paper critically examines the idea that regulation stifles innovation in the field of AI. Current trends in AI regulation, particularly the proposed European AI Act and the standards supporting its implementation, are discussed. Arguments in support of the idea that regulation stifles innovation are analysed and criticised, and an alternative point of view is offered, showing how regulation and standards can foster innovation in the field of AI.
    Date: 2023–02
  11. By: Chrisp, Joe; Garcia-Lazaro, Aida; Pearce, Nick
    Abstract: [Synopsis and motivation] In recent decades, most OECD countries have seen a significant decline in the labour share, as well as an increase in inequality. The decline in the labour share and the rise in inequality poses several problems for such countries, whether related to distributive justice, economic and social outcomes, such as deficient aggregate income and demand, or democratic politics. In this report, we focus on the role of technological change as a central driver of the decline in the labour share and explore its contingency: both across contexts and across definitions/operationalisations of technology. With respect to the latter, we distinguish between perspectives that place physical capital and investment in automation and ICT at the centre of technological change on the one hand, and the growth of the knowledge economy and intangible capital on the other. Meanwhile, following work by Baccaro and Pontusson (2016), and more recently Hassel and Palier (2021), we utilise the concept of 'growth regimes' to analyse how the effects of technology are mediated and moderated by national political-economic institutions. This approach allows us to test more nuanced arguments about the role of technological change in the decline in the labour share and to discuss the likely effects, and political feasibility, of policy solutions such as universal basic income (UBI) that are often advanced as an answer to increased automation and lower returns to labour. The following issues provide the basis for our research questions: 1. To what extent is technological change responsible for the decline in the labour share? 2. What is the role of growth regimes in moderating the effect of technology on the labour share? 3. Are results consistent across different conceptions and definitions of technological change? 4. What policy solutions are available to tackle these trends and issues? 5. Does technological change strengthen the case for and the feasibility of a universal basic income? This work builds on previous policy briefs and reports by the Institute for Policy Research (IPR) on UBI and technological change, namely the September 2019 report by Dr Luke Martinelli entitled 'Basic income, automation and labour market change' (Martinelli, 2019a). That report summarised the evidence regarding the effects of technology on labour markets and the case for UBI in such a light. Empirical analysis, however, focused on political economy questions concerning the political constituency for a UBI and policy trade-offs in design across EU countries using microsimulation analysis. Here, our empirical strategy is instead focused on questions about the effect of technology on the labour share, enabling us to re-pose the question of how a UBI could serve as a tool for combating growing inequality, income and demand deficiency, and labour market dysfunction in global economies. Future empirical research at the IPR will focus more comprehensively on the fifth and final research question above, namely estimating the macroeconomic effects of a UBI, including one funded using sovereign money. Next, we introduce three central ideas in the report - the decline in the labour share, technological change and growth regimes - before briefly outlining the consequences for policy debates.
    Date: 2023
  12. By: Sascha O. Becker (Monash University and University of Warwick); Steven Pfaff (University of Washington); Yuan Hsiao (University of Washington); Jared Rubin (Chapman University)
    Abstract: The spread of radical institutional change does not often result from onesided pro-innovation influence; countervailing influence networks in support of the status quo can suppress adoption. We develop a model of multiple and competing network diffusion. To apply the contesteddiffusion model to real data, we look at the contest between Martin Luther and Desiderius Erasmus, the two most influential intellectuals of early 16th-century Central Europe. Whereas Luther championed a radical reform of the Western Church that broke with Rome, Erasmus opposed him, stressing the unity of the Church. In the early phase of the Reformation, these two figures utilized influence networks of followers, affecting which cities in the Holy Roman Empire adopted reform. Using newly digitalized data on both leaders’ correspondence networks, their travels, the dispersion of their followers, and parallel processes of exchange among places through trade routes, we employ econometric tests and network simulations to test our theoretical model. We find that Luther’s network is strongly associated with the spread of the Reformation and that Erasmus’s network is associated with the stifling of the Reformation. This is consistent with a “fire-fighting†mechanism of contested diffusion, whereby the countervailing force suppresses innovations only after they have begun to spread.
    Keywords: contested diffusion; multiplex networks; correspondence networks; Protestant Reformation
    JEL: D85 N33 Z12 Z13
    Date: 2023

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