nep-ino New Economics Papers
on Innovation
Issue of 2023‒07‒17
twenty-one papers chosen by
Uwe Cantner
University of Jena

  1. Directing innovation towards a low-carbon future By Joëlle Noailly
  2. China’s quest for innovation- progress and bottlenecks By Alicia García-Herrero; Robin Schindowski
  3. Skills Shortage and Innovation Openness By Paolo Carioli; Dirk Czarnitzki
  4. Second World War and the direction of medical innovation By Bhaven Sampat
  5. Technological capabilities and the twin transition in Europe: Opportunities for regional collaboration and economic cohesion By Bachtrögler-Unger, Julia; Balland, Pierre-Alexandre; Boschma, Ron; Schwab, Thomas
  6. Pandemic effects: do innovation activities of German firms suffer from Long-COVID? By Markus Trunschke; Bettina Peters; Dirk Czarnitzki; Christian Rammer
  7. Technology, Innovation, and Firm Competitiveness: Firm Level Analysis in Cambodia By Hing, Vutha; Thangavelu, Shandre M.; Kong, Ratha
  8. Invention and Diffusion in the Solar Power Sector By Grafström, Jonas; Poudineh, Rahmat
  9. Direction of innovation in developing countries and its driving forces By Xiaolan Fu; Liu Shi
  10. Cassatts in the Attic By Marlène Koffi; Matt Marx
  11. Engaging citizens in innovation policy: Why, when and how? By Caroline Paunov; Sandra Planes-Satorra
  12. The Profit Motive in the Classroom—Friend or Foe? By Elert, Niklas; Henrekson, Magnus
  13. Why Green deals may fail – evidence from biogas, bio-ethanol and “fossil free” steel By Sandström, Christian; Alm, Carl
  14. Techies and Firm Level Productivity By James Harrigan; Ariell Reshef; Farid Toubal
  15. Innovation, Public Debt and Monetization: an Empirical Analysis By D'Andrea, Sara
  16. New Technologies and Jobs in Europe By Albanesi, Stefania; Dias da Silva, António; Jimeno, Juan F.; Lamo, Ana; Wabitsch, Alena
  17. Open Science vs. Mission-oriented Policies and the Long-run Dynamics of Integrated Economies: An Agent-based Model with a Kaldorian Flavour. By Andrea Borsato; Andre Lorentz
  18. Firm Investments in Artificial Intelligence Technologies and Changes in Workforce Composition By Tania Babina; Anastassia Fedyk; Alex X. He; James Hodson
  19. The blind spots of interdisciplinarity in addressing grand challenges By Pimentel, Erica; Cho, Charles; Bothello, Joel
  20. Centrality in Production Networks and International Technology Diffusion By Rinki Ito
  21. War and Entrepreneurship: A Synthetic Control Study of the Russia-Ukraine Conflict By David B. Audretsch; Paul P. Momtaz; Hanna Motuzenko; Silvio Vismara

  1. By: Joëlle Noailly
    Abstract: Achieving the ambition of limiting global warming to 1.5°C to 2°C by the end of the century as enacted in the Paris Climate Agreement will require massive investments in environmental technologies and a forceful change of path away from high-carbon technologies. This report presents novel descriptive evidence on global trends in patenting in low-carbon technologies, with a particular focus on the energy and road transport sector. The analysis discusses the role of public policies in driving the rate and the direction of innovation for a low-carbon future.
    Keywords: Climate change, Innovation, Clean technologies, Patents, Energy, Electric vehicles, Environmental policy, Technology Policy
    JEL: Q55 O31 Q42 L62
    Date: 2022–04
  2. By: Alicia García-Herrero; Robin Schindowski
    Abstract: We identify three potential bottlenecks that might be hindering the translation of China’s innovation efforts into productivity growth.
    Date: 2023–06
  3. By: Paolo Carioli; Dirk Czarnitzki
    Abstract: Skills shortage has become a key policy issue in highly developed and innovationoriented economies, with non-negligible consequences on firms’ innovation activities. We investigate the effect of skills shortage on firms’ innovation openness, which is considered to be one of the key drivers of innovation performance. We hypothesize that scarcity of personnel causes firms to cooperate more broadly with external partners. Using cross-sectional data from the German contribution to the Community Innovation Survey (CIS), and exploiting detailed information on the extent to which firms could fill their job vacancies, we find that, on average, a one standard deviation increase in skills shortage more than doubles a firm’s cooperation breadth. We contribute to the literature on human capital in relation to open innovation by characterizing the necessity of openness as a way to mitigate the scarcity of skills.
    Keywords: open innovation, R&D collaboration, skills shortage
    Date: 2023–05–29
  4. By: Bhaven Sampat
    Abstract: This paper provides an overview of the role of the United States of America (U.S.) Second World War research effort on the direction of innovation, with a particular focus on medical research. It provides an overview of the U.S. wartime research program, reviews quantitative evidence on the effects of the overall wartime research shock on postwar patenting, describes the wartime medical research effort, and summarizes case studies of five major wartime medical research programs (penicillin, antimalarials, vaccines, blood substitutes, and hormones) and their effects on postwar R&D. It concludes by drawing out implications for crisis innovation and the direction of innovation in general, discussing mechanisms through which crises may have long-run effects, and highlighting hypotheses warranting further investigation.
    Keywords: Second World War, direction of innovation, crisis innovation
    JEL: O30 O38 N42
    Date: 2022–04
  5. By: Bachtrögler-Unger, Julia; Balland, Pierre-Alexandre; Boschma, Ron; Schwab, Thomas
    Abstract: Technological capabilities vary substantially across European regions. Combining these diverse sets of capabilities is crucial to develop the technologies necessary to master the green and digital transition. However, collaboration between regions is sparse today. To increase inter-regional cooperation, linkages that spur the development of green and digital technologies must be identified. In this study, we provide an overview of inter-regional collaborations already in place and map new opportunities for these between regions. A special emphasis is placed on potential collaborations between economically leading and lagging regions. Our results provide new impetus for policy designs that strengthen regional innovation capabilities and cohesion across Europe’s regions.
    Keywords: Regional diversification; Relatedness; Technological capabilities; European Union; Europe; Cohesion
    JEL: B52 H54 O33 R11
    Date: 2023–04–04
  6. By: Markus Trunschke; Bettina Peters; Dirk Czarnitzki; Christian Rammer
    Abstract: The COVID-19 pandemic has affected firms in many economies. Exploiting treatment heterogeneity, we use a difference-in-differences design to causally identify the shortrun impact of COVID-19 on innovation spending in 2020 and expected innovation spending in subsequent years. Based on a representative sample of German firms, we find that negatively affected firms substantially reduced innovation expenditure not only in the first year of the pandemic (2020) but also in the two subsequent years, indicating ’Long–Covid’ effects on innovation. In 2020, innovation expenditure fell by 4.7% due to the pandemic. In 2022, innovation spending was even 5.4% lower compared to the counterfactual scenario without the pandemic. Firms with higher pre-treatment digital capabilities show higher innovation resilience during the pandemic. Moreover, COVID-19 leads to a decrease in innovation spending not only in firms that were strongly negatively affected by the pandemic, but also in those firms that experienced a positive demand shock from the pandemic, presumably to increase production capacity.
    Keywords: COVID-19, innovation, difference-in-differences, economic crisis, resilience
    Date: 2023–05–29
  7. By: Hing, Vutha (Asian Development Bank Institute); Thangavelu, Shandre M. (Asian Development Bank Institute); Kong, Ratha (Asian Development Bank Institute)
    Abstract: We examine the innovation and competitiveness of firms, especially with regard to the channels of technology transfer and the nature of innovation activities that influence firm performance in Cambodia's economy. Despite the growing importance of innovation, there has been no empirical analysis of the factors affecting technological and innovative development and the impact that these factors have on firms’ productivity in Cambodia. We use the World Bank Enterprise Survey for Cambodian enterprises for our empirical implementation. The results of the research indicate that overseas linkages that include both upstream and downstream activities could affect productivity growth at both firm and industry levels. We also find that technology and innovation have a positive impact on the productivity of firms in Cambodia.
    Keywords: technology; innovation; productivity; human capital; export and import
    JEL: D24
    Date: 2023–01
  8. By: Grafström, Jonas (The Ratio Institute); Poudineh, Rahmat (The Oxford Institute for Energy Studies)
    Abstract: There is an increasing interest in policies that promote invention and diffusion in solar energy technologies. In this paper the question of how does support policies affect inventions and diffusion of solar PV technology and is the effect heterogeneous and counteracting is investigated. The policies investigated are Feed-in-tariffs, Public R&D stock and flow, Environmental tax, and Environmental Policy Stringency Index. A Schumpeterian technological development approach is utilized on a panel dataset covering 23 European countries between 2000 and 2019. Two econometric approaches are employed, a negative binomial regression model is used to assess inventions and a panel data fixed effect regression is used for the diffusion model. The empirical findings suggest that FITs, Public R&D stock and flow, Environmental tax and Environmental Policy Stringency Index have no statistically significant negative effect on either inventions or diffusion. In most cases for invention the policies had a statistically significant positive effect. Policy crowding out does not seem to have been present.
    Keywords: solceller PV; uppfinning; diffusion; Schumpeter; policy
    JEL: Q42 Q48 Q55 Q58
    Date: 2023–06–01
  9. By: Xiaolan Fu; Liu Shi
    Abstract: Innovation is a major driving force of long-term economic growth and sustainable development. Direction of innovation matters because technical change is not neutral and hence bears significant social, economic and environmental development implications. This paper contributes to the literature through a systematic examination of the direction of innovation in developing and emerging economies and its driving forces. It shows that innovation in the global South exhibits a vibrant and diverse landscape when we do not confine ourselves with traditional research and innovation indicators. While emerging economies are accelerating their pace in inventive activities in fields such as ICTs, biotech and engineering, low-income countries (LICs) are also found to be active in learning-based, incremental “under-the-radar innovations†(URIs). These URIs that are introduced through international technology transfer and indigenous innovative efforts. Indigenous sources of URIs play a primary role in LICs, contributed by localised learning-by-doing, close interaction with customers and embeddedness in regional production networks and clusters. However, insufficient role of the state, a low science and technology intensity and a lack of university-industry linkage limit the potential of URIs. International technology transfer is another important driver of technical change in developing countries. However, its strengthen varies across countries due to differences in host country policy, absorptive capacity, and the type of foreign economic engagement that they have as well as the inappropriateness of transferred foreign technologies mostly from Global North. Given the status of direction of innovation and its driving forces in developing countries, this report argues that the unfolding 4th industrial revolution poses both challenges and opportunities to LICs. Policy implications are discussed.
    Keywords: Indigenous innovation, technology transfer, direction of innovation, sources of innovation, government policy, under-the-radar innovation, open national innovation system, 4th industrial revolution, developing countries
    JEL: O3 O14 O19 O25
    Date: 2022–04
  10. By: Marlène Koffi; Matt Marx
    Abstract: We analyze more than 70 million scientific articles to characterize the gender dynamics of commercializing science. The double-digit gender gap we report is explained neither by the quality of the science nor its ex-ante commercial potential, and is widest among papers with female last authors (i.e., lab heads) when publishing high-quality science. Using Pitchbook database, we show that when authors self-commercialize scientific discoveries via new ventures, no gap appears, raising the question of whether incumbent firms are unaware of—or ignore—scientific contributions by women. A natural experiment based on the Obama administration’s staggered introduction of open-access requirements for federally-funded research reveals that although easier access to scientific articles might facilitate commercialization, this benefit accrues primarily to male authors. Articles written with more “boastful” language are commercialized more often, and female scientists generally boast less, but even when they do their discoveries are commercialized no more often. We also observe gender homophily between scientific authors and commercializing inventors, the majority of whom are male. We conclude with the potential welfare effects of the gender gap: the disparity is more pronounced for higher-quality discoveries, as indicated by academic and patent citations or by predicted probabilities of commercialization derived from deep-learning algorithms.
    JEL: J16 O31
    Date: 2023–06
  11. By: Caroline Paunov; Sandra Planes-Satorra
    Abstract: Innovation policies need to be socially embedded for them to effectively contribute to addressing major societal challenges. Engaging citizens in innovation policymaking can help define long-term policy priorities, enhance the quality and legitimacy of policy decisions, and increase the visibility of innovation in society. However, engaging all groups in society and effectively integrating citizens' inputs in policy processes is challenging. This paper discusses why, when and how to engage citizens in innovation policy making. It also addresses practical considerations for organising these processes, such as reaching out to diverse publics and selecting the optimal mix of methods and tools.
    Date: 2023–06–19
  12. By: Elert, Niklas (Institute of Retail Economics (HFI)); Henrekson, Magnus (Research Institute of Industrial Economics (IFN))
    Abstract: Can competition and the existence of profit-seeking actors in the school market improve educational quality? To see cost-efficient, long-term improvements, we identify the school system’s capacity for knowledge-enhancing innovation as crucial and explore this question by examining Swedish tax-financed schooling. The Swedish school system was marketized in the early 1990s to an unparalleled degree but has only seen modest (if any) educational gains. This lack of progress is puzzling considering evidence from regular markets that competition and the presence of for-profit actors should spur innovation. Our analysis suggests that these factors are necessary but not sufficient conditions for innovation, tracing the obstacles to innovation in the Swedish school quasi-market to three sub-par institutional conditions. Together, they result in a significant epistemic problem, which impedes the beneficial effects of competition and the profit-motive. First, the view of knowledge (institutionalized in national curricula) does not entrust teachers with a real, knowledge-promoting mission. Second, the design of the grading system makes grades unreliable measures of knowledge, making it difficult for schools to compete and for users to choose along this dimension. Third, the information provided to users is insufficient and overly complicated, meaning user choice is less informed than it should be. Institutional reforms that improve actors’ epistemic positions along these margins could improve the situation, paving the way for innovation and long-term improvements.
    Keywords: For-profit schools; Innovation; Marketized education; Quasi-markets; School choice; View of knowledge
    JEL: H42 H44 H75 I22 I28 L88 O31
    Date: 2023–06–30
  13. By: Sandström, Christian (The Ratio Institute); Alm, Carl (The Ratio Institute)
    Abstract: Environmental policy is no longer about imposing regulations on industry but is increasingly regarded as industrial policy. Both the EU and national governments are taking more active roles in initiating “green deals” and various technologies aimed to result in sustainable development. In this chapter we describe and discuss some recent experiences of green innovation policies. Historical examples concerning efforts in both biogas and ethanol are combined with a more contemporary description of “fossil free” steel, i.e. steel made by using hydrogen instead of coal. We argue that the presence of large public funds from different funding bodies such as the EU, various government agencies and municipalities has distorted incentives, making it rational for firms to pursue technologies without long term potential. The result has been an absence of sustainable development, mounting debt and financial problems for those actors that have been involved. We explain these results and draw policy conclusions concerning the risks related to green deals. Relatedly, we argue that the EU’s current efforts into hydrogen gas face similar challenges.
    Keywords: Green deal; biogas; policy failure; entreprenörsstat; riktning
    JEL: O25 O31 O38 O44 Q42 Q55
    Date: 2023–06–13
  14. By: James Harrigan; Ariell Reshef; Farid Toubal
    Abstract: We study the impact of techies—engineers and other technically trained workers—on firm-level productivity. We first report new facts on the role of techies in the firm by using French administrative data and unique surveys. Techies are STEM-skill intensive and are associated with innovation, as well as with technology adoption, management, and diffusion within firms. Using structural econometric methods, we estimate the causal effect of techies on firm-level Hicks-neutral productivity in both manufacturing and non-manufacturing industries. We find that techies raise firm-level productivity, and this effect goes beyond the employment of R&D workers, extending to ICT and other techies. In non-manufacturing firms, the impact of techies on productivity operates mostly through ICT and other techies, not R&D workers. Engineers have a greater effect on productivity than technicians.
    JEL: D2 D24 O3 O33
    Date: 2023–06
  15. By: D'Andrea, Sara
    Abstract: This paper explores the relationship between public debt and technological innovation through panel threshold regressions on a sample of 15 industrialized countries from 2000 to 2019. It also asks what impact debt monetization (expressed as the amount of debt held at the central bank) has on this nexus. Our results show strong nonlinearities in the sense that an increase in debt above a certain threshold negatively impacts the rate of innovation, while below it has positive effects. Monetizing debt contributes positively to innovation if it is below the "debt turning point", while this becomes detrimental for debt-to-GDP ratios above the threshold. The same inverted-U-shaped relationship is found between the monetization rate and innovation rate.
    Keywords: Public debt, Innovation, Debt monetization, Panel threshold regression
    JEL: C23 E58 H60 O47
    Date: 2023–06–03
  16. By: Albanesi, Stefania (University of Pittsburgh); Dias da Silva, António (European Central Bank); Jimeno, Juan F. (Bank of Spain); Lamo, Ana (European Central Bank); Wabitsch, Alena (University of Oxford)
    Abstract: We examine the link between labour market developments and new technologies such as artificial intelligence (AI) and software in 16 European countries over the period 2011- 2019. Using data for occupations at the 3-digit level in Europe, we find that on average employment shares have increased in occupations more exposed to AI. This is particularly the case for occupations with a relatively higher proportion of younger and skilled workers. This evidence is in line with the Skill Biased Technological Change theory. While there exists heterogeneity across countries, only very few countries show a decline in employment shares of occupations more exposed to AI-enabled automation. Country heterogeneity for this result seems to be linked to the pace of technology diffusion and education, but also to the level of product market regulation (competition) and employment protection laws. In contrast to the findings for employment, we find little evidence for a relationship between wages and potential exposures to new technologies.
    Keywords: artificial intelligence, employment, skills, occupations
    JEL: J23 O33
    Date: 2023–06
  17. By: Andrea Borsato; Andre Lorentz
    Abstract: This paper offers a contribution to the literature on science policies and on the possible trade-off that might arise between broad spectrum science-technology policies and missionoriented programs. We develop a multi-country, multi-sectoral agent-based model of economic dynamics with endogenous structural change that represents a small-scale monetary union. Findings are threefold. Firstly, science policies from national governments, even when symmetric, act as a source of growth divergence across countries. Secondly, even if economic growth is largely driven by the sectors with absolute advantages, having at least a little flow of open science investments is sufficient for the other industries to survive and innovate, hence preserving the bio-diversity of the economic structure. Thirdly, science policy alone is a sufficient means to break monopolistic tendencies, trigger competition and reduce income inequality. Still, such results are conditioned to the flow of open science. Yet, the working of the model suggests that supply-side science policies should be paired with demand-side policies for the wide re-organisation of consumption habits, if grand societal challenges are to be met.
    Keywords: Science policies, Structural and technical change, Economic growth.
    JEL: E11 E32 O33 O41
    Date: 2023
  18. By: Tania Babina; Anastassia Fedyk; Alex X. He; James Hodson
    Abstract: We study the shifts in U.S. firms' workforce composition and organization associated with the use of AI technologies. To do so, we leverage a unique combination of worker resume and job postings datasets to measure firm-level AI investments and workforce composition variables, such as educational attainment, specialization, and hierarchy. We document that firms with higher initial shares of highly-educated workers and STEM workers invest more in AI. As firms invest in AI, they tend to transition to more educated workforces, with higher shares of workers with undergraduate and graduate degrees, and more specialization in STEM fields and IT skills. Furthermore, AI investments are associated with a flattening of the firms' hierarchical structure, with significant increases in the share of workers at the junior level and decreases in shares of workers in middle-management and senior roles. Overall, our results highlight that adoption of AI technologies is associated with significant reorganization of firms' workforces.
    JEL: D22 E22 J01 J23 J24
    Date: 2023–06
  19. By: Pimentel, Erica; Cho, Charles; Bothello, Joel
    Abstract: When implemented effectively, interdisciplinary research can produce practical impact towards addressing societal “grand challenges” while also generating novel conceptual insights that advance theory. However, despite decades of calls for interdisciplinarity, research communities continue to become more siloed and less impactful. This paper aims to highlight the obstacles to interdisciplinary work contained within the accounting community, specifically those associated with Interdisciplinary Accounting Research (IAR). We argue that, in order to overcome these obstacles and produce more effective and impactful interdisciplinary work, we require four IAR practices: Problem-solving, Public engagement, Professionalism and Performance Revision. Our purpose is to identify challenges as well as solutions that reduce the friction that accounting academics experience when collaborating with scholars outside their research discipline, especially when it concerns addressing grand challenges.
    Keywords: interdisciplinary; accounting academic research; engagement and impact; community
    JEL: M0
    Date: 2022
  20. By: Rinki Ito
    Abstract: This study examines whether the structure of global value chains (GVCs) affects international spillovers of research and development (R&D). Although the presence of ``hub'' countries in GVCs has been confirmed by previous studies, the role of these hub countries in the diffusion of the technology has not been analyzed. Using a sample of 21 countries and 14 manufacturing industries during the period 1995-2007, I explore the role of hubs as the mediator of knowledge by classifying countries and industries based on a ``centrality'' measure. I find that R&D spillovers from exporters with High centrality are the largest, suggesting that hub countries play an important role in both gathering and diffusing knowledge. I also find that countries with Middle centrality are getting important in the diffusion of knowledge. Finally, positive spillover effects from own are observed only in the G5 countries.
    Date: 2023–06
  21. By: David B. Audretsch; Paul P. Momtaz; Hanna Motuzenko; Silvio Vismara
    Abstract: Entrepreneurs are often situated in extreme environments characterized by violent conflict. Yet, war is largely a blind spot in entrepreneurship scholarship. As a first step to closing this gap, we offer a well-identified synthetic control study of entrepreneurial dynamics in the Russo-Ukrainian war. Relative to the synthetic counterfactual, Ukraine’s number of self-employed dropped by 20%, and the number of Ukrainian SMEs temporarily dropped by 14% but recovered within five years of the start of the conflict. In contrast, Russia had lost more than 1.4 million SMEs (42%) five years into the conflict. The disappearance of entrepreneurs is driven by both fewer new SMEs created and more existing SME closures. To pave the way for systematic scholarship on “war and entrepreneurship, ” our study proposes a conceptual framework integrating conflict into the theory of entrepreneurial choice and suggests numerous avenues for future research.
    Keywords: entrepreneurship, war, Russia-Ukraine conflict
    JEL: D74 L26 N44 O17
    Date: 2023

This nep-ino issue is ©2023 by Uwe Cantner. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.