nep-ino New Economics Papers
on Innovation
Issue of 2023‒11‒13
seven papers chosen by
Uwe Cantner, University of Jena

  1. Mind the Knowledge Gap! The Origins of Declining Business Dynamics in a Macro Agent-Based Model By Domenico Delli Gatti; Roberta Terranova; Enrico Maria Turco
  2. Seeking for the shift towards challenge-oriented innovation policies: Tracing digitalization policies over two decades in Africa By Otioma, Chuks; Nsanzumuhire, Silas U.; Grillitsch, Markus; Jirström, Magnus
  3. R&D Subsidy and Import Substitution: Growing in the Shadow of Protection By Gustavo de Souza
  4. Empirical Determinants of Innovation in European Countries: Testing the Porter's Hypothesis By Makrevska Disoska, Elena; Tonovska, Jasna; Toshevska-Trpcevska, Katerina; Tevdovski, Dragan; Stojkoski, Viktor
  5. Internationalisation, specialisation and technological collaboration in the EU Outermost Regions: A patent data-based analysis By OECD
  6. Technological Innovations and Workers’ Job Insecurity: The Moderating Role of Firm Strategies By Mauro Caselli; Andrea Fracasso; Arianna Marcolin; Sergio Scicchitano
  7. There are different shades of green: heterogeneous environmental innovations and their effects on firm performance By Gianluca Biggi; Andrea Mina; Federico Tamagni

  1. By: Domenico Delli Gatti; Roberta Terranova; Enrico Maria Turco
    Abstract: In this paper we replicate most of the stylized facts characterizing the decline in business dynamism in the USA highlighted by Akcigit and Ates (2021) and provide an explanation of their emergence by means of a macroeconomic agent-based model populated by two types of firms: innovators who generate new and more productive capital goods, and entrepreneurs who employ labor and capital goods to produce consumption goods. A key ingredient of the model is the assumption that the entrepreneurs’ access to new and better capital goods depends on the knowledge gap, i.e., the wedge between the firm’s technical knowledge and the state of technology embodied in new capital goods. Within this framework, we investigate the obstacles to knowledge diffusion subsequently leading to declining business dynamism. Our findings indicate that only when knowledge diffusion decreases in both the technology imitation and adoption processes does it lead to high market concentration and markups, falling labor share and productivity growth. Patents are an important obstacle to knowledge diffusion. We find an inverse U-shaped relationship between patent strength and growth: moderate levels of patent protection can stimulate growth, but strong protection leads to rising market power and slower growth.
    Keywords: innovation, imitation, knowledge diffusion, knowledge gap, patents
    JEL: O31 O32 O33 O34
    Date: 2023
  2. By: Otioma, Chuks (UNU Merit); Nsanzumuhire, Silas U. (UNU Merit); Grillitsch, Markus (CIRCLE, Lund University); Jirström, Magnus (Lund University)
    Abstract: The current innovation-policy discourse suggests a shift towards challenge-orientation and calls for a whole of government approach to tackle grand societal challenges such as climate change, inequality, and poverty. We seek for such a shift in two countries highly exposed to these challenges, South Africa and Rwanda, and in relation to digitalization policies, which hold strong transformative potential. To do so, we develop an analytical framework, which differentiates between policy goals (intended economic, social, or environmental outcomes) and policy rationales (technology-push, system building, or transformative change). Our empirical results show little resemblance to the temporality assumed in the literature, namely that policy goals and policy rationales should shift towards challenge-orientation and transformation over time. In contrast, we find that the policies relevant for the digital transformation have been challenge-driven from the beginning addressing besides economic growth also inclusivity and poverty reduction. Also, we find a potentially generalizable pattern in transformation processes, embarking from system building, then focusing on developing products, processes, and business models, and finally specializing the instruments to address specific shortcomings. The findings complement and contrast existing studies often centered on the Global North and often covering a narrower set of innovation policies.
    Keywords: Innovation policy; grand challenges; digitalization; South Africa; Rwanda; transformation; system innovation; policy evolution
    JEL: O10 O30 O33 O38 O55
    Date: 2023–10–30
  3. By: Gustavo de Souza
    Abstract: I study the effect of an innovation subsidy on the growth of firms in a developing country. Using administrative microdata for Brazil and difference-in-differences, I find that innovation subsidies drive firm growth by facilitating firm entry into high-tariff markets with domestically produced versions of foreign goods. After receiving an innovation subsidy, firms issue more patents, expand their workforce, and diversify their product line. However, these patents receive minimal citations, while also heavily citing foreign patents. Firms increase imports of foreign inputs and expand their product line towards products with high import tariff. Despite that, in the most conservative estimate, every $1 of innovation subsidy generated $10 in present value wages.
    Keywords: R&D; Industrial policy; Industrial development
    JEL: O3 O14 O25
    Date: 2023–10–05
  4. By: Makrevska Disoska, Elena; Tonovska, Jasna; Toshevska-Trpcevska, Katerina; Tevdovski, Dragan; Stojkoski, Viktor
    Abstract: We investigate the interplay between innovation and productivity, emphasizing the role of environmental regulations on the innovation behaviours of European firms. Anchored in the Porter hypothesis, which proposes that environmental regulations can drive technological innovation and bolster commercial competitiveness, we utilize the CDM model (Crépon, Duguet, and Mairesse, 1998) for in-depth analysis. Our approach begins by pinpointing the factors that shape firms' decisions to innovate and the associated investments, employing the Heckman correction model. Subsequently, we adopt the three-stage least squares (3SLS) methodology to analyse both innovation outputs and firm productivity in tandem. Drawing data from the Community Innovation Survey (CIS) 2018, our structured examination unveils how diverse innovation drivers can elevate labor productivity in varied institutional landscapes. By contrasting the performance of South Europe (comprising Greece, Spain, Portugal) and Central Eastern Europe (countries like Bulgaria, Estonia, Hungary) against a German benchmark, our research offers a nuanced understanding of environmental regulations' influence on innovation and productivity across European contexts.
    Keywords: innovation, productivity, CDM model, CIS, Porter`s hypothesis
    JEL: C33 C36 O31 O33
    Date: 2023–09–29
  5. By: OECD
    Abstract: This paper explores the innovation dynamics of the EU Outermost Regions (EU ORs) through patenting behaviour. It emphasises the potential for international collaborations with a wide range of partners, and recommends to mobilise the resources and strategies provided by the EU to strengthen research and innovation in the private sector; enhance the impact of public research centres and universities; and foster intra-regional co-operation. It also calls for stronger ties with African countries, the Latin American and Caribbean region, as well as Small Island Developing States (SIDS), to foster innovation-based collaborations, particularly around sustainable agriculture, renewable energy and the ocean economy. The paper is developed within the framework of the EU-OECD project on Global Outermost Regions.
    Keywords: EU Outermost Regions, Global Value Chains, Intellectual Property Rights, Research and Development, Technological Innovation
    JEL: O33 O34 O52 O55 R11 R58 O54
    Date: 2023–10–30
  6. By: Mauro Caselli; Andrea Fracasso; Arianna Marcolin; Sergio Scicchitano
    Abstract: In this paper, we empirically assess whether the perceived implications of technological innovations on the probability of job loss vary according to the innovation-related strategies adopted by firms. We take advantage of a unique dataset based on a large and representative cross-sectional survey covering several characteristics of Italian workers and their firms. We find that the relationship between technological innovations and job insecurity is moderated by firms’ technology-specific training programs, their dismissal plans, and the impact of innovations on the tasks and activities performed by workers. Thus, workers’ perceptions of job insecurity vary significantly across innovative firms and the adoption of technological innovations in the workplace has a multifaceted impact on the perceptions of job insecurity of the affected workers.
    Keywords: job insecurity, technology, innovation, firms
    JEL: J28 O33
    Date: 2023
  7. By: Gianluca Biggi; Andrea Mina; Federico Tamagni
    Abstract: Using a firm-level dataset from the Spanish Technological Innovation Panel (2003-2016), this study explores the characteristics of environmentally innovative firms and quantifies the effects of pursuing different types of environmental innovation strategies (resource-saving, pollution-reducing, and regulation-driven innovations) on sales, employment, and productivity dynamics.
    Date: 2023–10

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