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on Innovation |
| By: | Joshua S. Gans |
| Abstract: | This paper examines the regulation of technological innovation direction under uncertainty about potential harms. We develop a model with two competing technological paths and analyze various regulatory interventions. Our findings show that market forces tend to inefficiently concentrate research on leading paths. We demonstrate that ex post regulatory instruments, particularly liability regimes, outperform ex ante restrictions in most scenarios. The optimal regulatory approach depends critically on the magnitude of potential harm relative to technological benefits. Our analysis reveals subtle insurance motives in resource allocation across research paths, challenging common intuitions about diversification. These insights have important implications for regulating emerging technologies like artificial intelligence, suggesting the need for flexible, adaptive regulatory frameworks. |
| JEL: | L51 O33 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32741 |
| By: | Damioli, Giacomo; Van Roy, Vincent; Vertesy, Daniel; Vivarelli, Marco |
| Abstract: | Artificial intelligence (AI) is emerging as a transformative innovation with the potential to drive significant economic growth and productivity gains. This study examines whether AI is initiating a technological revolution, signifying a new technological paradigm, using the perspective of evolutionary neo-Schumpeterian economics. Using a global dataset combining information on AI patenting activities and their applicants between 2000 and 2016, our analysis reveals that AI patenting has accelerated and substantially evolved in terms of its pervasiveness, with AI innovators shifting from the ICT core industries to non-ICT service industries over the investigated period. Moreover, there has been a decrease in concentration of innovation activities and a reshuffling in the innovative hierarchies, with innovative entries and young and smaller applicants driving this change. Finally, we find that AI technologies play a role in generating and accelerating further innovations (so revealing to be "enabling technologies", a distinctive feature of GPTs). All these features have characterised the emergence of major technological paradigms in the past and suggest that AI technologies may indeed generate a paradigmatic shift. |
| Keywords: | Artificial Intelligence, Technological Paradigm, Structural Change, Patents |
| JEL: | O31 O33 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1467 |
| By: | Flavio Calvino; Chiara Criscuolo; Hélène Dernis; Lea Samek |
| Abstract: | This report outlines a new methodology and provides a first exploratory analysis of technologies and applications that are at the core of recent advances in AI. Using AI-related keywords and technology classes, the study identifies AI-related patents protected in the United States in 2000-18. Among those, “core” AI patents are selected based on their counts of AI-related forward citations. The analysis finds that, compared to other (AI and non-AI) patents, they are more original and general, and tend to be broader in technological scope. Technologies related to general AI, robotics, computer/image vision and recognition/detection are consistently listed among core AI patents, with autonomous driving and deep learning having recently become more prominent. Finally, core AI patents tend to spur innovation across AI-related domains, although some technologies – likely AI applications, such as autonomous driving or robotics – appear to increasingly contribute to developments in their own field. |
| Keywords: | Artificial Intelligence, Innovation, Patents |
| JEL: | C81 O31 O33 O34 |
| Date: | 2023–11–13 |
| URL: | https://d.repec.org/n?u=RePEc:oec:comaaa:6-en |
| By: | Jaedo Choi; Younghun Shim |
| Abstract: | Should policymakers in developing countries prioritize foreign technology adoption over domestic innovation? How might this depend on development stages? Using historical technology transfer data from Korea, we find that greater productivity gaps with foreign firms correlate with faster productivity growth after adoption, despite lower fees. Furthermore, non-adopters increased patent citations to foreign sellers, suggesting knowledge spillovers. Motivated by these findings, we build a two-country growth model with innovation and adoption. As the gaps narrow, productivity gains and spillovers from adoption diminish and foreign sellers strategically raise fees due to intensified competition, which renders adoption subsidies less effective. Korea’s shift from adoption to innovation subsidies substantially contributed to growth and welfare. We also explore the optimal policy and its interaction with import tariffs. |
| Keywords: | Technology Adoption; Innovation; Industrial Policy; Strategic Interaction |
| Date: | 2024–07–19 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/154 |
| By: | Xavier Giroud; Ernest Liu; Holger Mueller |
| Abstract: | The vast majority of U.S. inventors work for firms that also have inventors and plants in other tech clusters. Using merged USPTO–U.S. Census Bureau plant-level data, we show that larger tech clusters not only make local inventors more productive but also raise the productivity of inventors and plants in other clusters, which are connected to the focal cluster through their parent firms' networks of innovating plants. Cross-cluster innovation spillovers do not depend on the physical distance between clusters, and plants cite disproportionately more patents from other firms in connected clusters, across large physical distances. To rationalize these findings, and to inform policy, we develop a tractable model of spatial innovation that features both within- and cross-cluster innovation spillovers. Based on our model, we derive a sufficient statistic for the wedge between the social and private returns to innovation in a given location. Taking the model to the data, we rank all U.S. tech clusters according to this wedge. While larger tech clusters exhibit a greater social-private innovation wedge, this is not because of local knowledge spillovers, but because they are well-connected to other clusters through firms' networks of innovating plants. In counterfactual exercises, we show that an increase in the interconnectedness of U.S. tech clusters raises the social-private innovation wedge in (almost) all locations, but especially in tech clusters that are large and well-connected to other clusters. |
| JEL: | G30 O30 R30 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32677 |
| By: | Koch, Florian; Hoellen, Max; Konrad, Elmar D.; Kock, Alexander |
| Abstract: | Creative industries contain paradoxes because conflicting tensions arise between the market and the arts. Entrepreneurs need to find and maintain a balance between those two sides to create innovation. This study tests the interaction between business and creative orientations of a founder in their influence on innovation in the context of creative entrepreneurial firms and provides recommendations for how creative agents can leverage and manage their innovations based on their creative visions. Determinants on the individual level, such as the founder's creative or business orientations, have a lasting impact on the practices and process of their venture. To trace the imprinting influence of the founder's orientation on innovation, the empirical setting is a time‐lagged study of German firm owners in the cultural and creative industries surveyed 5 years apart. The results show a significant relationship between creative orientation and innovation, whereas business orientation does not significantly relate to innovation. However, creative and business orientations reveal a negative interaction effect. This study contributes empirical evidence to the paradox theory and the interaction between the opposite poles. Our findings provide valuable insights about the relevance of creative orientation and its visionary impact on the firms' innovation process. Furthermore, the results shed new light on the tension between art and the market, as different compositions of the two orientation poles seem to have a varying impact on the degree of innovation. Thus, the study reveals the complexity of creative entrepreneurship and provides managerial guidance for other knowledge‐based industries. |
| Date: | 2023 |
| URL: | https://d.repec.org/n?u=RePEc:dar:wpaper:147985 |
| By: | Réka Juhász; Shogo Sakabe; David Weinstein |
| Abstract: | This paper studies technology absorption worldwide in the late nineteenth century. We construct several novel datasets to test the idea that the codification of technical knowledge in the vernacular was necessary for countries to absorb the technologies of the Industrial Revolution. We find that comparative advantage shifted to industries that could benefit from patents only in countries and colonies that had access to codified technical knowledge but not in other regions. Using the rapid and unprecedented codification of technical knowledge in Meiji Japan as a natural experiment, we show that this pattern appeared in Japan only after the Japanese government codified as much technical knowledge as what was available in Germany in 1870. Our findings shed new light on the frictions associated with technology diffusion and offer a novel take on why Meiji Japan was unique among non-Western countries in successfully industrializing during the first wave of globalization. |
| JEL: | F14 F63 N15 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32667 |
| By: | Campo, Francesco; Mendola, Mariapia; Morrison, Andrea; Ottaviano, Gianmarco |
| Abstract: | We investigate the importance of co-ethnic networks and diversity in determining immigrant inventors' settlements in the United States by following the location choices of thousands of them across counties during the Age of Mass Migration. To do so, we combine a unique United States Patent and Trademark Office historical patent dataset on immigrants who arrived as adults with Census data and exploit exogenous variation in both immigration flows and diversity induced by former settlements, WWI, and the 1920s Immigration Acts. We find that co-ethnic networks play an important role in attracting immigrant inventors. Yet, we also find that immigrant diversity acts as an additional significant pull factor. This is mainly due to externalities that foster immigrant inventors' productivity. |
| JEL: | F22 J61 O31 |
| Date: | 2022–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:124052 |
| By: | Simon Baumgartinger-Seiringer (Department of Geography and Regional Research, University of Vienna, Vienna, Austria); Balazs Pager (Department of Geography and Regional Research, University of Vienna, Vienna, Austria); Michaela Trippl (Department of Geography and Regional Research, University of Vienna, Vienna, Austria) |
| Abstract: | This article focuses on regions in industrial transitions (RITs) in the context of climate change mitigation and their varying paths towards sustainability, drawing on rich data from 11 regions in 9 countries in the Danube area in Europe. Inspired by recent work on green regional vulnerability, challenge-oriented regional innovation systems and transformative resilience, the article conceptualizes regional industrial transition pathways as the outcome of a complex interplay between distinct geographies of (1) vulnerability to, (2) preparedness for, and (3) responsiveness to transition pressures. Empirically, the article employs a mixed-method approach, combining quantitative analyses of regional structural conditions (focusing on vulnerability and preparedness) with qualitative investigations of agency of regional and non-regional actors (focusing on responsiveness). In doing so, the article unravels diverse pathways that regions adopt to navigate industrial transitions. We contend that these insights hold important implications for the design of tailor-made regional industrial transition strategies. |
| Keywords: | Regions in industrial transitions, vulnerability, preparedness, responsiveness, transformative resilience |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:aoe:wpaper:2403 |
| By: | Christoph Carnehl; Marco Ottaviani; Justus Preusser |
| Abstract: | This paper overviews the economics of scientific grants, focusing on the interplay between the inherent uncertainty in research, researchers' incentives, and grant design. Grants differ from traditional market systems and other science and innovation policy tools, such as prizes and patents. We outline the main economic forces specific to science, noting the limited attention given to grant funding in the economics literature. Using tools from information economics, we identify key incentive problems at various stages of the grant funding process and offer guidance for effective grant design. In the allocation stage, funders aim to select the highest-merit applications while minimizing evaluation costs. The selection rule, in turn, impacts researchers' incentives to apply and invest in their proposals. In the grant management stage, funders monitor researchers to ensure efficient use of funds. We discuss the advantages and potential pitfalls of (partial) lotteries and emphasize the effectiveness of staged grant design in promoting a productive use of grants. Beyond these broadly applicable insights, our overview highlights the need for further research on grantmaking. Understudied areas include, at the micro level, the interplay of different grant funding stages, and at the macro level, the interaction of grants with other instruments in the market for science. |
| JEL: | D83 H81 I23 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32668 |
| By: | Mark Fenwick; Erik P. M. Vermeulen; Marcelo Corrales Compagnucci |
| Abstract: | Identifying and then implementing an effective response to disruptive new AI technologies is enormously challenging for any business looking to integrate AI into their operations, as well as regulators looking to leverage AI-related innovation as a mechanism for achieving regional economic growth. These business and regulatory challenges are particularly significant given the broad reach of AI, as well as the multiple uncertainties surrounding such technologies and their future development and effects. This article identifies two promising strategies for meeting the AI challenge, focusing on the example of Fintech. First, dynamic regulation, in the form of regulatory sandboxes and other regulatory approaches that aim to provide a space for responsible AI-related innovation. An empirical study provides preliminary evidence to suggest that jurisdictions that adopt a more proactive approach to Fintech regulation can attract greater investment. The second strategy relates to so-called innovation ecosystems. It is argued that such ecosystems are most effective when they afford opportunities for creative partnerships between well-established corporations and AI-focused startups and that this aspect of a successful innovation ecosystem is often overlooked in the existing discussion. The article suggests that these two strategies are interconnected, in that greater investment is an important element in both fostering and signaling a well-functioning innovation ecosystem and that a well-functioning ecosystem will, in turn, attract more funding. The resulting synergies between these strategies can, therefore, provide a jurisdiction with a competitive edge in becoming a regional hub for AI-related activity. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.19439 |
| By: | Philippe Lorenz; Karine Perset; Jamie Berryhill |
| Abstract: | Generative artificial intelligence (AI) creates new content in response to prompts, offering transformative potential across multiple sectors such as education, entertainment, healthcare and scientific research. However, these technologies also pose critical societal and policy challenges that policy makers must confront: potential shifts in labour markets, copyright uncertainties, and risk associated with the perpetuation of societal biases and the potential for misuse in the creation of disinformation and manipulated content. Consequences could extend to the spreading of mis- and disinformation, perpetuation of discrimination, distortion of public discourse and markets, and the incitement of violence. Governments recognise the transformative impact of generative AI and are actively working to address these challenges. This paper aims to inform these policy considerations and support decision makers in addressing them. |
| Keywords: | AI, artificial intelligence, generative artificial intelligence, mis- and disinformation |
| Date: | 2023–09–18 |
| URL: | https://d.repec.org/n?u=RePEc:oec:comaaa:1-en |
| By: | Naughton, Barry; Cheung, Tai Ming; Xiao, Siwen; Xu, Yaosheng; Yang, Yujing |
| Abstract: | China continues to dramatically increase the priority it gives to science and technology (S&T). This paper reviews China’s reorganization of its S&T system, which is part of a broader Party and government restructuring plan. The most important elements of the bureaucratic reform were the establishment of a Central Science and Technology Commission (CSTC) and the reorganization of the existing Ministry of Science and Technology (MOST). These reorganizations have been carefully thought out and in gestation for the past several years. If the subordination of research and innovation to immediate policy goals is taken as a given, most of the reorganization measures are reasonable attempts to moderate the costs that would be expected with a campaign-style approach to S&T. At the same time, the measures are no panacea. Bureaucratic conflicts will persist, though shifted to different arenas, and the biggest challenges will persist: the subordination of research to security imperatives; divorce from international collaborative research; and narrower use of market incentives will all be very costly to China’s science efforts and aspirations. |
| Keywords: | Social and Behavioral Sciences, industrial policy, China, science, technology, and innovation, national security |
| Date: | 2023–08–22 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:globco:qt8503h22s |
| By: | Francesco Filippucci; Peter Gal; Cecilia Jona-Lasinio; Alvaro Leandro; Giuseppe Nicoletti |
| Abstract: | This paper explores the economics of Artificial Intelligence (AI), focusing on its potential as a new General-Purpose Technology that can significantly influence economic productivity and societal wellbeing. It examines AI's unique capacity for autonomy and self-improvement, which could accelerate innovation and potentially revive sluggish productivity growth across various industries, while also acknowledging the uncertainties surrounding AI's long-term productivity impacts. The paper discusses the concentration of AI development in big tech firms, uneven adoption rates, and broader societal challenges such as inequality, discrimination, and security risks. It calls for a comprehensive policy approach to ensure AI's beneficial development and diffusion, including measures to promote competition, enhance accessibility, and address job displacement and inequality. |
| Keywords: | Artificial intelligence, Competition, Productivity |
| JEL: | O15 |
| Date: | 2024–04–16 |
| URL: | https://d.repec.org/n?u=RePEc:oec:comaaa:15-en |