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on Innovation |
| By: | Ziming Wang |
| Keywords: | Patent pledge, intellectual property strategy, ecosystem, invention diffusion, electric vehicles, Tesla |
| JEL: | O30 O32 O34 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:enp:wpaper:eprg2510 |
| By: | Dandan Xia; Bruno Cassiman; David Wehrheim |
| Abstract: | This study leverages advanced text-analysis techniques to investigate how increased product market rivalry, induced by Chinese import competition, affects innovation among incumbent U.S. firms in the electronic and electrical appliance industry. We measure the similarity between the product descriptions of U.S. firms and those of Chinese importers, thus capturing firm-level competitive pressure. Employing a continuous difference-in-differences framework, we compare innovation outcomes of U.S. firms more directly competing with Chinese importers to those facing lower competitive pressure, over a five-year period before and after initial Chinese market entry. We find that incumbent U.S. firms significantly increase their quality-weighted patent production, create more newproduct patents, and strategically diversify into new technological and business segments when confronted with heightened competition. Our findings highlight the role of import-driven rivalry in stimulating strategic innovation and illustrate how text-based similarity measures can effectively quantify firm-level competition, providing novel methodological tools for strategy scholars. |
| Date: | 2025–05–23 |
| URL: | https://d.repec.org/n?u=RePEc:ete:msiper:765722 |
| By: | Gianluca Biggi; Elisa Giuliani; Arianna Martinelli; Julia Mazzei |
| Abstract: | Earlier research using the directed technical change framework argues that with the right mix of policies, governments can steer firms' R&D efforts away from harmful technologies toward supposedly cleaner alternatives. This article puts that assumption to the test by examining the impact of the 2004 Stockholm Convention, which banned 12 highly toxic persistent organic pollutants (POPs), on the development of alternative chemical compounds. Does regulation truly drive innovation toward safer substitutes, or does it create new risks under a different guise? Our results show that rather than steering innovation towards safer alternatives, the Stockholm Convention has incentivized the development of patents containing s.c. "regrettable" chemicals -i.e. chemicals that, while not banned under the Convention, exhibit POP-like characteristics, particularly high toxicity and persistence. Our study suggests that a closer inspection of the substitute technologies is crucial to understanding the effectiveness of incentives set to replace dirty technologies with cleaner ones. |
| Keywords: | directed technical change, persistent organic pollutants (POPs), Stockholm Convention, policy evaluation, patent toxicity |
| Date: | 2025–06–09 |
| URL: | https://d.repec.org/n?u=RePEc:ssa:lemwps:2025/23 |
| By: | Ufuk Akcigit; Harun Alp; Jeremy Pearce; Marta Prato |
| Abstract: | This paper explores the symbiotic relationship between transformative entrepreneurs and inventors, which is crucial for economic growth. We utilize microdata from Denmark to demonstrate that while the relationship between IQ and general entrepreneurship tends to be negative, it is strongly positive among transformative entrepreneurs. Transformative entrepreneurs, often with higher IQ and education levels, significantly drive R&D and business growth, thereby providing substantial opportunities for inventors. In contrast, average entrepreneurs are more influenced by their family’s entrepreneurship background. Our economic model links these dynamics to overall economic progress, highlighting how higher education influences career paths in entrepreneurship and invention. We identify talent misallocation caused by unequal education access, particularly affecting lower-income families. Our findings indicates the most effective policies strengthen the interplay between higher education, innovation, and entrepreneurship to foster transformative businesses and achieve long-run economic growth. |
| JEL: | J24 O31 O38 O47 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33766 |
| By: | Ashish Arora; Sharon Belenzon; Larisa C. Cioaca; Elia Ferracuti |
| Abstract: | We quantify the private returns to government R&D contracts awarded to firms. We present new evidence that R&D contracts not only finance innovation but also embed an implicit government guarantee of noncompetitive future procurement for the winning R&D contractor. We measure its private value by analyzing stock market reactions to news about R&D contract awards. Using all federal R&D contracts awarded to U.S. publicly traded firms from 1984 through 2015, we find that the average private return on an R&D contract is 19 times its maximum potential revenue. However, returns are highly skewed, with only 7.5% of firms receiving at least one top-quartile contract. Private returns are linked to future production contracts, but only for noncompetitive awards to vertically integrated or large firms. These results suggest that a procurement regime bundling R&D and production contracts enhances value for firms with production capability. We develop a conceptual framework to clarify this innovation policy lever. |
| JEL: | H57 O31 O38 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33880 |
| By: | Joanna Wolszczak-Derlacz (Gdansk University of Technology, Gdansk, Poland); Aleksandra Parteka (Gdansk University of Technology, Gdansk, Poland); Sabina Szymczak (Gdansk University of Technology, Gdansk, Poland); Piotr Platkowski (Gdansk University of Technology, Gdansk, Poland) |
| Abstract: | Relatively poor transfer of knowledge from higher education to the market remains a concern in Europe, universities being involved in at most 10% of all patented inventions. We examine the role of university funding in patenting, addressing three key research gaps: (i) the limited, country-specific samples rather than pan-European data used in most patent-funding studies; (ii) scarce evidence on the impact of the funding structure on patent quality; and (iii) the lack of precise estimates of interactions between university patenting, funding structures, and regional systems. We fill these gaps thanks to a micro-level database of almost 2, 900 higher education institutions (HEIs) in 31 European countries and 295 NUTS2 regions (2011-2019), containing detailed information on their activity as direct patent applicants and various institutional characteristics, including financial records. We show that universities with a greater share of third-party funds (research grants, contracts) apply for more patents and have better quality patents than those that rely mainly on core funding, i.e. national/regional allocations. The HEIs that do patent are richer and have more than twice the share of third-party revenues. This indicates that the very marked core-periphery pattern of university patenting in Europe is related both to the amount of university funding and to its sources. Additionally, we find that regional economic systems also influence the way in which the funding structure impacts university patenting. The positive effect of third-party funding is strongest in the wealthy European regions, less so in developed areas, and negligible in the poorest regions. |
| Keywords: | Patents, Higher Education Institutions, University, Funding |
| JEL: | O31 O34 I23 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:gdk:wpaper:75 |
| By: | Chiara Zisler; Patricia Palffy; Harald Pfeifer; Kerstin Pull; Uschi Backes-Gellner |
| Abstract: | This paper introduces teams' technology use as a contingency factor for the link between teams' boundary-spanning activities - such as regularly maintaining firm external or firm internal contacts, or memberships in multiple teams - and team innovativeness. Using novel, detailed data on the technology use of teams in a representative sample of over 3, 500 German firms, we derive distinct technological portfolios at the team level, comprising comprehensive tech use portfolios with advanced artificial intelligence (AI) applications, minimalistic tech use portfolios, and focused tech use portfolios heavily reliant on specialized technologies, such as Big Data or IT security. We find that the effectiveness of team boundary spanning in increasing team innovativeness strongly depends on a team’s technological portfolio. While boundary spanning is more vital for team innovativeness with either minimal or comprehensive technology use, it is less relevant for focused-tech teams. Our results emphasize the critical interplay between a team’s technological portfolio and the link between boundary-spanning activities and team innovativeness. We provide insights into how teams can better align their boundary-spanning activities with their technological portfolios to support team innovativeness. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:iso:educat:0243 |
| By: | Andrew J. Fieldhouse; Karel Mertens |
| Abstract: | Recent empirical evidence by Fieldhouse and Mertens (2024) points to a strong causal link between federal nondefense R&D funding and private-sector productivity growth, and large implied social returns to public R&D investment. We show that these high social return estimates broadly align with existing evidence on the social returns to private or total R&D spending. If the R&D increases authorized under the CHIPS and Science Act were fully appropriated, our modeling indicates a boost in U.S. productivity within a few years, reaching gains of 0.2–0.4% after seven years or more. At their peak, the direct productivity effects of the implied expansion in nondefense R&D alone would raise output by over $40 billion in a single year—exceeding total outlays from the CHIPS Act R&D provisions over a decade. The potential productivity impact of fiscal consolidations changing R&D spending is not clear ex ante. We show that in recent fiscal consolidations, cuts to federal R&D funding were largely borne by defense R&D, whereas funding for nondefense R&D was largely spared or was increased. Our evidence suggests that future deficit reduction efforts that instead emphasize cuts to nondefense R&D funding could have a larger adverse impact on productivity and economic growth than previous fiscal consolidations. |
| Keywords: | Public R&D; productivity; growth; innovation; fiscal consolidations |
| JEL: | E62 O38 O47 |
| Date: | 2025–05–14 |
| URL: | https://d.repec.org/n?u=RePEc:fip:feddwp:99990 |
| By: | Zachary H. Thomas; Ellen D. Williams; Kavita Surana; Morgan R. Edwards |
| Abstract: | Accelerating climate-tech innovation in the formative stage of the technology life cycle is crucial to meeting climate policy goals. During this period, competing technologies are often undergoing major technical improvements within a nascent value chain. We analyze this formative stage for 14 climate-tech sectors using a dataset of 4, 172 North American firms receiving 12, 929 early-stage private investments between 2006 and 2021. Investments in these firms reveal that commercialization occurs in five distinct product clusters across the value chain. Only 15% of firms develop end products (i.e., downstream products bought by consumers), while 59% support these end products through components, manufacturing processes, or optimization products, and 26% develop business services. Detailed analysis of the temporal evolution of investments reveals the driving forces behind the technologies that commercialize, such as innovation spillovers, coalescence around a dominant design, and flexible regulatory frameworks. We identify three patterns of innovation: emerging innovation (e.g., agriculture), characterized by recent growth in private investments across most product clusters and spillover from other sectors; ongoing innovation (e.g., energy storage), characterized by multiple waves of investments in evolving products; and maturing innovation (e.g., energy efficiency), characterized by a dominant end product with a significant share of investments in optimization and services. Understanding the development of nascent value chains can inform policy design to best support scaling of climate-tech by identifying underfunded elements in the value chain and supporting development of a full value chain rather than only end products. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.00010 |
| By: | Gabelberger Fabian; Marques Anabela; Doussineau Mathieu (European Commission - JRC) |
| Abstract: | This paper introduces a novel approach to measuring synergies between Horizon 2020 and cohesion policy funding in the field of R&I during the 2014-2020 programming period. Leveraging project-level data, we calculate regional cosine similarity indices based on societal grand challenges (SGCs) addressed to assess alignment between the two EU funding instruments in EU NUTS-3 regions. Results indicate that synergies are less likely in rural areas, emerging innovators, and â though not statistically significant â less developed regions, highlighting the role of business environments and innovation ecosystems. Regression analysis reveals that funding alignment is positively linked to the presence of universities and specialization in knowledge-intensive services, though the latter exhibits a nonlinear effect under certain circumstances. However, a higher number of SGCs addressed in smart specialization (S3) policy objectives is negatively associated with thematic funding similarity, likely due to fragmentation and dilution of focus. Regions that prioritize too many SGCs may reduce their ability to develop strong specialization and align different funding sources effectively. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:termod:202505 |
| By: | Antonin Bergeaud; Adam B. Jaffe; Dimitris Papanikolaou |
| Abstract: | Innovation is central to models in economics, strategy, management, and finance, yet it remains difficult to measure due to its intangible and knowledge-based na ture. Recent advancements in Natural Language Processing offer new methods to analyze textual artifacts, providing empirical insights into previously hard-to-measure aspects of innovation. This paper provides an overview of the current applications of these methods in empirical innovation research, highlights their transformative potential for reshaping how researchers study and quantify innovation, and discusses the critical challenges that accompany their use. |
| JEL: | C80 O30 O31 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33821 |
| By: | George Chondrakis; Carlos J. Serrano; Rosemarie Ziedonis |
| Abstract: | Markets for technology provide a vibrant channel through which firms purchase ownership rights to patented inventions. Although such transactions enable firms to secure access to intangible assets originating beyond their borders, they also provide cues to competitors regarding the purchasing firm’s technological investments. This study explores the timing of strategic disclosure of patent acquisitions and the conditions under which firms trade the benefits of competitor deterrence through early recordation for those of secrecy through delayed disclosure. Using evidence on the lag between the execution and recording dates for US patents purchased by publicly traded corporations, we predict and find earlier disclosure of patent acquisitions when the buyer works on related technologies and is better positioned to enforce the patents (i.e., is large and relatively litigious). As predicted by the model, we also find that the buyer delays disclosure when the seller is a large firm, suggesting that buyers take advantage of the seller’s ability to deter competitors while keeping the transaction secret. Additional analyses reveal that (a) regulatory changes reducing the value of keeping acquisitions of patent applications secret lead to shorter recording lags, and (b) increases in the enforceability of business method and software patents further accelerate the voluntary recording of patent ownership changes. The study provides new evidence on the tradeoffs that innovating firms face when determining the timing of disclosure for patents they have purchased in technology markets. |
| JEL: | O3 O32 O34 O38 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33783 |
| By: | Castellacci, Fulvio |
| Abstract: | Innovation fosters economic growth and the long-run dynamics of national economies. However, recent literature shows that innovation is also a source of increasing income inequalities. Public policies face thus an important trade-off between efficiency and equity effects of innovation. What are the possible policy strategies to address this trade-off? The paper presents a model in which innovations can be developed by both private firms and public companies. Technological change increases the profit share in the long-run, exacerbating income inequalities between firms’ owners, employed workers, and the unemployed. I empirically calibrate the model for the US economy and carry out a simulation analysis to investigate the effects of different policies aimed at reducing the inequality effects of innovation. Specifically, the analysis compares two distinct policy strategies: one is based on a standard economic policy approach that increases taxes to finance welfare spending; the other is based on a new approach – the Entrepreneurial State – in which the profits of innovations developed by public R&D companies are used to finance welfare programs. The results point out the advantages and drawbacks of different strategies and show that the optimal policy strategy largely depends on the policy maker’s preferences regarding the income distribution. |
| Keywords: | Innovation; income inequalities; labor share; public policies; Entrepreneurial State; public R&D. |
| JEL: | O1 O30 O4 O40 |
| Date: | 2024–04 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124900 |
| By: | Laura Alfaro; Harald Fadinger; Jan S. Schymik; Gede Virananda |
| Abstract: | Trade and industrial policies, while primarily intended to support domestic industries, may unintentionally stimulate technological progress abroad. We document this mechanism in the case of rare earth elements (REEs) – critical inputs for manufacturing at the knowledge frontier, with low elasticity of substitution, inelastic supply, and high production and processing concentration. To assess the importance of REEs across industries, we construct an input-output table that includes disaggregated REE inputs. Using REE-related patents categorized by a large language model, sectoral TFP data, trade data, and physical and chemical substitution properties of REEs, we show that the introduction of REE export restrictions by China led to a global surge in innovation and exports in REE-intensive downstream sectors outside of China. To rationalize these findings and quantify the global impact of the adverse REE supply shock, we develop a quantitative general equilibrium model of trade and directed technological change. We also propose a structural method to estimate sectoral input substitution elasticities for REEs from patent data and find REEs to be complementary inputs. Under endogenous technologies and with complementary inputs, input supply restrictions on REEs induce a surge in REE-enhancing innovation and lead to an expansion of REE-intensive downstream sectors. |
| JEL: | E0 E6 F02 F13 F14 F42 F6 O1 O33 O47 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33877 |
| By: | Matti Cristian (European Commission - JRC); Zacharewicz Thomas; Barsotti Valentina; Haegeman Karel Herman (European Commission - JRC) |
| Abstract: | The Opportunity Spaces publication offers a comprehensive approach to help regions identify and activate opportunities at the intersection of innovation policy and climate adaptation. Through three complementary components, it supports practitioners in developing more transformative approaches to territorial development.Firstly, the publication introduces a novel conceptual framework that helps practitioners understand opportunity spaces through three key dimensions: timing (windows of opportunity), place-based conditions (territorial assets and constraints), and actor capacities (stakeholder capabilities). This framework emphasizes the dynamic nature of opportunity spaces and the importance of conversations - from initial awareness-raising through to systemic transformation. It particularly highlights how different policy areas can be activated and combined to create more transformative approaches.Secondly, a curated collection of real-world examples demonstrates how different regions navigate their opportunity spaces. Each example is structured to highlight the WHAT (actors and resources), HOW (engagement and experimentation), WHY (goals and enabling conditions), and SO WHAT (learnings and achievements). These cases span different maturity levels and focus areas, from horizontal governance to skills development, providing practical insights adaptable to different contexts.Thirdly, the Opportunity Space mapping tool offers a structured yet flexible approach to applying these insights in practice. Through two co-creation sessions, it guides practitioners from initial sense-making through to intervention design. The tool helps regions identify gaps, test assumptions, and develop more transformative portfolios of actions. Its practical exercises and visual templates make complex concepts accessible while encouraging systematic thinking about transformation opportunities. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc141403 |
| By: | Alicia García-Herrero; Michal Krystyanczuk; Robin Schindowski |
| Abstract: | In this paper, we study who is engaging in frontier innovation in AI, semiconductors and quantum computing in China, the US and the EU |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:bre:wpaper:node_10927 |
| By: | Grafström, Jonas (The Ratio Institute) |
| Abstract: | This report investigates the rationale, implementation challenges, and evolving global context of vertical industrial policy, with a particular focus on Sweden. Against the backdrop of recent global crises—including the 2008 financial crisis, the COVID-19 pandemic, and geopolitical disruptions following Russia’s invasion of Ukraine—the analysis explores how governments have re-evaluated the role of state intervention to bolster economic resilience and strategic autonomy. The report distinguishes between horizontal and vertical approaches, where vertical policy targets specific sectors or technologies considered critical for national development, such as green technology, semiconductors, and renewable energy. Drawing on economic theory and empirical evidence, the report outlines the key justifications for vertical industrial policy, including market failures, coordination problems, and the under-provision of public goods. It also addresses the limitations and risks associated with such policies, including information asymmetries, rent-seeking, and political capture. A central contribution is a decision-making framework designed to help policymakers assess when vertical industrial intervention may be justified and how it can be designed to minimize inefficiencies and unintended consequences. While the report takes a cautiously critical stance toward vertical industrial policy, it acknowledges its potential when implemented with clear objectives, regular evaluations, and institutional safeguards. The analysis highlights the need for a balanced and flexible approach, especially in the context of green transitions and geopolitical fragmentation. |
| Keywords: | Industrial policy; vertical policy; market failure; public goods; state intervention; strategic autonomy; coordination failure; green transition; subsidies; economic resilience |
| JEL: | F13 H25 L52 O25 Q48 |
| Date: | 2025–06–04 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:ratioi:0384 |
| By: | Elci Sirin; Galindo Manuel; Sarcina Angela (European Commission - JRC) |
| Abstract: | Recognizing the crucial role of science, technology, and innovation (STI) in achieving the Sustainable Development Goals (SDGs), this report is set within the broader context of the European Commissionâs global and regional initiatives, underscoring the commitment to the Global Gateway initiative. It forms part of a collaborative endeavour by the Joint Research Centre (JRC) and the Directorate-General for International Partnerships (DG INTPA) of the European Commission, focusing on five African countries. Within this framework, the report focuses on Seychelles, exploring STI's role in addressing the country's critical sustainability challenges, particularly in enhancing energy efficiency and integrating renewable energy sources. The objective is to boost energy efficiency and renewable energy uptake by formulating an STI for SDGs Roadmap through participatory and co-creative approaches. The methodology involves comprehensive desk research, stakeholder workshops, interviews, and surveys to collect insights from public and private sectors, NGOs, and academia. Findings highlight Seychelles' significant reliance on fossil fuels, inefficient electricity production, and underutilized renewable energy potential. Key policy recommendations include strengthening STI governance, enhancing human capital, and fostering eco-innovation through focused R&D. The report's originality lies in its tailored approach to leveraging STI for reinforcing Seychelles' energy resilience and sustainability, which provides a well-structured portfolio of STI investments specifically tailored to Seychelles' sustainability challenges and offers a valuable framework for other countries facing similar sustainability issues. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc141389 |
| By: | Anton Korinek (University of Virginia); Joseph Stiglitz (Columbia University) |
| Abstract: | Rapid progress in new technologies such as AI has led to widespread anxiety about adverse labor market impacts. This paper asks how to guide innovative efforts so as to increase labor demand and create better-paying jobs while also evaluating the limitations of such an approach. We develop a theoretical framework to identify the properties that make an innovation desirable from the perspective of workers, including its technological complementarity to labor, the factor share of labor in producing the goods involved, and the relative income of the affected workers. Applications include robot taxation, factor-augmenting progress, and task automation. We find that steering technology becomes more desirable the less efficient social safety nets are. If technological progress devalues labor, the desirability of steering is at first increased, but beyond a critical threshold, it becomes less effective, and policy should shift toward greater redistribution. If labor's economic value diminishes in the future, progress should increasingly focus on enhancing human well-being rather than labor productivity. |
| Keywords: | technological progress, AI, inequality redistribution |
| JEL: | E64 D63 O3 |
| Date: | 2025–05–05 |
| URL: | https://d.repec.org/n?u=RePEc:thk:wpaper:inetwp232 |
| By: | Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | Industrial policy has become a core item in the policy agenda of many governments as well as of the EU which has come up with many policy initiatives over the past two decades. This paper emphasises the important shifts taking place in the global economy with the rise of China but also of other emerging/ed economies that affect the competitiveness of the European economy and challenges its traditional comparative advantages. The challenge to the European economy is compounded by having been left behind in some of the most innovative areas and branches of economic activity (IT, most recently AI, quantum and cloud computing) and also lagging behind in important technological shifts in more traditional industries (such as EVs in the transport equipment industry). On top of this – but also linked to global economic developments – have come rather big ruptures in geo-political relationships such as the decline of multilateral institutions and increasing conflictual relationships amongst the major acting powers on the global political stage. We discuss in this paper the challenges that EU industrial policy has to meet given the trends in geo-politics and geo-economics. |
| Keywords: | EU, industrial policy, geo-economics, geo-politics, industrial restructuring |
| JEL: | F02 F42 F51 F6 L5 L16 L52 O25 O31 O33 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:wii:pnotes:pn:96 |
| By: | Frattini, Federico Fabio; Vona, Francesco; Bontadini, Filippo; Colantone, Italo |
| Abstract: | What are the job multipliers of the green industrialization? We tackle this question within EU regions over the period 2003-2017, building a novel measure of green manufacturing penetration that combines green production and regional employment data. We estimate local job multipliers of green penetration in a long-difference model, using a shift-share instrument that exploits plausibly exogenous changes in non-EU green innovation. We find that a 3-years change in green penetration per worker increases the employment-to-active population ratio by 0.11 pp. The effect is: persistent both in manufacturing and outside manufacturing; halved by agglomeration effects that increase the labour market tightness; stronger for workers with high and low-education; and present also in regions specialized in polluting industries. When focusing on large shocks in a staggered DiD design, we find ten times larger effects, particularly in earlier periods. |
| Keywords: | Climate Change, Environmental Economics and Policy, Industrial Organization, Labor and Human Capital |
| Date: | 2025–06–04 |
| URL: | https://d.repec.org/n?u=RePEc:ags:feemwp:358792 |
| By: | Christian Callaghan |
| Abstract: | This paper introduces Experiential Matrix Theory (EMT), a general theory of growth, employment, and technological change for the age of artificial intelligence (AI). EMT redefines utility as the alignment between production and an evolving, infinite-dimensional matrix of human experiential needs, thereby extending classical utility frameworks and integrating ideas from the capabilities approach of Sen and Nussbaum into formal economic optimisation modelling. We model the economy as a dynamic control system in which AI collapses ideation and coordination costs, transforming production into a real-time vector of experience-aligned outputs. Under this structure, the production function becomes a continuously learning map from goods to experiential utility, and economic success is redefined as convergence toward an asymptotic utility frontier. Using Pontryagin's Maximum Principle in an infinite-dimensional setting, we derive conditions under which AI-aligned output paths are asymptotically optimal, and prove that unemployment is Pareto-inefficient wherever unmet needs and idle human capacities persist. On this foundation, we establish Alignment Economics as a new research field dedicated to understanding and designing economic systems in which technological, institutional, and ethical architectures co-evolve. EMT thereby reframes policy, welfare, and coordination as problems of dynamic alignment, not static allocation, and provides a mathematically defensible framework for realigning economic production with human flourishing. As ideation costs collapse and new experiential needs become addressable, EMT shows that economic growth can evolve into an inclusive, meaning-centred process -- formally grounded, ethically structured, and AI-enabled. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.19045 |
| By: | Starobinsky, Mark |
| Abstract: | Large Language Models (LLMs) have propelled AI forward, yet they falter with static knowledge, unreliable outputs, and regulatory misalignment. Ontology-Enhanced AI, developed by OntoGuard AI, introduces a visionary framework that transcends these limits by weaving dynamic knowledge structures with sophisticated validation, tackling the Peak Data Problem head-on. Poised to transform enterprise AI with unparalleled adaptability and trust, this approach aligns with standards like GDPR and the EU AI Act. While proprietary breakthroughs remain under wraps due to a pending patent, this paper unveils the concept’s potential to captivate technical acquirers and licensees. |
| Date: | 2025–05–01 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:fh4ue_v1 |
| By: | Carpentier Elodie (European Commission - JRC); D'adda Diego (European Commission - JRC); Nepelski Daniel (European Commission - JRC); Stake Johan (European Commission - JRC) |
| Abstract: | The European Digital Innovation Hubs (EDIH) Network of digital innovation intermediaries, established in 2023, aims to accelerate the adoption of advanced digital technologies among SMEs and Public Sector Organisations across European regions. Covering nearly 90% of European regions, the EDIH Network provides tailored digitalisation support services, including AI, cybersecurity, and high-performance computing. As of September 2024, EDIHs have reached over 200, 000 participants and/or companies through 5, 000 events, delivering over 18, 000 services. EDIHs operate close to their customers, with a broad regional but limited international service coverage. The Digital Maturity Assessment Tool (DMAT) reveals that firms' digitalisation processes follow a structured path, with digital business strategy driving development and human-centric digitalisation and data management becoming central at higher levels of maturity. 90% of firms show an increase in their digital maturity level score after EDIH interventions. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc140547 |
| By: | Ping Wang; Tsz-Nga Wong |
| Abstract: | How large is the impact of artificial intelligence (AI) on labor productivity and unemployment? This paper introduces a labor-search model of technological unemployment, conceptualizing the generative aspect of AI as a learning-by-using technology. AI capability improves through machine learning from workers and in turn enhances their labor productivity, but eventually displaces workers if wage renegotiation fails. Three distinct equilibria emerge: no AI, some AI with higher unemployment, or unbounded AI with sustained endogenous growth and little impact on employment. By calibrating to the U.S. data, our model predicts more than threefold improvements in productivity in some-AI steady state, alongside a long-run employment loss of 23%, with half this loss occurring over the initial five-year transition. Plausible change in parameter values could lead to global and local indeterminacy. The mechanism highlights the considerable uncertainty of AI's impacts in the presence of labor-market frictions. In the unbounded-AI equilibrium, technological unemployment would not occur. We further show that equilibria are inefficient despite adherence to the Hosios condition. By improving job-finding rate and labor productivity, the optimal subsidy to jobs facing the replacement risk of AI can generate a welfare gain from 26.6% in the short run to over 50% in the long run. |
| JEL: | E2 J2 O30 O40 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33867 |
| By: | Albora Giambattista (European Commission - JRC); Diodato Dario (European Commission - JRC); Fenoaltea Enrico; Mazzilli Dario; Patelli Aurelio; Sbardella Angelica; Sciarra Carla (European Commission - JRC); Tacchella Andrea; Zaccaria Andrea |
| Abstract: | The European Commission adopted the Digital Europe Programme to equip the EU workforce with the necessary skills to cope with labour market changes induced from innovation in advanced digital technologies as AI. Clerical work and cognitive tasks are considered to be more exposed to AI substitution, whereas manual, operational, and technical tasks are comparatively less exposed. AISE is a job-specific AI exposure metric based on data from financed start-ups whose output could potentially replace a job. Results reveal the existence of a gap between potential and actual AI exposure, as start-ups are more likely to adopt AI development in niche tasks. The AISE-based analysis reveals that cognitive jobs are heterogeneously AI-exposed, and exposure depends on advanced cognitive skills requirements. Beyond technical feasibility and economic viability, ethical and social considerations and trust in AI capabilities determine job expo-sure to AI. Considering EU countriesâ structure of the labour market, Germany and Belgium are the most actually AI-exposed. The largest gap between potential and actual exposure is detected for Sweden and Italy, the former being more potentially AI-exposed than actually. The opposite is true for Italy. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc141782 |