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on Innovation |
| By: | Nelli, Linnea; Virgillito, Maria Enrica; Vivarelli, Marco |
| Abstract: | The aim of this paper is to understand whether what has been labelled as “twin transition”, at first as a policy flagship, endogenously emerges as a new technological trajectory stemming by the convergence of the green and digital technologies. Embracing an evolutionary approach to technology, we first identify the set of relevant technologies defined as “green”, analyse their evolution in terms of dominant blocks within the green technologies and concurrences with digital technologies, drawing on 560, 720 granted patents by the US Patent Office from 1976 to 2024. Three dominant blocks emerge as relevant in defining the direction of innovative efforts, namely energy, transport and production processes. We assess the technological concentration and underlying complexity of the dominant blocks and construct counterfactual scenarios. We hardly find evidence of patterns of actual endogenous convergence of green and digital technologies in the period under analysis. On the whole, for the time being, the “twin transition” appears to be just a policy flagship, rather than an actual endogenous technological trajectory driving structural change. |
| JEL: | O33 O38 Q55 Q58 |
| Date: | 2025–03–17 |
| URL: | https://d.repec.org/n?u=RePEc:unm:unumer:2025008 |
| By: | Jesus Fernandez-Villaverde (University of Pennsylvania); Yang Yu (Shanghai Jiao Tong University); Francesco Zanetti (University of Oxford) |
| Abstract: | Defensive hiring of researchers by incumbent firms with monopsony power reduces creative destruction. This mechanism helps explain the simultaneous rise in R&D spending and decline in TFP growth in the US economy over recent decades. We develop a simple model highlighting the critical role of the inelastic supply of research labor in enabling this effect. Empirical evidence confirms that the research labor supply in the US is indeed inelastic and supports other model predictions: incumbent R&D spending is negatively correlated with creative destruction and sectoral TFP growth while extending incumbents’ lifespan. All these effects are amplified when ideas are harder to find. An extended version of the model quantifies these mechanisms’ implications for productivity, innovation, and policy. |
| Keywords: | Productivity growth, innovation, R&D, patents, creative destruction |
| JEL: | E22 L11 O31 O33 |
| Date: | 2025–03–11 |
| URL: | https://d.repec.org/n?u=RePEc:pen:papers:25-007 |
| By: | Yijia Chen; Kangmin Wu; |
| Abstract: | Artificial intelligence (AI) is a key driver of the Fourth Industrial Revolution. Despite growing interest in the geography of AI, our understanding of how AI integrates into regional contexts remains limited. In response, we examine the integration of AI into regional technological domains in China and the United States using patent data. Theoretically, we develop a framework by introducing the concepts of intra- and extra-regional AI relatedness. Our findings reveal that the integration of AI into regional technological domains is positively associated with both intra-regional and extra-regional AI relatedness. Additionally, extra-regional AI relatedness can moderate the lack of intra-regional AI relatedness. |
| Keywords: | integration of artificial intelligence, intra-regional AI relatedness, extra-regional AI relatedness, regional technological domains, China, the United States |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2507 |
| By: | A.C. Pinate; M. Dal Molin; M.G. Brandano |
| Abstract: | This paper analyses the relationship between institutional quality and green innovation in Italian regions (NUTS2). We examine how varying levels of institutional quality influence the regional capacity to generate green innovation, disentangling the effects related to economic institutions (corruption, government effectiveness, and regulatory quality) from the impacts associated with political institutions (rule of law and voice and accountability). Using a panel of data for 2004–2018 on green patents, we use an instrumental variable IV approach to control for endogeneity and several robustness checks. Our results show that the most important drivers of green innovation are related to the quality of political institutions. These findings remain robust, even when checking for economic and environmental controls, demonstrating that green innovation is more related to political decisions and social capital than innovation in general is. |
| Keywords: | regional green innovation;green patents;Institutional Quality;italy |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:cns:cnscwp:202508 |
| By: | Sandström, Christian (Linnaeus University); Stenkula, Mikael (Research Institute of Industrial Economics (IFN)) |
| Abstract: | This paper critically evaluates the European Union’s shift towards large-scale green industrial policies. It highlights the risks of government-directed resource allocation, such as inefficiencies, misaligned incentives, rent-seeking, and lobbying. Politicians and bureaucrats at the EU level lack the ability to identify the future industries, products, and technologies for this policy to work effectively. The EU is not designed to operate large top-down interventions successfully. There is a substantial risk that large amounts of resources will be spent on initiatives that ultimately fail. Instead, this paper emphasizes competition- and technological-neutral frameworks, emissions trading systems, and general policy incentives. The paper concludes that a decentralized, market-driven approach is more sustainable for fostering innovation. |
| Keywords: | New industrial policy; Green investments; Innovation policy; Mission-oriented policies |
| JEL: | H50 L52 O38 P16 |
| Date: | 2025–02–25 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:iuiwop:1523 |
| By: | Keuschnigg, Christian; Stalenis, Giedrius Kazimieras |
| Abstract: | We study a small open economy that must implement an emissions reduction plan and eventually phase out fossil fuel. R&D leads to the design of energy saving new machines. Endogenous scrapping eliminates old inefficient machines. We identify two distortions that delay the adoption and diffusion of energy saving technology: scrapping of old equipment and investment in new machines are both too low. The optimal policy to manage the energy transition thus combines a carbon tax with a profit tax to speed up exit, and an investment subsidy to speed up investment in new equipment. The optimal policy increases capital turnover, the diffusion of energy saving technology, and thereby mitigates the costs of the energy transition. Compared to a policy that exclusively relies on carbon taxes, the optimal policy could reduce the GDP loss of moving to net zero from 7.8 to 6.1% of GDP. |
| Keywords: | Energy saving innovation, vintage capital, emissions reduction |
| JEL: | D21 D62 H23 O33 Q41 Q43 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:usg:econwp:2025:03 |