nep-knm New Economics Papers
on Knowledge Management and Knowledge Economy
Issue of 2007‒08‒27
seventeen papers chosen by
Emanuele Canegrati
Catholic University of the Sacred Heart

  1. Weightless Economy, Knowledge Goods and Schumpeterian Growth By GRIMAUD, André
  2. On the Long run Determinants of Industry TFP Growth Rates By Ngai, Liwa Rachel; Samaniego, Roberto
  3. Is Distance Dying at Last? Falling Home Bias in Fixed Effects Models of Patent Citations By Rachel Griffith; Sokbae Lee; John Van Reenen
  4. Close to You? Bias and Precision in Patent-Based Measures of Technological Proximity By Mary Benner; Joel Waldfogel
  5. Product Innovation, Export Entrepreneurship and Regional Characteristics - an analysis of innovation ideas in regions By Andersson, Martin; Johansson, Börje
  6. Publicness and Taken-for-granted Knowledge: A Case Study of Communal Land Formation in Rural Thailand By Shigetomi, Shin'ichi
  7. Specialization and adjustment during the growth of China and India : the Latin American experience By Rubiano, Eliana; Olarreaga, Marcelo; Lederman, Daniel
  8. A Two-countries Two-R&D-sectors Model of Growth and Trade By Gilles Koléda
  9. Web 2.0: Nothing Changes…but Everything is Different By Barbry, Eric
  10. Efficiency and equity impacts of rural land rental restrictions : evidence from India By Nagarajan, Hari K.; Jin, Songqing; Deininger, Klaus
  11. Individual Rationality and Market Efficiency By Steven Gjerstad; Jason M. Shachat
  12. Statistics and Politics in a "Knowledge Society". By Enrico Giovannini
  13. Entrepreneurship As Regional Development Catalyst By Lucio Cassia; Alessandra Colombelli
  14. An Equity Perspective on Access to, Enrolment in and Finance of Tertiary Education By Rita Asplund; Oussama Ben-Abdelkarim; Ali Skalli
  15. Strengthening China ' s technological capability By Yusuf, Shahid; Nabeshima, Kaoru
  16. Adaptive Minimax-Regret Treatment Choice, With Application To Drug Approval By Charles F. Manski
  17. Regional Characteristics of the Human Resources in Hungary During the Transitory Period By Janos Rechnitzer; Melinda Smaho

  1. By: GRIMAUD, André
    Date: 2007–05
  2. By: Ngai, Liwa Rachel; Samaniego, Roberto
    Abstract: We develop a multi-sector general equilibrium model in which productivity growth is driven by the generation of knowledge. In the model, firms allocate resources towards the production of goods and the production of new knowledge, in response to industry-specific factors of demand and technology. In equilibrium, we find that long run differences in research intensity and productivity growth are primarily driven by the parameters of the production function for knowledge -- particularly the extent to which the production of new knowledge benefits from prior knowledge, which we term receptivity. Conditional on receptivity, whether the production of knowledge relies on prior knowledge that is internally generated by the firm or whether it instead "spills over" from its competitors does not appear to be quantitatively important. The results are consistent with a number of empirical findings on the relationship between research intensity and rates of technical change.
    Keywords: Multi-sector growth; R&D Intensity; Technological Opportunity; Total Factor Productivity
    JEL: D24 O31 O41 O47
    Date: 2007–07
  3. By: Rachel Griffith; Sokbae Lee; John Van Reenen
    Abstract: We examine the home bias of international knowledge spillovers as measured by the speed of patent citations (i.e. knowledge spreads slowly over international boundaries). We present the first compelling econometric evidence that the geographical localization of knowledge spillovers has fallen over time, as we would expect from the dramatic fall in communication and travel costs. Our proposed estimator controls for correlated fixed effects and censoring in duration models and we apply it to data on over two million citations between 1975 and 1999. Home bias declines substantially when we control for fixed effects: there is practically no home bias for the more modern sectors such as pharmaceuticals and information/communication technologies.
    JEL: F23 O32 O33
    Date: 2007–08
  4. By: Mary Benner; Joel Waldfogel
    Abstract: Patent data have been widely used in research on technological innovation to characterize firms' locations as well as the proximities among firms in knowledge space. Researchers could measure proximity among firms with a variety of measures based on patent class data, including Euclidean distance, correlation, and angle between firms' patent class distributions. Alternatively, one could measure proximity using overlap in cited patents. We point out that measures of proximity based on small numbers of patents are imprecisely measured random variables. Measures computed on samples with few patents generate both biased and imprecise measures of proximity. We explore the effects of larger sample sizes and coarser patent class breakdowns in mitigating these problems. Where possible, we suggest that researchers increase their sample sizes by aggregating years or using all of the listed patent classes on a patent, rather than just the first.
    JEL: O31
    Date: 2007–08
  5. By: Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Johansson, Börje (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper focuses on how characteristics of regions pertaining to local information about product varieties and markets as well as networks for the transmission of information about innovation opportunities influence the arrival of innovation ideas to existing and potential entrepreneurs. We formulate a model where entrepreneurs or innovating firms introduce new products in a quasi-temporal setting. Market conditions are characterized by monopolistic competition between varieties belonging to the same product group, in which there is entry and exit of varieties. Firms innovate in response to the arrival of innovation ideas. To realize these ideas firms have to make an R&D investment and a firm’s decision to export a variety to a new market is associated with a market channel investment. The theoretical model is used as a reference when formulating two regression models, with which we estimate factors that can explain the introduction of new export varieties by firms in different regional milieus. In one model we examine the emergence of new export firms, and in the second model we investigate the appearance of new export varieties. Results are consistent with the assumption that knowledge and information flows have a positive influence on the frequency of arrival of innovation ideas to firms.
    Keywords: innovation ideas; exports; entrepreneurship; location; knowledge spillovers
    JEL: O31 R11 R12
    Date: 2007–08–08
  6. By: Shigetomi, Shin'ichi
    Abstract: The lack of public-mindedness can cause problems in the social order of people’s daily lives, such as the tragedy of the commons and the problem of free riders. Some scholars such as Habermas assert that communicative rationality is the solution, expecting that individuals will communicate with each other to reach a consensus without being bounded by aspects of social background. Other scholars advocate the revitalization of traditional community culture. These arguments, however, are not based on reality. By using the case of communal land formation in rural Thailand, the author shows that collective action is neither a revival of tradition nor a result of communication free from social constraints. Rather, cooperation emerges because the people rationally respond to their present needs and have built, through daily social interactions, taken-for-granted knowledge about how they should behave for cooperation.
    Keywords: Local organization, Rural development, Thailand, Public sphere, Community forest, Communal land, Community, Forest
    JEL: O18 Q15 Q23 Z13
    Date: 2007–06
  7. By: Rubiano, Eliana; Olarreaga, Marcelo; Lederman, Daniel
    Abstract: This paper examines the extent to which the growth of China and India in world markets is affecting the patterns of trade specialization in Latin American economies. The authors construct Vollrath ' s measure of revealed comparative advantage by 3-digit ISIC sector, country, and year. This measure accounts for both imports and exports. The empirical analyses explore the correlation between the revealed comparative advantage of Latin America and the two Asian economies. Econometric estimates suggest that the specialization pattern of Latin A-with the exception of Mexico-has been moving in opposite direction of the trade specialization pattern of China and India. Labor-intensive sectors (both unskilled and skilled) probably have been negatively affected by the growing presence of China and India in world markets, while natural resource and scientific knowledge intensive sectors have probably benefited from China and India ' s growth since 1990.
    Keywords: Free Trade,Economic Theory & Research,Trade Policy,Water and Industry,Agricultural Knowledge & Information Systems
    Date: 2007–08–01
  8. By: Gilles Koléda
    Abstract: This paper presents a two-countries dynamic model of Schumpeterian growth with two innovative R&D sectors in each country: a vertical R&D sector that improves the quality of existing differentiated products and a horizontal R&D sector that creates new differentiated products. The two countries exchange differentiated products and beneficiate from knowledge spillovers, possibly from the other country. We opt for an endogenous growth without scale effect specification à la Howitt (1999) and explore the consequence on home research and production of an increase of research capacities in foreign country (possibly impulsed by R&D subsidies).
    Keywords: Endogenous growth without scale effect, innovation, Trade, spillovers, R&D subsidies
    JEL: F43 O31 O34 O40
    Date: 2007–06
  9. By: Barbry, Eric
    Abstract: For some, Web 2.0 is a "simple" evolution of the current web; for others, Web 2.0 is a real revolution. Web 2.0 is, in fact, a "revolutionary evolution." Technically speaking, Web 2.0 is a "simple" evolution because it is not a technical "breakthrough," as it is essentially based on an aggregation of existing technologies. However, the impact of Web 2.0 is such that it can actually be described as an evolution that will shake our sociological, economic and legal bases. This paper addresses the legal aspects of Web 2.0 and tries to explain that while Web 2.0 is not a lawless domain, it is highly likely to create a legal tsunami.
    Keywords: Web 2.0; regulation; law; case law; blogs; liability; intellectual property; personal data; knowledge management; collaborative space and employment law.
    JEL: M50 C51 K21 L96 K29 C52 C10 O33 L32 K23 C23
    Date: 2007–03
  10. By: Nagarajan, Hari K.; Jin, Songqing; Deininger, Klaus
    Abstract: Recognition of the potentially deleterious implications of inequality in opportunity originating in a skewed asset distribution has spawned considerable interest in land reforms. However, little attention has been devoted to fact that, in the longer term, the measures used to implement land reforms could negatively affect productivity. Use of state level data on rental restrictions, together with a nationally representative survey from India, suggests that, contrary to original intenti ons, rental restrictions negatively affect productivity and equity. The restrictions reduce the scope for efficiency-enhancing rental transactions that benefit poor producers. Simulations suggest that, by doubling the number of producers with access to land through rental, from about 15 million currently, liberalization of rental markets could have far-reaching impacts.
    Keywords: Rural Development Knowledge & Information Systems,Municipal Housing and Land,Housing & Human Habitats,Climate Change,Land and Real Estate Development
    Date: 2007–08–01
  11. By: Steven Gjerstad; Jason M. Shachat
    Abstract: The demonstration by Smith [1962] that prices and allocations quickly converge to the competitive equilibrium in the continuous double auction (CDA) was one of the first – and remains one of the most important results in experimental economics. His initial experiment, subsequent market experiments, and models of price adjustment and exchange have added considerably to our knowledge of how markets reach equilibrium, and how they respond to disruptions. Perhaps the best known model of exchange in CDA market experiments is the random behavior in the “zero-intelligence” (ZI) model by Gode and Sunder [1993]. They conclude that even without trader rationality the CDA generates efficient allocations and “convergence of transaction prices to the proximity of the theoretical equilibrium price,” provided only that agents meet their budget constraints. We demonstrate that – by any reasonable measure – prices don’t converge in their simulations. Their budget constraint requires that a buyer’s currency never exceeds her value for the commodity, which is an unnatural restriction. Their conclusion that market efficiency results from the structure of the CDA independent of traders’ profit seeking behavior rests on their claim that the constraints that they impose are a part of the market institution, but this is not so. We show that they in effect impose individual rationality, which is an aspect of agents’ behavior. Researchers on learning in markets have been misled by their interpretation of the ZI simulations, with deleterious effects on the debate on market adjustment processes.
    Keywords: Bounded rationality; double auction; exchange economy; experimental economics; market experiment; “zero intelligence” model
    JEL: C70 C92 D44 D51
    Date: 2007–08
  12. By: Enrico Giovannini
    Abstract: Several studies have analysed the characteristics of the knowledge society, as well as its impact on the production of "official" statistics. In this paper we will not enter into this debate, but we will try to analyse the role of statistics in building a knowledge society and improving the democratic control of policy makers. This issue is especially important because the development of information and communication technologies (ICT) dramatically reduced the cost of producing statistics: therefore, nowadays a huge number of organisations is able to produce statistical figures and indices, frequently picked up by media, just for advocacy purposes and this contributes to create a sense of "confusion" often reported by citizens about the real state of the economy and of the society. This "noise" does not help at all citizens to make the best possible choices, including the electoral ones, and this is not a good thing for the functioning of economic markets and the democracy. The paper initially analyses the relationships between information, expectations and economic theory, as well as the nexus between information and political sciences. In the second part, various approaches to the measurement of societal progress and the role of "key indicators" are presented and analysed. Moreover, theoretical models and empirical evidence about what citizens know on societal progress are discussed. Finally, the OECD project on the measurement of societal progress is presented. <BR>Plusieurs études ont analysé les caractéristiques d’une société de la connaissance, ainsi que son impact sur la production de statistiques « officielles ». Nous n’entrerons pas dans ce débat dans ce document, mais nous essayerons d’analyser le rôle des statistiques dans la construction d’une société de la connaissance et l’amélioration du contrôle démocratique des décideurs politiques. Cette question est particulièrement importante parce que le développement des technologies de l’information et de la communication (TIC) a nettement réduit le coût de la production des statistiques : par conséquent, un grand nombre d’organisations sont maintenant capables de produire des chiffres et des indices, fréquemment repris par les médias, dans le but de sensibiliser ce qui contribue à créer un sentiment de « confusion » souvent rapporté par les citoyens à propos de l’état réel de l’économie et de la société. Ce « bruit » n’aide pas les citoyens à faire les meilleurs choix possibles, y compris les choix électoraux, et ce n’est pas une bonne chose pour le fonctionnement des marchés économiques et de la démocratie. Cet article examine initialement les rapports entre l?information, les attentes et la théorie économique, ainsi que la connexion entre l'information et les sciences politiques. Dans la deuxième partie, diverses approches de la mesure du progrès sociétal et du rôle des « indicateurs clés » sont présentées et analysées. De plus, les modèles théoriques et l'évidence empirique au sujet de ce que les citoyens connaissent du progrès sociétal sont discutés. En conclusion, le projet de l'OCDE sur la mesure du progrès sociétal est présenté.
    Date: 2007–05–29
  13. By: Lucio Cassia; Alessandra Colombelli
    Abstract: Entrepreneurship is more and more considered a key driver of economic performance. Recent works in the literature on this research area (see Saxenian, 1994; Audretsch and Keilbach, 2004; Cooke, 2004; Cassia, Fattore and Paleari, 2006) suggest that there is a positive link between entrepreneurship capital, regional economic performance and the creation of new firms and businesses. This kind of intangible assets promotes the spillover of knowledge, becoming crucial in building firms and regional innovation capability and strengthening learning capacities. Entrepreneurship is, thus, about change and innovation. In relation to these concepts, the aim of the paper is to highlight the entrepreneurial dimension behind the creation of firms formed around new business ideas in a knowledge-based economy, where value-relevant assets are expected to consist predominately of intangible and non-marketable assets. To this purpose, we focus on companies going public on the Alternative Investment Market (AIM), a market dedicated to young and growing companies in both science and non-science based industries. The AIM was launched in 1995, allowing to a large number of SME to go public in the UK, and, today, is recognized as the most successful secondary market in Europe, brought forward as an example by other stock exchanges in mainland Europe. In the paper we investigate the post-IPO performance of listed firms, during the period going from 1995 to 2002, with the aim, first, to highlight the determinants shaping that performance and influencing the local milieu and, secondly, to underline the role of entrepreneurship. The results of this work have some policy implications both at national and regional level. At the national level, policy makers should take into account the relevance of an efficient financial system, in particular the emerging role of secondary markets, and try to remove financial constraints that hamper the the prospect of new businesses. At the regional level, political intervention should aim to promote entrepreneurial activities, which ease the regional process of change, for example, by encouraging the propensity to risk and facilitating the access to external capital.
    Date: 2006–08
  14. By: Rita Asplund; Oussama Ben-Abdelkarim; Ali Skalli
    Abstract: The failure to achieve equitable access to university studies has turned the focus to the funding of European higher education systems. Since the large amounts of public subsidies injected in tertiary-level education have not succeeded in reducing disparities in access for children from different social backgrounds, this is seen as compelling evidence for there being a need to revise higher education financing not only on efficiency but also on equity grounds. Such policies are already pursued, planned or intensively discussed in most of Europe. More equitable access to and participation in university education through changes in the funding sources and mechanisms is a challenging policy with long-term implications. Hence, it should preferably be based on reliable empirical evidence. This raises the question of what the theoretical and empirical literature actually tells us about these matters. How severe is the under-representation of students from a socially disadvantaged background? Has this inequality changed over time across and within European countries? What role does funding play? Have the changes in funding systems already undertaken in several European countries improved the participation of students from low-income families? This review paper aims to answer these important questions by drawing together the available evidence, by contrasting it against pursued educational policies and by pointing to still existing knowledge gaps.
    Keywords: access, equity, financing, tertiary education
    JEL: I22
    Date: 2007–08–17
  15. By: Yusuf, Shahid; Nabeshima, Kaoru
    Abstract: China is increasing its outlay on research and development and seeking to build an innovation system that will deliver quick results not just in absorbing technology b ut also in pushing the technological envelope. China ' s spending on R & D rose from 1.1 percent of GDP in 2000 to 1.3 percent of GDP in 2005. On a purchasing power parity basis, China ' s research outlay was among the world ' s highest, far greater than that of Brazil, India, or Mexico. Chinese firms are active in the fields of biotechnology, pharmaceuticals, alternative energy sources, and nanotechnology. This surge in spending has been parallel by a sharp increase in patent applications in China, with the bulk of the patents registered in the areas of electronics, information technology, and telecoms. However, of the almost 50,000 patents granted in China, nearly two-thirds were to nonresidents. This paper considers two questions that are especially important for China. First, how might China go about accelerating technology development? Second, what measures could most cost-effectively deliver the desired outcomes? It concludes that although the level of financing for R & D is certainly important, technological advance is closely keyed to absorptive capacity which is a function of the volume and quality of talent and the depth as well as the heterogeneity of research experience. It is also a function of how companies maximize the commercial benefits of research and development, and the coordination of research with production and marketing.
    Keywords: Technology Industry,Tertiary Education,E-Business,ICT Policy and Strategies,Agricultural Knowledge & Information Systems
    Date: 2007–08–01
  16. By: Charles F. Manski
    Abstract: Suppose that there are two treatments for a condition. One is the status quo, whose properties are known from experience and the other is an innovation, whose properties are not known initially. A new cohort of persons presents itself each period and a planner must choose how to treat this cohort. When facing situations of this kind, it has become common to commission randomized trials of limited duration to learn about the innovation. Rather than wait for the outcomes of interest to unfold over time, surrogate outcomes that can be observed early on are used to judge the success of the innovation. A close approximation to this process is institutionalized in the drug approval protocol of the U. S. Food and Drug Administration. This paper brings welfare-economic and decision-theoretic thinking to bear on the problem of treatment choice, with application to drug approval. I introduce the adaptive minimax-regret (AMR) rule, which applies to each cohort the minimax-regret criterion using the knowledge of treatment response available at the time of treatment. The result is a fractional treatment allocation whenever the available knowledge does not suffice to determine which treatment is better. The rule is adaptive because, as knowledge of treatment response accumulates, successive cohorts are allocated differently across the two treatments. I use the AMR idea to suggest an adaptive drug approval process that permits partial marketing of new drugs while scientifically appropriate long-term clinical trials are underway. The stronger the evidence on health outcomes of interest, the more treatment would be permitted, with a definitive approval decision eventually made when sufficient evidence has accumulated.
    JEL: D63 I18
    Date: 2007–08
  17. By: Janos Rechnitzer; Melinda Smaho
    Abstract: The territorial examination of human resources and their training institutions was disregarded by the hungarian regional researches. The cause of the time-lag is that data concerning the qualification of the population are connecting to the census, which is carried out in every 10th year and it is not possible to work out reliable analyses on the territorial level (regional, county, in case of some variable settlement) without them. There is rather broad information base on the institutions training human resources. For example information on the network of secondary level education, higher education, their service palette (training directions), quantity development (number of students, teachers), state of supply (equipments), and data can be collected about the rating of institutons (mainly on secondary level) as well (the number of matriculating students). The first part of the study focuses on the relation between human resources and regional development. It sets out that human capacity is a new resource, which has more and more important role in shaping of territorial processes. The authors examine the regional features of human resources in five dimensions. First, they review the human factors like the more important demographical factors, the qualification and the Human Development Index. In case of life quality they analyse the civil society and the regional/local identity. When analysing the change of living conditions they review the role of the info-communication infrastructure in the city network. In the part on knowledge and communication network they study the regional structure and changes of training institutions (from primary school to high education) and research and development. Finally they evaluate the innovation environment of the city network in the transition period. The essay proves that regional disparities can be shown in the human resources, but their character is different from the expected, which can be experienced in the economy or settlement network. To conclude, regional disparities are manifold, the structure is divided by factors and the concentration effects of large centers is quite strong.
    Date: 2006–08

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