nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2020‒02‒03
five papers chosen by
Arvi Kuura
Tartu Ülikool

  1. Subsidized to change? The impact of R&D policy on regional technological diversification By Lars Mewes; Tom Broekel
  2. Which Countries Have Benefited the Most from China’s Belt and Road Initiative? By Albert Park
  3. Aid Effectiveness in Fragile States By Francesca G. Caselli; Andrea F. Presbitero
  4. Communication for Coproduction: A Systematic Review and Research Agenda By Li, Huafang
  5. Compositional nature of firm growth and aggregate fluctuations By Smirnyagin, Vladimir

  1. By: Lars Mewes; Tom Broekel
    Abstract: Previous research shows ample evidence that regional diversification is strongly path-dependent, as regions are more likely to diversify into related than unrelated activities. In this paper, we ask whether contemporary innovation policy in form of R&D subsidies intervenes in the process of regional diversification. We focus on R&D subsidies and assess if they cement existing path-dependent developments, or if they help in breaking these by facilitating unrelated diversification. To investigate the role of R&D policy in the process of regional technological diversification, we link information on R&D subsidies with patent data and analyze the diversification of 141 German labor-market regions into new technology classes between 1991 and 2010. Our findings suggest that R&D subsidies positively influence regional technological diversification. In addition, we find significant differences between types of subsidy. Subsidized joint R&D projects have a larger effect on the entry probabilities of technologies than subsidized R&D projects conducted by single organizations. To some extent, collaborative R&D can even compensate for missing relatedness by facilitating diversification into unrelated technologies.
    Keywords: regional technological diversification, relatedness, innovation, policy, R&D subsidies
    JEL: O31 O33 O38
    Date: 2020–01
  2. By: Albert Park (Director, HKUST Institute for Emerging Market Studies; Chair Professor, Department of Economics, Division of Social Science and Division of Public Policy, Hong Kong University of Science and Technology)
    Abstract: Analysis of project-level data on China’s outbound FDI and construction projects finds that the Belt and Road Initiative (BRI) has led to a large increase in China’s outbound FDI in Belt and Road (B&R) countries compared to non-B&R countries, especially for greenfield FDI projects and in the energy sector. The importance of economic fundamentals in allocating Chinese investment to different countries has declined substantially under the BRI, raising concerns that the expected returns to such investments has declined. The importance of governance quality in explaining China’s outbound FDI increased significantly under the BRI, dispelling concerns that under the BRI China targets investments toward corrupt, poorly governed countries
    Keywords: Belt and Road, China, Financial Development, Firms, Jobs
    Date: 2019–09
  3. By: Francesca G. Caselli (International Monetary Fund); Andrea F. Presbitero (International Monetary Fund)
    Abstract: Fragile states are highly dependent on foreign aid and are characterized by several features that impair their economic and social performance. After reviewing the literature on aid effectiveness, the chapter presents several stylized facts on aid flows to fragile states, and exploits detailed project-level data to provide novel evidence on aid effectiveness in fragile states. Comparing project success rate across fragile and other developing countries confirms that aid given to fragile states is less likely to be effective than elsewhere. Focusing on the conflict dimension of fragility, we can extend our analysis at the subnational level to strengthen the identification of the effect of fragility on project success. Our results indicate that a project implemented in a fragile state is up to 8 percentage points less likely to be successful than a similar project financed in another developing country. Our analysis does not imply that aid to fragile states should be reduced across the board, but points to several factors that could hamper the growth dividend of aid.
    Date: 2020–01
  4. By: Li, Huafang
    Abstract: Government and nonprofit organizations communicate with the public to reduce the degree of information asymmetry that could impede the two parties from working together to achieve higher levels of performance and accountability and coproduce better policy outcomes and public goods. Different organizational communication strategies’ influences, including choices of information channels, types, frequency, and contents, vary across individuals. This study reviews the relevant literature, discusses various communication strategies and their influences on citizens and implications for public policies and programs, develops a conceptual framework, and proposes a research agenda for future studies.
    Date: 2019–11–29
  5. By: Smirnyagin, Vladimir (University of Minnesota)
    Abstract: This paper studies firm dynamics over the business cycle. I present evidence from the United Kingdom that more rapidly growing firms are born in expansions than in recessions. Using administrative records from Census data, I find that this observation also holds for the last four recessions in the United States. I also present suggestive evidence that financial frictions play an important role in determining the types of firms that are born at different stages of the business cycle. I then develop a general equilibrium model in which firms choose their managers’ span of control at birth. Firms that choose larger spans of control grow faster and eventually get to be larger, and in this sense have a larger target size. Financial frictions in the form of collateral constraints slow the rate at which firms reach their target size. It takes firms longer to get up to scale when collateral constraints tighten; therefore, businesses with the largest target size are affected disproportionately more. Thus, fewer entrepreneurs find it profitable to choose larger projects when financial conditions deteriorate. Using Bayesian methods, I estimate the model using micro and aggregate data from the United Kingdom. I find that financial shocks account for over 80% of fluctuations in the formation of businesses with a large target size, and TFP and labour wedge shocks account for the remaining 20%. An independently estimated version of the model with no choice over the span of control needs larger aggregate shocks in order to account for the same data series, suggesting that the intensive margin of business formation is important at business cycle frequencies. The model with the choice over the span of control generates an empirically relevant and non-targeted collapse in the right tail of the cumulative growth distribution among firms started in recessions, while the model without such a choice does not. The paper also discusses implications for micro-targeted government stimulus policies.
    Keywords: Business cycles; firm dynamics
    JEL: E23 E32 H25
    Date: 2020–01–03

This nep-ppm issue is ©2020 by Arvi Kuura. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.