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on Technology and Industrial Dynamics |
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Issue of 2013‒11‒09
eleven papers chosen by Fulvio Castellacci Norwegian Institute of International Affairs (NUPI) |
| By: | Christoph Ernst (ZEW Mannheim); Katharina Richter (University of Mannheim & ZEW Mannheim); Nadine Riedel (University of Hohenheim, Oxford University CBT & CESifo Munich) |
| Abstract: | This paper examines the impact of tax incentives on corporate research and development (R&D) activity. Traditionally, R&D tax incentives have been provided in the form of special tax allowances and tax credits. In recent years, several countries moreover reduced their income tax rates on R&D output. Previous papers have shown that all three tax instruments are effective in raising the quantity of R&D related activity. We provide evidence that, beyond this quantity effect, corporate taxation also distorts the quality of R&D projects, i.e. their innovativeness and revenue potential. Using rich data on corporate patent applications to the European patent office, we find that a low tax rate on patent income is instrumental in attracting innovative projects with a high earnings potentialand innovation level. The effect is statistically significant and economically relevant and prevails in a number of sensitivity checks. R&D tax credits and tax allowances are in turn not found to exert a statistically significant impact on project quality. |
| Keywords: | corporate taxation, research and development, micro data |
| JEL: | H3 H7 J5 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:btx:wpaper:1301&r=tid |
| By: | Hallegatte, Stephane; Fay, Marianne; Vogt-Schilb, Adrien |
| Abstract: | Green industrial policies can be defined as industrial policies with an environmental goal -- or more precisely, as sector-targeted policies that affect the economic production structure with the aim of generating environmental benefits. This paper provides a framework to assess their desirability depending on the effectiveness and political acceptability of price instruments. The main messages are the following. (i) Greening growth processes to the extent and with the speed needed cannot be done without industrial policies, even if prices can be adjusted to reflect environmental objectives. (ii)"Sunrise"green industrial policies are needed because they support the development of critical new technologies and sectors, bring down costs, and allow for reduced emissions in the short term even in the absence of carbon pricing. (iii)"Sunset"green industrial policies and trade policies may be needed in conjunction with safety nets to make carbon pricing politically or socially acceptable. They can help mitigate the impact of a carbon price on competitiveness and unemployment and smooth the transition by helping industries adjust to the new conditions. (iv) Green or not, industrial policy requires carefully navigating the twin dangers of market and governance failure. The viability of supported technologies and sectors is difficult to assess through a market-test given their dependence on continued environmental policies or pricing -- such as a carbon price. Particular attention must be paid to avoid potential unintended negative effects, such as rebound effects (especially if prices are inappropriate), misallocation of capital, or capture and rent-seeking behaviors. |
| Keywords: | Climate Change Economics,Transport Economics Policy&Planning,Climate Change Mitigation and Green House Gases,Economic Theory&Research,Labor Policies |
| Date: | 2013–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6677&r=tid |
| By: | Timothy Dunne; Shawn D. Klimek; Mark J. Roberts; Daniel Yi Xu |
| Abstract: | This paper estimates a dynamic, structural model of entry and exit in an oligopolistic industry and uses it to quantify the determinants of market structure and long-run firm values for two U.S. service industries, dentists and chiropractors. Entry costs faced by potential entrants, fixed costs faced by incumbent producers, and the toughness of short-run price competition are all found to be important determinants of long-run firm values, firm turnover, and market structure. Estimates for the dentist industry allow the entry cost to differ for geographic markets that were designated as Health Professional Shortage Areas and in which entry was subsidized. The estimated mean entry cost is 11 percent lower in these markets. Using simulations, we compare entry-cost versus fixed-cost subsidies and find that entry-cost subsidies are less expensive per additional firm. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2013-10&r=tid |
| By: | Paige Ouimet; Rebecca Zarutskie |
| Abstract: | Young firms disproportionately employ young workers, controlling for firm size, industry, geography and time. The same positive correlation between young firms and young employees holds when we look just at new hires. On average, young employees in young firms earn higher wages than young employees in older firms. Further, young employees disproportionately join young firms with greater innovation potential and that exhibit higher growth, conditional on survival. These facts are consistent with the argument that the skills, risk tolerance, and career dynamics of young workers are contributing factors to their disproportionate share of employment in young firms. Finally, we show that an increase in the regional supply of young workers is positively related to the rate of new firm creation, especially in high tech industries, suggesting a causal link between the supply of young workers and new firm creation. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2013-75&r=tid |
| By: | Mella-Barral , Pierre; Habib, Michel A.; Hege, Ulrich |
| Abstract: | We analyze the implications of the decision to spawn or to retain a new product for the nature and evolution of the firm. In our model, a new product is spawned if the fit between the product and its parent firm organization is not adequate. We focus on the impact of the firm's history of spawning decisions on firm characteristics such as size, focus, profitability, and innovativeness, and analyze its role in shaping firm dynamics. In accordance with the empirical literature, our model predicts that older firms innovate less, spawn less, are more diversified and less profitable, and that firms with more valuable general or specialized resources innovate and spawn more. Echoing seemingly contradictory empirical findings, our model predicts that small, focused firms (large, diversified firms) innovate and spawn more, and are more profitable when sample heterogeneity is driven by the importance of organizational fit (the value of general resources) |
| Keywords: | spawning; spinoffs; spinouts; general and specialized resources; firm organization; organizational fit; firm size; focus; profitability; innovativeness; spawning dynamics |
| JEL: | L25 M13 O31 O33 |
| Date: | 2013–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:heccah:0984&r=tid |
| By: | Joao Paulo Pessoa; John Van Reenen |
| Abstract: | It is widely believed that in the US wage growth has fallen massively behind productivity growth. Recently, it has also been suggested that the UK is starting to follow the same path. Analysts point to the much faster growth of GDP per hour than median wages. We distinguish between "net decoupling" - the difference in growth of GDP per hour deflated by the GDP deflator and average compensation deflated by the same index - and "gross decoupling" - the difference in growth of GDP per hour deflated by the GDP deflator and median wages deflated by a measure of consumer price inflation. We would expect that over the long-run real compensation growth deflated by the producer price (the labour costs that employers face) should track real labour productivity growth (value added per hour), so net decoupling should only occur if labour's share falls as a proportion of gross GDP, something that rarely happens over sustained periods. We show that over the past 40 years that there is almost no net decoupling in the UK, although there is evidence of substantial gross decoupling in the US and, to a lesser extent, in the UK. This difference between gross and net decoupling can be accounted for essentially three factors (i) compensation inequality (which means the average compensation is growing faster than the median compensation), (ii) the wedge between compensation (which includes employer-provided benefits like pensions and health insurance) and wages which do not and (iii) differences in the GDP deflator and the consumer price deflator (i.e. producer wages and consumption wages). These three factors explain basically ALL of the gross decoupling leaving only a small amount of "net decoupling". The first two factors are important in both countries, whereas the difference in price deflators is only important in the US. |
| Keywords: | Decoupling, Wages, Productivity, Compensation, Labour Income Share. |
| JEL: | E24 J20 J30 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1246&r=tid |
| By: | Dominika Langenmayr (University of Munich); Andreas Hau fler (University of Munich and CESifo); Christian J. Bauer (University of Munich and CESifo) |
| Abstract: | Heterogeneous firm productivity raises the question of whether governments should pursue `pick-the-winner' strategies by subsidizing highly productive firms more, or taxing them less, than their less productive counterparts. We study this issue in a setting where governments can set differentiated effective tax rates in an oligopolistic industry where firms with two productivity levels co-exist. We show that the optimal structure of tax differentiation depends critically on the feasible level of the corporate profit tax, which in turn depends on the degree of international tax competition. When tax competition is weak and optimal profit tax rates are high, favouring high-productivity firms is indeed the optimal policy. When tax competition is aggressive and profit taxes are low, however, the optimal tax policy reverses and favours low-productivity firms. |
| Keywords: | business taxation, firm heterogeneity, tax competition |
| JEL: | H25 H87 F15 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:btx:wpaper:1308&r=tid |
| By: | Serena Fatica |
| Abstract: | The working paper investigates the impacts of corporate taxes on the accumulation of different types of capital assets. The paper analyses the effect of corporate taxes on new investment in different types of capital assets in the manufacturing industries of 11 advanced economies over the period 1991-2007. The magnitude of the asset substitution elasticities points to a significant inter-asset distortionary effect induced by differences in the tax-adjusted user cost of capital. Overall, differential taxation leads on average to under-investment in ICT capital and to over-investment in other machinery and equipment compared to a counterfactual benchmark where marginal tax rates are equalized across assets. Once cross-country heterogeneity in corporate taxation is accounted for, the results are more mixed, in terms of both the size and the direction of the distortions. On average, 4 percent of the aggregate capital stock appears misallocated. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:euf:ecopap:0503&r=tid |
| By: | Negin Salimi; Rudi Bekkers; Koen Frenken |
| Abstract: | Joint PhD projects are a promising form of research collaboration, connecting universities to firms and public research organizations. Entering into such collaborations, however, requires decisions in terms of governance. This paper investigates how a university and its partners govern such projects, including decision-making, daily management and disclosure policies. Earlier studies show that shared governance modes have had a higher success rate than centralized governance modes. Nevertheless, more than two thirds of the 191 joint PhD projects we investigated opted for centralized rather than shared governance. Our findings show that: (i) geographical and cognitive distance render the adoption of a shared governance mode less likely; (ii) the partner controlling critical resources tends to centralize governance, and (iii) partnering firms are more likely to put restrictions on publication output than public research organizations. We therefore recommend that universities and their partners take these aspects into account when selecting such projects. |
| Keywords: | university-industry collaboration, collaborative PhD project, shared governance, centralized governance, proximity, resource imbalances, publication disclosure. |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:tuecis:wpaper:1309&r=tid |
| By: | Christine Greenhalgh (Oxford Intellectual Property Research Institute, University of Oxford; and Intellectual Property Research Institute of Australia, The University of Melbourne) |
| Abstract: | This paper begins by surveying recent economic studies of the relationships between technology transfer, intellectual property, innovation and diffusion in emerging countries. It applies this literature to the Indian case. India is a potentially useful case study for several reasons. India has recently been experiencing rapid growth and has several high technology sectors staffed by an absolutely large and highly educated middle class. At the same time an even larger share of its very big population is still working in low productivity agriculture and many of these people are living in extreme poverty. To reduce poverty and improve agricultural productivity India will need to create jobs in labour intensive production and distribution sectors to employ its vast army of unskilled workers. The second part of the paper outlines how industry structure and innovative performance have been progressing in India following the economic reforms of the early 90s and the changes to intellectual property law occasioned by the TRIPS agreement and membership of the World Trade Organisation. In the third section the focus turns to recent science, technology and innovation policy in India. A study of the country’s potential for innovation by the World Bank in 2007 argued that India must proceed on two fronts. In addition to considering how India’s growth prospects can be enhanced by world leading innovations, this volume placed great emphasis on inclusive innovation. This may involve mainly the diffusion and absorption of existing knowledge, but is designed to improve the lot of the poor. The World Bank report proposed a number of new policy directions aimed at speeding up innovation and technology diffusion in India. We attempt to record what changes have been made to innovation policy, foreign direct investment policy and diffusion policy in India in recent years and assess whether these are likely to be effective. |
| Keywords: | Science and technology policy, developing economies, IP rights, innovation |
| JEL: | O12 O34 O38 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2013n37&r=tid |
| By: | Alexander Sokolov (Director of the international Foresight centre, vice director of the ISSEK HSE. Address: National research university “Higher school of economics”); Alexander Chulok (Head of the science and technology Foresight department, ISSEK HSE. Address: National research university “Higher school of economics”); Vladimir Mesropyan (Researcher at the science and technology Foresight department, ISSEK HSE. Address: National research university “Higher school of economics”) |
| Abstract: | Currently the framework conditions for science and technology and innovation (STI) policy have changed significantly in Russia: a system of technology forecasting has been established, which focuses on ensuring the future needs of the manufacturing sector of the national economy. This system was supposed to be the main part of the state strategy planning system which is currently being formed. Over the last decade dozens of science and technology forward-looking projects have been implemented, among which 3 cycles of long-term S&T Foresight stand out prominently. The Foresight was developed by the request of the Ministry of Education and Science of the Russian Federation. The development of the 3rd cycle of long-term Foresight includes both normative («market pull») and research («technology push») approaches. The project involved more than 2,000 experts and more than 200 organizations. Within the project a network of six sectoral Foresight centers was created on the basis of leading universities. The article describes the most important issues of future studies in Russia and presents the principles which formed the basis for the long-term science and technology (S&T) Foresight until 2030. The authors explore its position in the national technology Foresight system and the possibilities for the implementation of its results by the key stakeholders of the national innovation system and on the level of STI policy. Eventually Russian experience could be fairly interesting and useful for many other countries with similar socio-economic features and barriers |
| Keywords: | Foresight, Russia, research and development strategy, planning of science and technology development, Russian technology Foresight system, innovation policy. |
| JEL: | O31 O32 O33 O38 O21 O25 O43 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:19sti2013&r=tid |