|
on Technology and Industrial Dynamics |
|
Issue of 2013‒11‒16
twelve papers chosen by Fulvio Castellacci Norwegian Institute of International Affairs (NUPI) |
| By: | Norman Gemmel (Victoria University of Wellington, New Zealand); Richard Kneller (University of Nottingham, UK); Danny McGowan (Bangor University, UK); Ismael Sanz (Universidad Rey Juan Carlos, Spain) |
| Abstract: | Firms that lay far behind the technological frontier have the most to gain from imitating the technology or management practices of others. That some firms converge relatively slowly to the productivity frontier suggests the existence of factors that cause them to under-invest in their productivity. In this paper we explore whether higher rates of corporate taxation affect firm productivity convergence because they reduce the after tax returns to productivity enhancing investments for small firms. Using data for 11 European countries we find evidence for such an effect; productivity growth in small firms is slower the higher are high corporate tax rates. Our results are robust to the use of instrumental variable and panel data techniques with quantitatively similar effects found from a natural experiment following the German tax reforms in 2001. |
| Keywords: | Productivity, taxation, convergence |
| JEL: | D24 H25 L11 O31 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:bng:wpaper:13001&r=tid |
| By: | Ciccone, Antonio (Universitat Pompeu Fabra); Peri, Giovanni (University of California) |
| Abstract: | We find that over the period 1950–1990, states in United States absorbed increases in the supply of schooling due to tighter compulsory schooling and child labor laws mostly through within-industry increases in the schooling intensity of production. Shifts in the industry composition towards more schooling-intensive industries played a less important role. To try and understand this finding theoretically, we consider a free trade model with two goods/industries, two skill types, and many regions that produce a fixed range of differentiated varieties of the same goods. We find that a calibrated version of the model can account for shifts in schooling supply being mostly absorbed through within-industry increases in the schooling intensity of production even if the elasticity of substitution between varieties is substantially higher than estimates in the literature. |
| Keywords: | human capital; skills; schooling; labor demand; United States |
| JEL: | E24 I20 J23 J24 |
| Date: | 2013–09–13 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0377&r=tid |
| By: | A. Kerem Cosar; Nezih Guner; James Tybout |
| Abstract: | This paper explores the combined effects of reductions in trade frictions, tariffs, and firing costs on firm dynamics, job turnover, and wage distributions. It uses establishment-level data from Colombia to estimate an open economy dynamic model that links trade to job flows in a new way. The fitted model captures key features of Colombian firm dynamics and labor market outcomes, as well changes in these features during the past 25 years. Counterfactual experiments imply that integration with global product markets has increased both average income and job turnover in Colombia. In contrast, the experiments find little role for this country’s labor market reforms in driving these variables. The results speak more generally to the effects of globalization on labor markets in Latin America and elsewhere. |
| Keywords: | international trade, firm dynamics, size distribution, labor market frictions, inequality |
| JEL: | F12 F16 E24 J64 L11 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:732&r=tid |
| By: | David S. Abrams (Penn Law School & Wharton Business Economics & Public Policy Department, University of Pennsylvania,); Ufuk Akcigit (Department of Economics, University of Pennsylvania & NBER); Jillian Popadak (Wharton Business Economics & Public Policy Department, University of Pennsylvania) |
| Abstract: | Prior work suggests that more valuable patents are cited more and this view has become standard in the empirical innovation literature. Using an NPE-derived dataset with patent-specific revenues we find that the relationship of citations to value in fact forms an inverted-U, with fewer citations at the high end of value than in the middle. Since the value of patents is concentrated in those at the high end, this is a challenge to both the empirical literature and the intuition behind it. We attempt to explain this relationship with a simple model of innovation, allowing for both productive and strategic patents. We find evidence of greater use of strategic patents where it would be most expected: among corporations, in fields of rapid development, in more recent patents and where divisional and continuation applications are employed. These findings have important implications for our basic understanding of growth, innovation, and intellectual property policy. |
| Keywords: | productive innovation, defensive innovation, patents, creative destruction, citations, patent value, competition, intellectual property, entrepreneurship, strategic patenting, defensive patenting, patent thickets, fencing patents. |
| JEL: | O3 L2 K1 |
| Date: | 2013–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:13-065&r=tid |
| By: | Qichun He (Central University of Finance and Economics); Heng-fu Zou (Development Research Group, World Bank) |
| Abstract: | We propose creative destruction as the channel for inflation to impact growth. The banks reap revenue from higher rates of credit growth, attracting more labor into banks and decreasing the profit of entrepreneurs. But when the revenue is achieved by issuing more credit to entrepreneurs, part of the revenue goes to entrepreneurs, attracting more resources into R&D. When banks retain a larger share of the revenue, the former effect dominates and credit inflation retards growth. When entrepreneurs get the larger share, the latter effect dominates and credit inflation increases growth. The welfare implications are also analyzed. Empirical evidence from the U.S. and China is provided. |
| Keywords: | Creative Destruction, Credit Inflation, Credit Demand Function, Nash Bargaining |
| JEL: | E31 G21 O31 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:cuf:wpaper:591&r=tid |
| By: | Ledezma, Ivan |
| Abstract: | This paper analyses the potentially defensive behaviour of patent race winners and its effect on aggregate R&D effort. It proposes a quality-ladders model that endogenously determines leaders technology advantages and who innovates. Product market regulation can have either a positive or a negative effect on R&D intensity. The negative effect is likely to be observed in highly deregulated economies. The positive influence arises in more regulated environments and it is stronger for larger innovative jumps. These steady-state equilibrium outcomes are consistent with puzzling and contrasting patterns stemming from data on manufacturing industries for 14 OECD countries during the period 1987-2003. |
| Keywords: | réglementation; modèle à échelles de qualité; leaders innovants; R&D; product market regulation; quality ladders; Innovative Leaders; |
| JEL: | O33 O31 L13 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:dau:papers:123456789/4966&r=tid |
| By: | Panos Markopoulos (Department of Business and Public Administration, University of Cyprus); Kartik Hosanagar (Department of Operations and Information Management, Wharton School, University of Pennsylvania) |
| Abstract: | As online information availability for products and services is increasing and as buyers engage in more online search prior to purchase decisions, it is becoming more important for firms to know when to invest to reduce buyer uncertainty. This article argues that today's firms should view product design and investments to reduce buyer uncertainty as an integrated process, which is in turn heavily influenced by how much information buyers can obtain independently, for example, by reading other buyers' reviews or by accessing third party infomediaries. Using a game-theoretic model of a competitive market, we explain how product quality decisions influence future investments to reduce buyer uncertainty, and demonstrate how firms should take this dependency into account to avoid over-investing in quality. We also show that firms, and especially lower quality firms, can free ride on the product information already available in the market, and reduce their own disclosure investments. Finally we show that firms can take further advantage of such ambient information availability to ease the intensity of competition among them, and specifically to reduce their product quality investments. |
| Keywords: | Buyer uncertainty, information disclosure, product quality, infomediaries |
| JEL: | C72 D43 D82 D83 L13 L15 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1325&r=tid |
| By: | Matthias Duschl (Economic geography and Location Research, Philipps-Universität Marburg); Thomas Brenner (Economic geography and Location Research, Philipps-Universität Marburg) |
| Abstract: | This paper analyses the causal relationships in regional technological systems within a structural vector autoregression (SVAR) framework. Applying a data-driven identification strategy based on Independent Component Analysis, it shows how the regional growth dynamics of economic, research, innovation and educational activities affect each other instantaneously and over time in five different industries. Referring to the type of industry and its knowledge base, expectations are derived on how industry-specific growth processes unfold. Knowledge on the causal relations among the various activities in such regional technological systems is of utmost relevance to the design and implementation of efficient policy instruments. |
| Keywords: | regional growth, SVAR, non-normality, innovations, universities, R&D, regional technological systems |
| JEL: | C33 O30 R11 |
| Date: | 2013–10–09 |
| URL: | http://d.repec.org/n?u=RePEc:pum:wpaper:2013-12&r=tid |
| By: | Naoto Jinji; Xingyuan Zhang; Shoji Haruna |
| Abstract: | We examine whether regional trade agreements (RTAs) enhance international technology spillovers by using a panel of patent application and citation data for 142 countries/regions during 1990–2006 at the United States Patent and Trademark Office. We use patent citation data as a proxy for technology spillovers. A gravity-like model is estimated by the negative binomial model and the fixed effects negative binomial (FXNB) model. We find that technology spillovers between two countries/regions measured by patent citations are greater if they are signatories to the same RTA. This finding is quite robust for different estimation techniques. The estimated results from the FXNB model suggest that there is no significant difference in the effects of free trade agreements and customs unions on technology spillovers. We also find that General Agreement on Tariffs and Trade (GATT) and World Trade Organization (WTO) membership and participation in the Information Technology Agreement of WTO facilitate technology spillovers across signatories. |
| Keywords: | regional trade agreement, technology spillovers, patent citations, economic distance, gravity model |
| JEL: | F15 O33 |
| URL: | http://d.repec.org/n?u=RePEc:kue:dpaper:e-12-010&r=tid |
| By: | Jinjarak, Yothin (Asian Development Bank Institute) |
| Abstract: | Focusing on the adjustment of working-capital financing, we find two pieces of supporting evidence from international firm-level panel data covering the period 2002:I–2012:IV. First, for industries where specific investment in the input supplier-customer relationship is large, firms are more exposed to credit-market shocks. We find that measures of global credit-market shocks are negatively associated with trade receivables, trade payables, and inventories, conditional on the level of contract intensity in the industries where firms operate. Second, firms in emerging markets are more vulnerable to credit-market shocks than are firms in developed countries. We are also able to verify the economic significance of sales growth, operating cash flows, cash stock, and firm size in the overall adjustment. |
| Keywords: | balance-sheet contagion; trade credit; differentiated products; financial system efficiency; supply chains |
| JEL: | E00 F00 G14 |
| Date: | 2013–11–06 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0443&r=tid |
| By: | Debuque-Gonzales, Margarita (University of the Philippines) |
| Abstract: | This paper investigates the financial determinants of research and development (R&D) investment in Asia, where innovation is naturally seen as the key driver of future (high) economic growth. We sample listed nonfinancial firms from eight economies in region (the People’s Republic of China; Hong Kong, China; India; Indonesia; the Republic of Korea; Malaysia; the Philippines; and Singapore) for the period 2002–2011 using the Oriana database. Panel data regressions show sensitivity of R&D investment to changes in cash flow, indicating reliance on internal financing of R&D and financially constrained firms, and a greater role of debt, rather than equity, as a source of external financing. In terms of alternative uses of funds, dividend payments by firms seem to divert from their spending on R&D, but investments in financial assets do not. In terms of ownership structure, empirical results show that both higher domestic ownership concentration and higher foreign ownership tend to lower cash flow sensitivity of R&D investment, suggesting more stable funding of innovation. Overall, there does not seem to be an extreme preference of firm shareholders for short-term returns at the expense of long-term productivity. However, there is clearly a gain for firms as well as economies they are in with better access to external financing of R&D. |
| Keywords: | R&D investment; financing innovation; cash flow; R&D financing constraints; Asia |
| JEL: | D92 G30 O30 O40 |
| Date: | 2013–08–16 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0364&r=tid |
| By: | Cull, Robert; Xu, Lixin Colin; Yang, Xi; Zhou, Li-An; Zhu, Tian |
| Abstract: | This paper uses data from a large survey of Chinese firms to investigate whether local government efforts to facilitate market development improve firm efficiency. Both government provision of information about products, markets, and innovation and government assistance in arranging loans are positively associated with firm efficiency. Those private firms with weak access to and knowledge of financial, input, and product markets benefit most from such assistance. These patterns are robust across multiple estimation approaches. Case studies of specific types of market facilitation by local governments are provided. The evidence is consistent with the notion that government facilitation can help some firms overcome market failures in the early stages of development. The paper argues that changing fiscal dynamics that forced local governments to become increasingly self-reliant in generating revenue and a government promotion system based on local economic performance compelled these efforts at market facilitation. |
| Keywords: | Access to Finance,Debt Markets,Banks&Banking Reform,Economic Theory&Research,Labor Policies |
| Date: | 2013–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6688&r=tid |