nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2014‒01‒10
seven papers chosen by
Fulvio Castellacci
Norwegian Institute of International Affairs (NUPI)

  1. The Effects of Biased Technological Changes on Total Factor Productivity: A Rejoinder and New Empirical Evidence By Cristiano Antonelli; Francesco Quatraro
  2. Biased Technological Change and the Relative Abundance of Natural Resources By John Boyce
  3. Mapping Global Value Chains By Koen De Backer; Sébastien Miroudot
  4. Supply Chains and Credit-Market Shocks : Some Implications for Emerging Markets By Yothin Jinjarak
  5. A R&D Based Real Business Cycle Model By Fung, Ka Wai Terence; Lau, Chi Keung Marco; Chan, Kwok Ho
  6. The dynamics of innovation and risk By Biais, Bruno; Rochet, Jean-Charles; Woolley, Paul
  7. Complementarity, Fragmentation, and the Effects of Patent Thickets By NAGAOKA Sadao; NISHIMURA Yoichiro

  1. By: Cristiano Antonelli (University of Torino; BRICK); Francesco Quatraro (University of Nice Sophia Antipolis; GREDEG CNRS; BRICK)
    Abstract: The paper by Ji and Wang (2013) calls new attention on the analysis of the effects of the direction of technological change. The aim of this paper is to better articulate and test the theoretical arguments that the direction of technological changes has specific effects on the efficiency of the production process and to study the incentives and the processes that lead to its introduction. The decomposition of total factor productivity growth into the bias and the shift effects enables to articulate the hypothesis that the types of technological change whether more neutral or more biased reflect the variety of the innovation processes at work. The evidence of a large sample of European regions tests the hypothesis that regional innovations systems with a strong science base are better able to introduce neutral technological changes while regional innovation systems that rely more upon learning processes and tacit knowledge favor the introduction of directed technologies a form of meta-substitution that aims at exploiting the opportunities provided by the most intensive use of locally abundant factors.
    Keywords: Biased Technological Change, Mobility, European Regions, GMM System, Transition Probability
    JEL: O33
    Date: 2014–01
  2. By: John Boyce (University of Calgary)
    Abstract: This paper documents that natural resources that are more abundant have higher production, lower prices, higher primary industry revenues, and higher R&D. These empirical facts are explained by a model of biased technological change in which relatively more abundant resources attract greater R&D because the return from obtaining a patent is higher in larger markets. Resource specific R&D may be targeted either towards upstream extraction technologies or towards downstream production technologies, and R&D is subject to diminishing knowledge spillovers and diminishing productivity of labor. The estimated elasticity of substitution between natural resources is greater than one, implying that natural resources are substitutes in production. Declining real resource prices in the face of rising resource production are explained by the increasing productivity of labor as knowledge stocks grow.
    Date: 2013–01–21
  3. By: Koen De Backer; Sébastien Miroudot
    Abstract: World trade and production are increasingly structured around “global value chains” (GVCs). The last few years have witnessed a growing number of case studies describing at the product level how production is internationally fragmented, but there is little evidence at the aggregate level on the prevalence of GVCs. The main objective of this paper is to provide for more and better evidence allowing the examination of countries’ position within international production networks. We propose a number of indicators that give a more accurate picture of the integration and position of countries in GVCs, as well as a more detailed assessment of the value chain in six broad industries: agriculture and food products, chemicals, electronics, motor vehicles, business services and financial services.
    JEL: F14 F23 L16 L23
    Date: 2013–12–19
  4. By: Yothin Jinjarak (Asian Development Bank Institute (ADBI))
    Abstract: Driven by the increasingly important role of supply chains in global production, this paper studies empirical association between global credit-market shocks and firm behavior towards liquidity needs across countries and industries. 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. Our findings highlight the importance of balance-sheet contagion along supply chains during the 2007–09 global financial crisis.
    Keywords: supply-chain, credit market shock, liquidity needs, firm-level panel data, Emerging Markets, firm behavior
    JEL: G14 E0 F0
    Date: 2013–11
  5. By: Fung, Ka Wai Terence; Lau, Chi Keung Marco; Chan, Kwok Ho
    Abstract: The New Keynesian Real Business Cycle model with staggered price adjustment is augmented with a R&D producing sector. Two sources of economic shocks are considered, namely random paritcipation (perturbances to value of alternative investment opportunities in another sector) and financial intermediation (shocks to the cost of raising capital in the financial intermediation market). We find that, when comparing to the baseline model, both models can explain pro-cyclical R&D spending. Additionally, the investment oversensitivity problem is corrected. However, only the financial intermediation model is consistent with the observed finding that volatility of R&D is larger than that of investment and output.
    Keywords: Endogenous growth model, real business cycle, asymmetric information, research and development
    JEL: E30 O3 O30 O4 O40 O42
    Date: 2013
  6. By: Biais, Bruno; Rochet, Jean-Charles; Woolley, Paul
    Abstract: We study the dynamics of an innovative industry when agents learn about its strength, i.e., the likelihood that it gets hit by negative shocks. Managers can exert risk-prevention export to mitigate the consequences of such shocks. As time goes by, if no shock occurs, con…dence improves. This attracts managers to the innovative sector. But, when con…dence becomes high, less managers exerting low risk-prevention export also enter. This accelerates the growth of the industry, while inducing a decline in risk-prevention. The longer the boom, the stronger the con…dence, the larger the losses if a shock occurs. While the above dynamics arise in the fi…rst best, with asymmetric information there is excessive entry of inefficient managers, earning informational rents at the expense of inneficient managers. This inflates the innovative sector and increases its vulnerability.
    Date: 2013–10
  7. By: NAGAOKA Sadao; NISHIMURA Yoichiro
    Abstract: This paper empirically investigates the effects of patent thickets. One unique feature of our study is to identify two sources of patent thickets: (1) complementarity as measured by the number of the patents to be used jointly with the focal patent in commercialization, and (2) ownership fragmentation as measured by the number of firms whose patents are cited by an examiner for the granting of the focal patent. There are three major findings. First, there is a significant difference between complex industry sectors and discrete ones regarding complementarity, while the difference regarding fragmentation at the patent level is small. Second, more complementarity is significantly associated with the importance of first mover advantage in research and development (R&D) and (less significantly) with that in commercialization, while fragmentation has little effect on them. Consistent with this finding, complementarity is associated with high patent value. Third, cross licensing motivation significantly accounts for patenting propensity while blocking motivation does not. Complementarity is significantly associated with more patenting for cross licensing, which facilitates both combining the inventions of different firms and preventing the risk of being held up. Furthermore, it does not invite patenting for blocking. Thus, we do not see significantly negative consequences of patent thickets on R&D, as seen by incumbents. At the same time, it is important to pay focus on policy to avoid granting patents to low quality inventions and to facilitate the mechanism of ex-ante contracting in complex industry sectors where patenting motivations are high.
    Date: 2014–01

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