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on Technology and Industrial Dynamics |
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Issue of 2014‒03‒15
eight papers chosen by Fulvio Castellacci Norwegian Institute of International Affairs (NUPI) |
| By: | Nicholas Bloom; Paul Romer; Stephen Terry; John Van Reenen |
| Abstract: | In a general equilibrium product-cycle model, lower trade barriers in-crease Southern purchasing power, which lifts long-run growth by increasing the profit from innovation. In the short run, factors of production must be reallocated inside firms, which lowers the opportunity cost of innovation, generating an additional "trapped factor" effect. Starting from a baseline OECD growth rate of 2% we find that trade integration with low-wage countries in the decade around China's WTO accession could have increased long-run growth to 2.4%. There is an additional short-run trapped factors effect, raising growth to 2.7%. China accounts for about half of these growth increases. |
| Keywords: | Innovation, trade, China, endogenous growth |
| JEL: | D92 E22 D8 C23 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1261&r=tid |
| By: | Dirk Czarnitzki; Bronwyn H. Hall; Hanna Hottenrott |
| Abstract: | Information about the success of a new technology is usually held asymmetrically between the research and development (R&D)-performing firm and potential lenders and investors. This raises the cost of capital for financing R&D externally, resulting in financing constraints on R&D especially for firms with limited internal resources. Previous literature provided evidence for start-up firms on the role of patents as signals to investors, in particular to Venture Capitalists. This study adds to previous insights by studying the effects of firms’ patenting activity on the degree of financing constraints on R&D for a panel of established firms. The results show that patents do indeed attenuate financing constraints for small firms where information asymmetries may be particularly high and collateral value is low. Larger firms are not only less subject to financing constraints, but also do not seem to benefit from a patent quality signal. |
| JEL: | G32 O31 O32 O38 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19947&r=tid |
| By: | Thanh Le; Cuong Le Van |
| Abstract: | We set up a theoretical framework to discuss the impact of trade liberalization and R&D policies on domestic exporting firms' incentive to innovate and social welfare. In this framework, exporting firms invest in R&D to reduce their production costs and, in return, receive R&D subsidies from the government. While firms target at maximizing their profits, the government aims to maximize the social welfare. We consider different settings of firm competition to explore their strategic behaviours as well as the government's strategic behaviour at the policy stage. We find that tradeliberalization in the foreign market is always welfare enhancing and, in most cases, leads to higher export sales and R&D investments of firms, and raises productivity at firms and industry level. When firms are independent monopolies in the overseas market, it is optimal for the government not to provide any R&D subsidy. When goods are close substitutes, the social optimum can be achieved as a Nash equilibrium by applying an optimal R&D tax. Trade liberalization induces a higher R&D tax rate to be levied on firms. When firms also conduct business in the home market, it is always optimal for the government to provide firms with a financial support to their R&D activity. While this R&D subsidy is decreasing in the trade cost when firms are independent monopolies, its monotonicity in the trade costs is determined by the convexity of the R&D cost function when firms produce close substitutes. |
| Keywords: | Trade, R&D, subsidies, welfare |
| JEL: | F12 F13 F15 O31 |
| Date: | 2014–02–25 |
| URL: | http://d.repec.org/n?u=RePEc:ipg:wpaper:2014-119&r=tid |
| By: | Huergo, Elena; Moreno, Lourdes |
| Abstract: | The objective of this study is to compare the effect of different types of public support for R&D projects on firms’ technological capabilities. We distinguish be-tween low-interest loans and subsidies and between national and European sup-port. Using data on 2,319 Spanish firms during the period 2002-2005, we estimate a multivariate probit to analyse the determinants of firms’ participation in public R&D programmes and, later, the impact of this participation on firms’ technologi-cal capabilities using different indicators. The results provide evidence of the ef-fectiveness of all treatments for improving firms’ innovative performance. Specif-ically, although the three kinds of public aid stimulate the intensity of R&D in-vestment, the highest impact corresponds to soft credits. In addition, national sub-sidies have a higher impact on internal R&D intensity than EU grants, but the op-posite relation is found as regards total R&D intensity. With respect to innovation outputs, apart from the indirect effect of public support by stimulating R&D in-tensity, we also find evidence of a direct effect of participation in the CDTI credit system and in the European subsidy programme on the probability of obtaining product innovations and applying for patents. |
| Keywords: | Soft loans, R&D subsidies, impact assessment |
| JEL: | H81 L2 L52 O3 |
| Date: | 2014–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:54218&r=tid |
| By: | Inoue, Hiroyasu; Yamaguchi, Eiichi |
| Abstract: | Subsidizing small high-technology firms is now considered to be important in stimulating economies throughout the world. This is because fast growing small firms create new markets and jobs. The Small Business Innovation Research (SBIR) program has played an important role in the United States in subsidization providing two billion dollars every year. Japan started its own SBIR program inspired by that in the United States. This paper examines the direct effects of Japan's SBIR program through the attributes of firms. First, we compared the changes in sales, employment, and the number of patents between SBIR awardees and matching firms. However, SBIR awardees did not demonstrate better performance in sales or employment. Therefore, it seems that the direct effect of Japan's SBIR program has not produced positive results. However, it did increase the number of patents. Second, we examined the overall results by using regression models. Even with control variables, these results were unchanged. Therefore, we concluded that the results were robust. |
| Keywords: | Small business, Research policy, Innovation, SBIR, Japan |
| JEL: | O2 O3 |
| Date: | 2014–02–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:53898&r=tid |
| By: | Michael D. König; Xiaodong Liu; Yves Zenou |
| Abstract: | We study a structural model of R&D alliance networks in which firms jointly form R&D collaborations to lower their production costs while competing on the product market. We derive the Nash equilibrium of this game, provide a welfare analysis and determine the optimal R&D subsidy program that maximizes total welfare. We also identify the key firms, i.e. the firms whose exit would reduce welfare the most. We then structurally estimate our model using a panel dataset of R&D collaborations and annual company reports. We use our estimates to identify the key firms and analyze the impact of R&D subsidy programs. Moreover, we analyze temporal changes in the rankings of key firms and how these changes affect the optimal R&D policy. |
| Keywords: | R&D networks, key firms, optimal subsidies |
| JEL: | D85 L24 O33 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:142&r=tid |
| By: | Llopis,Oscar; D’Este,Pablo |
| Abstract: | In this study, we analyze the determinants of biomedical scientists’ participation in various types of activities and outputs related to medical innovation. More specifically, we argue that scientists occupying brokerage positions among their contacts will in a more favorable position to deliver medical innovation outcomes, compared to scientists embedded in more dense networks. However, we also theorize that beyond a threshold, the coordination costs of brokerage may surpass its potential benefits. In addition to that, we study the influence of two individual-level attributes as potential determinants of the participation in medical innovation activities: cognitive breadth and perceived beneficiary impact. We situate our analysis within the context of the Spanish biomedical research framework, where we analyze a sample of 1,309 biomedical scientists. |
| Keywords: | Social Capital, Ego-Network Brokerage, Medical innovation, Translational Research, Perceived Beneficiary Impact, Cognitive Breadth |
| JEL: | D85 Z13 O31 |
| Date: | 2014–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:ing:wpaper:201402&r=tid |
| By: | Barbara Casu (Cass Business School, City University, London); Alessandra Ferrari (Department of Economics, University of Reading); Claudia Girardone (Essex Business School, University of Essex); John O.S. Wilson (School of Management, University of St Andrews) |
| Abstract: | In the context of the debate on increased integration of Eurozone banking markets, this paper evaluates the impact of the Single Market on bank productivity and assesses the cross-border benefits of integration in terms of technological spillovers. We utilise a parametric metafrontier Divisia index to estimate productivity change and identify technological gaps. We then assess the extent to which productivity converges within and across banking industries as a result of technological spillovers. Our results suggest that bank productivity growth has occurred for most Eurozone countries up to the onset of the financial crisis, but has since reversed. Technological spillovers do exist, and have led to progression toward the best technology. However, convergence is not complete and significant long run differences in productivity persist. Improvements in technology are increasingly driven by a smaller number of banks and concentrated in fewer banking industries. |
| Keywords: | European banking, financial integration, convergence, productivity growth |
| JEL: | G21 D24 |
| Date: | 2014–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2014-01&r=tid |