nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2014‒12‒13
eight papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Financial Development and Technology Diffusion By Diego Comin; Ramana Nanda
  2. Product and Labor Market Regulations, Production Prices, Wages and Productivity By Gilbert Cette; Jimmy Lopez; Jacques Mairesse
  3. Appropriability mechanisms, innovation and productivity: Evidence from the UK By Hall B.H.; Sena V.
  4. Do Tax Credits Affect R&D Expenditures by Small Firms? Evidence from Canada By Ajay Agrawal; Carlos Rosell; Timothy S. Simcoe
  5. The adoption of information and communication technologies in the design sector and their impact on firm performance: Evidence from the Dutch design sector By Bashir, Sadaf; Matzat, U.; Sadowski, B. M.
  6. The Dynamic Implication of Agricultural Research and Development Investment for Economic Development By Didier, Y. Alia; Reed, Michael R.
  7. Globalization, the rise of biotechnology and catching up in agricultural innovation: The case of Bt technology in India By Iizuka M.; Thutupalli A.
  8. Innovation of knowledge intensive service firms in urban areas By Hammer, Andrea

  1. By: Diego Comin (Dartmouth College); Ramana Nanda (Harvard Business School, Entrepreneurial Management Unit)
    Abstract: We examine the extent to which financial market development impacts the diffusion of 16 major technologies, looking across 55 countries, from 1870 to 2000. We find that greater depth in financial markets leads to faster technology diffusion for more capital-intensive technologies, but only in periods closer to the invention of the technology. In fact, we find no differential effect of financial depth on the diffusion of capital-intensive technologies in the late stages of diffusion or in late adopters. Our results are consistent with a view that local financial markets play a critical role in facilitating the process of experimentation that is required for the initial commercialization of technologies. This evidence also points to an important mechanism relating financial market development to technology diffusion and economic growth.
    Keywords: banking, technology diffusion, experimentation, growth.
    Date: 2014–10
  2. By: Gilbert Cette; Jimmy Lopez; Jacques Mairesse
    Abstract: This study is to our knowledge the first attempt to infer the consequences on productivity entailed by anticompetitive regulations in product and labor markets through their impacts on production prices and wages. Results are encouraging showing that changes in production prices and wages at country*industry levels are informative about the creation of rents impeding productivity in different ways and to different extents. A simulation based on these results and on OECD regulation indicators suggests that nearly all countries, in particular European countries, could expect sizeable gains in multifactor productivity over the years from an economic policy that would be able to reform product and labor market regulation practices.
    JEL: C23 L16 L50 O43 O47
    Date: 2014–10
  3. By: Hall B.H.; Sena V. (UNU-MERIT)
    Abstract: We use an extended version of the well-established Crepon, Duguet and Mairesse model 1998 to model the relationship between appropriability mechanisms, innovation and firm-level productivity. We enrich this model in several ways. First, we consider different types of innovation spending and study the differences in estimates when innovation spending rather than RD spending is used to predict innovation in the CDM model. Second, we assume that a firm simultaneously innovates and chooses among different appropriability methods formal or informal to protect the innovation. Finally, in the third stage, we estimate the impact of the innovation output conditional on the choice of appropriability mechanisms on firmsf productivity. We find that firms that innovate and rate formal methods for the protection of Intellectual Property IP highly are more productive than other firms, but that the same does not hold in the case of informal methods for the protection of a firmfs IP, except possibly for large firms as opposed to SMEs. We also find that this result is strongest for firms in the services, trade, and utility sectors, and negative in the manufacturing sector.
    Keywords: Firm Performance: Size, Diversification, and Scope; Technological Change; Research and Development; Intellectual Property Rights: General; Intellectual Property Rights;
    JEL: O34 O30 L25
    Date: 2014
  4. By: Ajay Agrawal; Carlos Rosell; Timothy S. Simcoe
    Abstract: We exploit a change in eligibility rules for the Canadian Scientific Research and Experimental Development (SRED) tax credit to gain insight on how tax credits impact small-firm R&D expenditures. After a 2004 program change, privately owned firms that became eligible for a 35 percent tax credit (up from a 20 percent rate) on a greater amount of qualifying R&D expenditures increased their R&D spending by an average of 15 percent. Using policy-induced variation in tax rates and R&D tax credits, we estimate the after-tax cost elasticity of R&D to be roughly -1.5. We also show that the response to changes in the after-tax cost of R&D is larger for contract R&D expenditures than for the R&D wage bill and is larger for firms that (a) perform contract R&D services or (b) recently made R&D-related capital investments. We interpret this heterogeneity as evidence that small firms face fixed adjustment costs that lower their responsiveness to a change in the after-tax cost of R&D.
    JEL: H2 H71 O25 O31 O38
    Date: 2014–10
  5. By: Bashir, Sadaf; Matzat, U.; Sadowski, B. M.
    Abstract: This paper analyzes processes and effects of ICT enabled innovation in the Dutch design sector. Although the adoption of Information and Communication Technologies (ICT) is considered as vital in the design sector, little is known about whether and how ICTs affect the firm performance of small and medium-sized companies (SMEs) in the industry. In introducing a conceptual distinction between ICT supporting the information processing and communication, the paper first examines the determinants of ICT adoption. Next, we analyze the effects of ICT adoption on product and process innovation as well as on firm performance, focusing on the mediating role of the innovation processes. The analyses rest on survey data of a sample of 189 Dutch companies in the Web, Graphic, and Industrial Design Sector in the Netherlands. The results indicate that information processing role of ICT supports the exploitation and communication role facilitates the exploration in organizational learning. The exploitation enables process innovation while exploration enables product innovation. Lastly, Information processing technologies and product innovation are important determinants of superior firm performance.
    Date: 2014
  6. By: Didier, Y. Alia; Reed, Michael R.
    Abstract: This paper presents some evidence of a positive effect of Agriculture R&D investment on economic growth in general dynamic setting using annual data for 57 developing countries for the period 1981-2010. The potential endogeneity of Research and Development Investment is also addressed to identify causal effect using GMM Style internal instrument that successfully pass various validity tests. Our analysis separates the growth effect and the level effect of R&D investment. The result appears to be robust to various proxies for Agriculture R&D investment. The finding suggests the intensification of investment in research and development in developing countries to boost agricultural productivity and economic growth.
    Keywords: Research and Development, Agriculture, Economic Growth, International Development, Research and Development/Tech Change/Emerging Technologies,
    Date: 2014–05
  7. By: Iizuka M.; Thutupalli A. (UNU-MERIT)
    Abstract: The agricultural sector has played an important role in the provision of food, foreign exchange and sustainable energy to many developing countries. This sector, however, has not been considered as a driving force of innovation as compared to other productive sectors. However, recent economics and international business literature suggests that the agricultural sector 1 has become knowledge intensive with the rise of biotechnology Bt; and 2 is a sector where firms in developing countries can play an important role in production and innovation due to their latent advantage in the context-specific or in-situ knowledge base. In this paper, we first present a conceptual framework that characterizes the knowledge required for successful agricultural innovation against the backdrop of globalization and rise of biotechnology. We then examine the case of diffusion of Bt cotton hybrids Bacillus thuringiensis, an insect resistant seed technology in India to illustrate the dynamics of knowledge creation and catching up by the local seed firms based on their interactions with global as well as other local firms. Our analysis reveals that the local firms with absorptive capacity, that is, the ability to effectively integrate location-specific in-situ knowledge and generic scientific knowledge global knowledge can catch up with global frontier technologies to gain significant domestic market shares.
    Keywords: Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products; Innovation and Invention: Processes and Incentives; Management of Technological Innovation and R&D; Agricultural R&D; Agricultural Technology; Biofuels; Agricultural Extension Services;
    JEL: O13 O31 O32 Q16
    Date: 2014
  8. By: Hammer, Andrea
    Abstract: This paper investigates the agglomeration of Knowledge Intensive Service (KIS) firms in urban areas. In accordance with the Regional Innovation Systems approach it is argued that cities provide crucial innovation advantages working as centripetal forces for KIS. Applying multivariate logit regressions to a company survey of the city of Karlsruhe, the second largest city of the German federal state of Baden-Württemberg, shows positive effects of local cooperation and urban infrastructures on the innovation probability of KIS firms. However, the effects vary with the type of innovation pursued, thus demonstrating a high complexity of local relations conducive to KIS firm innovation.
    Keywords: Knowledge Intensive Services,Regional Innovation Systems,urban innovation,innovation in services,local cooperation,urban infrastructure
    JEL: R48 L92 Q55
    Date: 2014

This nep-tid issue is ©2014 by Fulvio Castellacci. 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.