nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2015‒05‒30
six papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. The Market Value of R&D in Weak Innovation Regimes: Evidence from India By Sunil Kanwar; Bronwyn H. Hall
  2. How Do Native and Migrant Workers Contribute to Innovation? A Study on France, Germany and the UK By Fassio, Claudio; Montobbio, Fabio; Venturini, Alessandra
  3. The effects of public supports on business R&D: firm-level evidence across EU countries By Aristei, David; Sterlacchini, Alessandro; Venturini, Francesco
  4. Federalism and innovation support for small and medium-sized enterprises: Empirical evidence in Europe By Becker, Lasse; Bizer, Kilian
  5. The Bias of Technological Change in Europe By Johanna Vogel; Kurt Kratena; Kathrin Hranyai
  6. Development Blocks in Innovation Networks. The Swedish Manufacturing Industry, 1970-2007 By Taalbi, Josef

  1. By: Sunil Kanwar; Bronwyn H. Hall
    Abstract: We revisit the relationship between market value and innovation in the context of manufacturing firms in a developing country, using Indian data from 2001 through 2010. Surprisingly, we find that financial markets value the R&D investment of Indian firms the same or higher than such investment is valued in developed economies like the US. Using a proxy for the option value of R&D, we find that this accounts for a very small part of the R&D valuation (5% at most). We also find that the market value-R&D relationship does not vary significantly across industry groups, although these results are imprecise.
    JEL: G12 O16 O30
    Date: 2015–05
  2. By: Fassio, Claudio (Lund University); Montobbio, Fabio (University of Turin); Venturini, Alessandra (University of Turin)
    Abstract: This paper uses the French and the UK Labour Force Surveys and the German Microcensus to estimate the effects of different components of the labour force on innovation at the sectoral level between 1994 and 2005. The authors focus, in particular, on the contribution of migrant workers. We adopt a production function approach in which we control for the usual determinants of innovation, such as R&D investments, stock of patents and openness to trade. To address possible endogeneity of migrants we implement instrumental variable strategies using both two-stage least squares with external instruments and GMM-SYS with internal ones. In addition we also account for the possible endogeneity of native workers and instrument them accordingly. Our results show that highly-educated migrants have a positive effect on innovation even if the effect is smaller relative to the positive effect of educated natives. Moreover, this positive effect seems to be confined to the high-tech sectors and among highly-educated migrants from other European countries.
    Keywords: innovation, migration, skills, human capital
    JEL: O31 O33 F22 J61
    Date: 2015–05
  3. By: Aristei, David; Sterlacchini, Alessandro; Venturini, Francesco
    Abstract: Using homogenous firm-level data for the largest Member States of the EU over the period 2007-2009, we test whether manufacturing firms receiving R&D public supports (subsidies and/or tax incentives) spent more on R&D. The analysis is performed by means of both non-parametric (Propensity Score Matching) and parametric estimations (OLS and mixed-model system, with the latter accounting for the possible endogeneity of public supports). The hypothesis of full crowding-out of private with public funds (i.e. public support reduced privately-funded R&D expenses) is rejected for all countries, with the partial exception of Spain. However, we do not find evidence for the hypothesis of additionality of R&D subsidies (i.e. direct funding did not raise private R&D). These findings contrast with earlier works and might be due to the period under assessment, which covers the financial turmoil and the subsequent economic downturn. A focused analysis on France suggests that R&D tax credits exerted a positive impact on R&D. Overall, our findings indicate that, albeit they were not expansive, public supports avoided the reduction of firm R&D at the outset of financial crisis.
    Keywords: R&D; subsidies; tax incentives; policy evaluation; EU manufacturing firms
    JEL: C21 D04 O32 O38
    Date: 2015–05–26
  4. By: Becker, Lasse; Bizer, Kilian
    Abstract: Private innovative activities receive public innovation support from different political levels. Few studies have empirically evaluated the influence of political systems on the reception of public innovation support and no other studies have evaluated innovation support across Europe with CIS data. This paper analyses the differences between federal, semi-federal and centralist political systems with CIS data from sixteen European countries. The results show that regional programmes in federal and semi-federal countries reach firms with barriers to innovate, such as small and medium-sized enterprises, while other programmes only claim to reach them. Federal and semi-federal countries therefore support a broader variety of firms compared with centralist countries. European support reaches SMEs better in centralist countries compared with federal and semi-federal countries. Regular and higher expenditure on innovative activities shows a positive influence on the reception of support in all countries, while indicators such as market focus vary between countries and political levels. Regional programmes focus more strongly on companies with a regional market focus, which can be seen as another barrier to innovation. As a policy implication, the paper implies that barriers to innovation can be reduced by a decentralized innovation framework with stronger regional programmes.
    Keywords: innovation,innovation support,SME,Europe,federalism,decentralization
    JEL: O31 O38 H77 H71
    Date: 2015
  5. By: Johanna Vogel; Kurt Kratena; Kathrin Hranyai
    Abstract: This paper is concerned with measuring and influencing the direction of technological change. First, it provides a comprehensive assessment of the factor bias of technological change using panel data from the World Input-Output Database (WIOD) for 25 EU countries from 1995 to 2009. We measure the bias with respect to the inputs capital, energy, non-energy materials and three types of labour (low-, medium- and high-skilled). For this purpose, the factor cost share approach based on the duality of production theory is applied. Estimating the system of cost share equations derived from a translog cost function, we find that technological change was low- and medium-skilled labour-saving, high-skilled labour-using, and energy- and materials-using. Second, the paper addresses the question how technological change could be redirected towards saving more energy and less labour. Patent applications in energy- and labour-saving technology fields are used to model the direction of technological change. We construct stocks of patents in these fields and integrate them into the system of cost share equations as proxies for the level of technology. Upon finding that they were indeed energy and labour saving over our sample period, we regress them on policy variables to identify instruments for shifting the bias away from saving labour towards saving energy. We conclude that one way to achieve this, at least partly, would be an increase in the energy tax rate coupled with a matching reduction in the social security contributions paid by employers for low-skilled workers.
    Keywords: Factor bias of technological change, translog cost function, induced innovation, environmental innovation, ICT, robotics, count data models for panel data, Europe, WIOD
    JEL: O33 O31 D24 Q55 Q58 C33 C35
    Date: 2015–05
  6. By: Taalbi, Josef
    Abstract: The notion of development blocks suggests the co-evolution of technologies and industries through complementarities and the overcoming of imbalances. This paper studies groups of closely related industries and their co-evolution in the network of Swedish product innovations, by combining statistical methods and qualitative data from a newly constructed innovation output database, SWINNO. The study finds ten sets of closely related industries in which innovation activity has been prompted by the emergence of technological imbalances or by the exploitation of new technological opportunities.
    Keywords: Development Blocks; Community Detection; Network Analysis; Technological Imbalances
    JEL: N1 N7 O3
    Date: 2015–05–23

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