nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2016‒03‒06
eleven papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Industrial Dynamics: A Review of the Literature 1990-2009 By Carlsson , Bo
  2. The effect of international competition on firm productivity and market power By De Loecker, Jan; Van Biesebroeck, Johannes
  3. Catching-up in a globalised context: Technological change as a driver of growth By Verspagen, Bart; Kaltenberg, Mary
  4. The Link between R&D, Innovation and Productivity: Are Micro Firms Different? By Baumann, Julian; Kritikos, Alexander S.
  5. Smart Specialization Strategies and Key Enabling Technologies. Regional evidence from European patent data. By Sandro Montresor; Francesco Quatraro
  6. Research and development strategy for environmental technology in Japan: A comparative study of the private and public sectors By Fujii, Hidemichi; Managi, Shunsuke
  7. Concentration on the few? R&D and innovation in German firms 2001 to 2013 By Rammer, Christian; Schubert, Torben
  8. Mexican manufacturing and its integration into global value chains By Castillo, Juan Carlos; Szirmai, Adam
  9. Intra-Firm Diffusion of Green Energy Technologies and the Choice of Policy Instruments By Tobias Stucki; Martin Wörter
  10. Will the real R&D employees please stand up? Effects of tax breaks on firm level outcomes By Irem Guceri
  11. Economic and Technological Complexity: A Model Study of Indicators of Knowledge-based Innovation Systems By Inga Ivanova; Oivind Strand; Duncan Kushnir; Loet Leydesdorff

  1. By: Carlsson , Bo (Case Western Reserve University, Weatherhead School of Management, Department of Economics, Cleveland and CIRCLE, Lund University)
    Abstract: This paper reviews the literature in the field of Industrial Dynamics as it has emerged since I first introduced the term in 1985. Nearly 8,000 articles in 12 major journals have been reviewed and classified under five broad themes that constitute the basic questions in industrial dynamics: 1. The causes of industrial development and economic growth, including the dynamics and evolution of industries and the role of entrepreneurship 2. The nature of economic activity in the firm and the dynamics of supply, particularly the role of knowledge. 3. How the boundaries and interdependence of firms change over time and contribute to economic transformation. 4. Technological change and its institutional framework, especially systems of innovation. 5. The role of public policy in facilitating adjustment of the economy to changing circumstances at both micro and macro levels. Under each theme, the main findings and their implications for theory and policy are summarized.
    Keywords: industrial dynamics; literature review; knowledge; technological change; institutions; growth
    JEL: D00 D20 L00 O30
    Date: 2016–01–18
  2. By: De Loecker, Jan; Van Biesebroeck, Johannes
    Abstract: We propose a framework to evaluate the potential impact of international competition on firm performance and highlight two points. First, it is important to consider effects on productive efficiency and market power in an integrated framework. The popular concept of (revenue) TFP combines both effects which can lead to problems of estimation and interpretation. Second, greater international competition enlarges the relevant market and can affect both the number and the type of competitors a firm faces, as well as the nature of competition. While it is possible that firms respond by adjusting their production operations, pricing adjustments are all but guaranteed. We contrast three estimation approaches that start, respectively, from the demand side, the product extensive margin, and the production side. We conclude with a few avenues for future research.
    Keywords: competition; firm performance; trade liberalization
    JEL: F10 L1 O30
    Date: 2016–02
  3. By: Verspagen, Bart (UNU-MERIT, and Maastricht University, SBE); Kaltenberg, Mary (UNU-MERIT)
    Abstract: This paper aims to understand the role that technology plays, particularly in structural change, as a driver of economic growth. Noting the exceptional few countries that succeeded in becoming a developed state and the accelerated period of globalisation (1995 - 2009), we analyse growth patterns at the product, sectoral and macroeconomic levels. Utilising trade data, we detail the type of complex products exported as a reflection of a nation's latent capabilities. At the sectoral level, technological shifts are observed through a TFP analysis to understand how countries use technological progress at varying development stages to realise economic growth. Finally, we use input-output analysis for a macroeconomic perspective on the impact of globalisation on production by sector and on demand patterns of foreign and domestic markets, both globally and regionally
    Keywords: Innovation, Technological Change, Economic development, Economic Growth, Structural change, International Trade, Convergence, Input-Output analysis
    JEL: C67 F14 O11 O12 O30 O47
    Date: 2015–12–01
  4. By: Baumann, Julian (DIW Berlin); Kritikos, Alexander S. (DIW Berlin)
    Abstract: We analyze the link between R&D, innovation, and productivity in MSMEs with a special focus on micro firms with fewer than 10 employees; usually constituting the majority of firms in industrialized economies. Using the German KfW SME panel, we examine to what extent micro firms are different from other firms in terms of innovativeness. We find that while firms engage in innovative activities with smaller probability, the smaller they are, for those firms that do make such investment, R&D intensity is larger the smaller firms are. For all MSMEs, the predicted R&D intensity is positively correlated with the probability of reporting innovation, with a larger effect size for product than for process innovations. Moreover, micro firms benefit in a comparable way from innovation processes as larger firms, as they are similarly able to increase their labor productivity. Overall, the link between R&D, innovation, and productivity in micro firms does not largely differ from their larger counterparts.
    Keywords: MSMEs, micro firms, small firms, R&D, innovation, productivity
    JEL: L25 L60 O31 O33
    Date: 2016–02
  5. By: Sandro Montresor; Francesco Quatraro
    Abstract: The paper investigates the drivers of Smart Specialisation Strategies (S3) with a focus on Key Enabling Technologies (KETs). We re-examine the interpretation of S3 as new regional technological advantages (RTAs) obtained through relatedness, by reconceptualising within it the original focus on General Purpose Technologies (GPTs) and by considering their inter-regional spillovers. Combing regional patent and economic data for a 30-year panel (1980-2010) of 26 European countries, we find that KETs positively impact on new RTAs, pointing to a novel “enabling” role for them. KETs also negatively moderate the RTAs-impact of cognitively proximate pre-existing technologies, suggesting that KETs could make relatedness less binding in pursuing S3. The net-impact of KETs is positive, pointing to a new case for plugging KETs in the S3 policy tool-box. Furthermore, KETs also display cross-regional spillovers in their RTAs-impact, leaving KETs “poor” regions with a possible back-up from closer KETs “rich” ones.
    Keywords: Smart Specialization Strategies, Key Enabling Technologies, Relatedness, Revealed Technological Advantages
    JEL: R11 R58 O31 O33
    Date: 2015–08
  6. By: Fujii, Hidemichi; Managi, Shunsuke
    Abstract: Environmental protection technology plays an important role in a sustainable society, simultaneously promoting economic development and pollution control. This study examines the determinants of technology inventions related to environmental protection in Japan. We use patent application data in a decomposition analysis framework. We find that environmental patent applications increase according to the prioritization of environmental patents by private companies and according to efficiency improvements in patent applications in the public sector. Additionally, patent applications related to emissions trading increased rapidly among private companies, mainly due to their increased priority after 2005. The different determinants of environmental technologies between the private and public sectors are useful for formulating effective policies to promote environmental innovation.
    Keywords: Green invention; decomposition analysis; research and development strategy; patent data; log mean Divisia index
    JEL: O32 Q55
    Date: 2016–02
  7. By: Rammer, Christian; Schubert, Torben
    Abstract: Innovation activities in the German enterprise sector showed two opposing trends over the past two decades: While total innovation expenditures grew substantially, the number of firms conducting innovation activities fell sharply. Innovation expenditures hence concentrate on fewer firms. In this paper we analyse the evolution of firms' innovation and R&D activities. Based on panel data from the German part of the Community Innovation Survey covering a 13 years period (2001 to 2013) we use continuous-time Markov-Chains to analyse the changing properties of the firms' choices to conduct R&D and non-R&D innovation activities. Our findings are threefold. As compared to the pre-crisis period 2001-2007 there is a considerable change in innovation and R&D behaviour of German firms from 2008 onwards with an increasing number of firms exiting R&D and innovation activities. Smaller firms are the main driver behind this process, particularly with regard to quitting non-R&D innovation activities. Although smaller firms were also less likely to move to higher levels of innovativeness and R&D engagement and more likely to fall back in the pre-crisis period, these trends have been more pronounced in the crisis and even in the post-crisis period. Both public innovation support and better financial capabilities can increase the rate chances to move to higher levels of innovativeness and reduce the chances to fall back.
    JEL: O31 C22
    Date: 2016
  8. By: Castillo, Juan Carlos (UNU-MERIT, Maastricht University); Szirmai, Adam (UNU-MERIT, Maastricht University)
    Abstract: This paper studies the value added contributions to final manufacturing output produced in Mexico. It distinguishes between contributions originating from foreign producers located in different major regions of the world economy and contributions made by domestic producers. The analysis is performed for the main two components of Mexican manufacturing: assembly plants producing for export markets (Maquiladora industry) and manufacturing firms mainly producing for the domestic market (Domestic Manufacturing). To this end, Mexico (Maquiladora) and Mexico (Domestic Manufacturing) are separately included into World Input-output Tables (WIOT) from 1998 to 2011. The empirical analysis shows that the structure of value added contributions with regard to the final output of the Mexican domestic sector has remained unaltered, while the structure of value added contributions to the final output of the Maquiladora sector has drastically changed over time. For its own final output, Mexico (Domestic) has the largest share of value added contributions with some increase in the value added contributions of producers in foreign countries (notably, the USA). With regard to the final output of Mexico (Maquiladora) there was a shift from a dominance of US value added in all the manufacturing sectors (70% in 1998) to a much more diversified structure of value added contributions. By 2011, the East Asian share in value added was the largest in the Electrical and Optical equipment sector. Mexico (Domestic Manufacturing) and Mexico (Maquiladora) had the largest value added contributions in the Transport Equipment sector, while the US continued to account for the lion's share of value added in the textile industry. In our view, those changes in the structure of value added contributions have to do with decisions by US firms to reallocate production to low-cost countries in Asia. They reflect changing patterns of the integration of Mexico in global value chains.
    Keywords: Global Value Chains, Export processing, World Input-output Tables, Manufacturing, Mexico
    JEL: C67 L60 F20
    Date: 2016–01–10
  9. By: Tobias Stucki (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Martin Wörter (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: Environmental benefits only unfold if green (environmentally friendly) technologies are widely diffused and intensively deployed within a firm. We investigate how different types of policies - directly and in combination - affect the number of different green energy technologies adopted by a single firm (intra-firm diffusion). Using data from a dedicated survey on the diffusion of green energy technologies of 1200 Swiss firms and applying well-identified econometric models, we found that energy taxes are a very effective policy instrument for the intra-firm diffusion of green energy technologies. Even more important, however, are non-political measures that show the largest effect among all tested instruments. Additional analyses show that (a) time-consistency in policy making is more important for energy tax regimes than for regulations and (b) no evidence for complementarities between the policy types could be identified.
    Keywords: Technology Adoption, Innovation, Policies, Intra-firm diffusion, Survey data
    JEL: O31
    Date: 2016–01
  10. By: Irem Guceri (Oxford University Centre for Business Taxation)
    Abstract: This paper evaluates the effect of R&D tax incentives in a quasi-experimental setting. I identify the impact by exploiting a reform in UK policy which increased the SME threshold from 250 to 500 employees. First, I provide evidence that tax incentives help to increase R&D spending at the company level, and the effect translates to a user cost elasticity of -1.18. Second, R&D generated through the reform may be attributable to an increase in the number of R&D employees. I use R&D survey data for which the companies do not have an incentive to relabel their ordinary spending as R&D.
    Keywords: R&D, tax credits, difference-in-differences
    JEL: H25 O30
    Date: 2016
  11. By: Inga Ivanova; Oivind Strand; Duncan Kushnir; Loet Leydesdorff
    Abstract: Hidalgo & Hausmann's (2009) Economic Complexity Index (ECI) measures the complexity of national economies in terms of product groups. Analogously to ECI, we develop the Patent Complexity Index (PatCI) on the basis of a matrix of nations versus patent classes. Using linear algebra, the three dimensions countries, product groups, and patent classes can be combined into an integrated ("Triple Helix") measure of complexity (THCI). We measure ECI, PatCI, and THCI during the period 2000-2014 for the 34 OECD member states, the BRICS countries, and a group of emerging economies (Argentina, Hong Kong, Indonesia, Malaysia, Romania, and Singapore). The positive correlation between ECI and average income claimed as an argument for the predictive value of ECI cannot be confirmed using our data. The three complexity indicators are significantly correlated between themselves, yet each captures another aspect of the complexity. THCI adds the trilateral interaction terms among the three bilateral interactions, and can thus be expected to capture the extent of systems integration between the global dynamics of markets (ECI) and technologies (PatCI) in each national system of innovation. Of the world's major economies, Japan scores highest on all three indicators, while China has been increasingly successful in combining economic and technological complexity. Our empirical results raise questions about the interpretation and empirical fruitfulness of the complexity approach.
    Date: 2016–02

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