nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2016‒03‒17
six papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Innovation systems and policy: A tale of three countries By Jan Fagerberg
  2. The effect of Intellectual Property Rights on domestic innovation in the pharmaceutical sector By Simona Gamba
  3. Technology-Skill Complementarity in the Early Phase of Industrialization By Franck, Raphaël; Galor, Oded
  4. Firm Dynamics and Employment Protection: Evidence from Sectoral Data By Bottasso, Anna; Conti, Maurizio; Sulis, Giovanni
  5. Changing Patterns in M&E-Investment-Based Innovation Strategies in CESEE and FSU Countries By Michael Landesmann; Sandra M. Leitner; Robert Stehrer
  6. Upstreamness in the Global Value Chain: Manufacturing and Services By Kenji Suganuma

  1. By: Jan Fagerberg (University of Oslo, Ålborg University and University of Lund)
    Abstract: Nordic policy makers have long been aware of the fact that prosperity requires more than just, say, well-functioning labor markets and/or generous social and educational policies. It also requires that the capabilities of the labor force are put to productive use in a way that enhances the productivity of the nation and hence the returns for the stakeholders. Nordic policy makers have therefore for a long time experimented with various policy instruments supporting productivity growth. Over the years different labels have been attached to such policy experiments (science, technology, industry policy etc.), but more recently the term innovation policy has become more widely used, and this practice is also adopted here. The paper provides an account of how innovation policies have evolved in three Nordic countries (Sweden, Norway and Finland) and considers the possible lessons from what has been done. The discussion informed by the literature on national innovation systems (introduced in the second section of the paper).
    Date: 2016–02
  2. By: Simona Gamba
    Abstract: This paper analyses the causal effect of Intellectual Property Rights (IPR) protecting pharmaceutical products and processes on pharmaceutical domestic innovation in a panel of 74 countries. The identification strategy exploits the different timing across these countries of two homogeneous sets of IPR reforms. Domestic innovation is measured as citation-weighted domestic patent applications filed at the European Patent Office (EPO): the highly skewed distribution of the dependent variable, and the high number of zero observations, are taken into account by using count data models. In particular, a Zero Inflated Negative Binomial model is adopted to take into consideration the choice not to patent at the EPO. Results show that patent protection stimulates innovation, although the effect is not long-lasting. Developing countries profit significantly less than developed ones from the protection, benefiting from an effect that is roughly one half the one for developed countries.
    Keywords: Intellectual Property Rights, Pharmaceutical sector, Innovation, Patents, TRIPS, Developing countries
    JEL: I18 O31 O34 O1 K10
    Date: 2016–03
  3. By: Franck, Raphaël (Bar-Ilan University); Galor, Oded (Brown University)
    Abstract: The research explores the effect of industrialization on human capital formation. Exploiting exogenous regional variations in the adoption of steam engines across France, the study establishes that, in contrast to conventional wisdom that views early industrialization as a predominantly deskilling process, the industrial revolution was conducive for human capital formation, generating broad increases in literacy rates and educational attainment.
    Keywords: technology-skill complementarity, economic growth, industrialization, human capital, steam engine
    JEL: N33 N34 O14 O33
    Date: 2016–02
  4. By: Bottasso, Anna (University of Genova); Conti, Maurizio (University of Genova); Sulis, Giovanni (University of Cagliari)
    Abstract: In this paper we analyse the impact of employment protection legislation (EPL) on firms' entry and exit rates for a large sample of industries of thirteen countries selected from the most recent version of the OECD Structural and Business Statistics Database. Using a differences-in-differences identification strategy, we find that more stringent EPL is associated to lower entry and exit rates, particularly in industries characterized by higher job reallocation intensity. We also find that both collective and individual dismissal regulations reduce firms' entry and exit rates. Interestingly, our results suggest that the negative effects of EPL is stronger in the case of firms between one and nine employees while, in the case of larger ones, results are not clear-cut. An extensive sensitivity analysis confirm the robustness of our findings.
    Keywords: entry and exit, turnover, employment protection legislation, reallocation
    JEL: J65 L11 L26
    Date: 2016–02
  5. By: Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw); Sandra M. Leitner (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Abstract Understanding the complexity of innovation processes and unravelling the complicated relationships between innovation and productivity is pivotal to effective and purposeful public policy, designed particularly for economically lagging economies to initiate their swifter technology-induced growth and catching-up with richer economies. In this respect, the analysis focuses on machinery and equipment (M&E) acquisition as a key innovation strategy and uses a modified CDM model (Crépon et al., 1998). The model is extended by introducing binding financing constraints to shed light on the drivers and determinants of innovation inputs, the relationship between innovation input and innovation output and, finally, the relationship between innovation output and firm productivity. We consider three different economic phases, spanning from the early 2000s and the immediate pre-crisis period to the immediate post-crisis period. The analysis uses firm-level data for a large set of Central, East and Southeast European countries (CESEE) and Former Soviet Union countries (FSU) and demonstrates that financing constraints were non-negligible and very harmful, inducing entrepreneurs to be less likely to invest in M&E but also to invest less in the acquisition of M&E. Moreover, it points to the important role of M&E investment efforts for an establishment’s innovation success, suggesting that establishments with higher M&E investment effort are also more likely to become successful product innovators. Finally, it consistently demonstrates that successful innovative activities pay off, significantly enhancing innovators’ labour productivity levels.
    Keywords: funding constraints, innovation strategies, innovation outcome, establishment performance, Central, East and Southeast Europe and Former Soviet Union, pre- and post-crisis developments
    JEL: G21 D24 L25 O1 O31 O33
    Date: 2016–01
  6. By: Kenji Suganuma (Economist, Institute for Monetary and Economic Studies, Bank of Japan (E-mail:
    Abstract: This paper investigates gupstreamness, h which measures the distance of an industry from the final use in terms of the number of production stages, using the WIOD global input-output tables, which cover 40 major countries. We find that global upstreamness increased in the mid -2000s. This trend is mainly due to developments in the manufacturing sector, but the service sector also contributed to the increase. In manufacturing, upstreamness has increased mainly in East Asian economies including Japan, which is consistent with the recent deepening of global value chains in this area. In services, the growing role of business services contributed to the deepening of value chains, such as outsourcing via leasing and staff agencies, and linkages to new businesses through mobile telecommunications. In further research, the concept of upstreamness can be applied to the analysis of industries f international competitiveness and of the influence of demand shocks across countries.
    Keywords: Upstreamness, Global value chain, Production fragmentation, I-O tables
    JEL: D57 F14 O14 O24 O53 O57
    Date: 2016–02

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