nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2016‒07‒23
thirteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Where to Locate Innovative Activities in Global Value Chains: Does Co-location Matter? By Rene Belderbos; Leo Sleuwaegen; Dieter Somers; Koen De Backer
  2. EU corporate R&D intensity gap: What has changed over the last decade? By Pietro Moncada-Paternò-Castello
  3. Comparing persistence of product and process innovation: A discrete-time duration analysis of Innovation Spells By Córcoles, David; Triguero, Ángela; Cuerva, María Carmen
  4. Changing of the guard: Structural change and corporate science in the semiconductor industry By Pellens, Maikel; Della Malva, Antonio
  5. Emission intensity and firm dynamics: reallocation, product mix, and technology in India By Geoffrey Barrows; Hélène Ollivier
  6. The role of innovation and agglomeration for employment growth in the environmental sector By Horbach, Jens; Janser, Markus
  7. The effect of labor flows, ownership and skill-relatedness on firm productivity By Zsolt Csáfordi; László Lőrincz; Balázs Lengyel; Károly Miklós Kiss
  8. Potential Growth, Misallocation, and Institutional Obstacles: Firm-Level Evidence By Leon-Ledesma, Miguel
  9. Trade Competition, Technology and Labour Reallocation By Baziki, Selva B.; Ginja, Rita; Borota Milicevic, Teodora
  10. The Determinants of Structural Transformation in Asia: A Review of the Literature By Sen, Kunal
  11. Catching Up, Structural Transformation, and Inequality: Lessons from Asia By Martorano, Bruno; Park, Donghyun; Sanfilippo, Marco
  12. Technology and Innovation Policies for Small and Medium-Sized Enterprises in East Asia By Intarakumnerd, Patarapong; Goto, Akira
  13. The Role of Structural Transformation in the Potential of Asian Economic Growth By Foster-McGregor, Neil; Verspagen, Bart

  1. By: Rene Belderbos; Leo Sleuwaegen; Dieter Somers; Koen De Backer
    Abstract: With the emergence of global value chains (GVCs), production processes are increasingly fragmented and dispersed across different countries. Although many MNEs still exhibit an important ‘home bias’ in their global innovation activities, a growing number of firms have offshored R&D and innovative activities to foreign locations. Is the more recent offshoring of R&D and innovation linked to the prior waves of manufacturing offshoring? The fear in OECD economies is that because of co-location effects between production and innovative activities, the loss of certain manufacturing/assembly activities may result in a loss of innovative capabilities (R&D, design, etc.) in the longer-term. The offshoring of R&D and innovation within GVCs poses new challenges to economic policy in OECD and emerging economies. For example, how can countries attract inward R&D investments by foreign MNEs? Should outward R&D investments by MNEs be a concern for the countries in which the MNEs are headquartered?
    Date: 2016–07–12
  2. By: Pietro Moncada-Paternò-Castello (European Commission – JRC)
    Abstract: This paper contributes with new findings to the literature on corporate research and development (R&D) intensity decomposition by examining the effects of several parameters on R&D intensity and investigating its comparative distribution among top R&D firms, sectors and world regions/countries. It draws on a longitudinal company-level micro-dataset from 2005 to 2013, and uses both descriptive statistics and decomposition computation methods. The results confirm the structural nature of the EU R&D intensity gap. In the last decade the gap between the EU and the US has widened, whereas the EU gap with Japan and Switzerland has remained relatively stable. The study also uncovers differences in R&D intensity between EU and US companies operating in the sectors more responsible for the aggregate R&D intensity gap. In contrast, the BRIC (Brazil, Russia, India and China) and Asian Tiger countries (Hong Kong, Singapore, South Korea and Taiwan) R&D intensity gap compared to the EU has remained relatively stable, while companies from the rest of the world are considerably reducing such gap. Finally, the study shows a high concentration -sustained over time- of R&D investment in a few countries, sectors and firms, but in the EU there are fewer smaller top R&D firms that invest more intensively in R&D, than in the most closed competing countries.
    Keywords: corporate R&D; decomposition; EU R&D intensity gap, EU R&D policy
    JEL: O30 O32 O38 O57
    Date: 2016–07
  3. By: Córcoles, David; Triguero, Ángela; Cuerva, María Carmen
    Abstract: The main purpose of this paper is to analyze the influence of previous experience and learning capabilities on survival in product and process innovation for Spanish manufacturing firms in the period 1990-2010. The authors find past and path dependence and confirm the important effect of R&D effort in both types of innovation. Nevertheless, for product innovation, the level of appropriability and the fact of operating in a high-tech sector are crucial for persistence in comparison with process innovation.
    Keywords: persistence in innovation,product innovation,process innovation,discrete-time duration models,panel-data
    JEL: O31 O32 L22 L60
    Date: 2016
  4. By: Pellens, Maikel; Della Malva, Antonio
    Abstract: This article documents a structural change in the production of science in the U.S. semiconductor industry over almost three decades. We observe a change in scientific productivity over time, where smaller firms publish more articles per dollar in R&D. Moreover, our results show a positive relationship between the value of intangibles and scientific publications, driven by basic research results. These effects are especially strong among Fabless 'design' firms and among firms in the post-PC era of semiconductor manufacturing, in line with a premium for smaller firms which invest in science in times of structural technological change.
    Keywords: corporate science,basic science,firm value,semiconductors
    JEL: O31 O33
    Date: 2016
  5. By: Geoffrey Barrows; Hélène Ollivier
    Abstract: We study how market conditions shape aggregate CO2 emission intensity from manufacturing. We first develop a multi-product multi-factor model with heterogeneous firms, variable markups, and monopolistic competition in which each product has a specific emission intensity. Competition affects output shares across heterogeneous firms, product-mix across heterogeneous products, and technological choice within firm-product lines. We find that increased competition shifts production to cleaner firms, but has ambiguous effects on withinfirm changes in emission intensity via product-mix and technology adoption. Next, using detailed firm-product emission intensity data from India, we find core-competency products tend to be cleaner than non-core products; but since market conditions have induced Indian firms to shift production away from core-competency, product-mix has increased CO2 emission intensity in India by 49% between 1990-2010. These emission intensity increases are offset by reductions within firm-product lines and by across-firm share shifts, so aggregate emission intensity has actually fallen by 50%.
    Date: 2016–06
  6. By: Horbach, Jens; Janser, Markus (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "The environmental sector is supposed to yield a dual benefit: its goods and services are intended to help to tackle environmental challenges and its establishments should create new jobs. However, it is still unclear in empirical terms whether that really is the case. This paper investigates whether employment growth in 'green' establishments with 'green' products and services is higher compared to other establishments. Furthermore, the main factors determining labor demand in this field are analyzed. We use linked employment and regional data for Germany. The descriptive results show that the environmental sector is characterized by disproportionately high employment growth. The application of both a generalized linear mixed model and an instrumental variables regression reveals that especially innovation and industry agglomeration foster employment growth in establishments in the environmental sector. Establishments without green products and services show a smaller increase in employment, even if they are also innovative." (Author's abstract, IAB-Doku) ((en))
    Keywords: Umweltschutzindustrie, Beschäftigungseffekte, Innovation, Arbeitskräftenachfrage
    JEL: J23 Q52 Q55 R23
    Date: 2015–05–28
  7. By: Zsolt Csáfordi (Hungarian Academy of Sciences CERS, Institute of Economics); László Lőrincz (Hungarian Academy of Sciences CERS, Institute of Economics); Balázs Lengyel (Hungarian Academy of Sciences CERS, Institute of Economics); Károly Miklós Kiss (Hungarian Academy of Sciences CERS, Institute of Economics)
    Abstract: Labor flows are major source of knowledge spillover between companies, in which the characteristics of the companies play an important role. Previous research found the more productive the sending firm is he bigger effect of labor flows on the productivity of the receiving firm. Another literature claims that domestic firms benefit from labor flows from multinational enterprises (MNE). We test these arguments by analyzing an anonymized employer-employee linked panel database from Hungary for the 2003-2011 period and also look at the similarity of necessary skills in the sending and receiving firm because industry-specific skills of employee’s matter in organizational learning and therefore in productivity growth. We construct the skill-relatedness network of industries based on inter-industry labor mobility and distinguish related and non-related labor inflows by comparing the observed level of mobility to an expected level of mobility. Our results suggest that labor flows from more productive firms increases the effect of labor flows significantly. Domestic companies obtain productivity gains from labor inflows coming from MNEs; however, inflows from MNEs have the greatest positive effect if the receiving firm is also a MNE. The effect of flows from skill-related industries, and particularly from the same industry outperform the effect of flows from unrelated industries, however, these effects are mitigated by the relative productivity effect.
    Keywords: skill-relatedness network, firm productivity, knowledge spillover, labor mobility, productivity gap, firm ownership
    JEL: D22 J24 J60
  8. By: Leon-Ledesma, Miguel (University of Kent)
    Abstract: One of the key determinants of potential growth are productivity gains. Total factor productivity (TFP)differences are the main determinant of per capita income differences between countries. A key factor to understand TFP is misallocation: the aggregate productivity loss from microeconomic distortions that prevent factors of production from being allocated to their optimal use. If misallocation is a key determinant of TFP differences, then reallocation of factors of production is a key driver of productivity gains. Since distortions preventing misallocation can be driven by institutional obstacles, then policies focused on the removal of these obstacles will affect potential growth. In this paper, we use a firm-level database for 62 developing countries to analyze which are the most important institutional obstacles driving misallocation. Our results highlight the importance of trade regulations, the functioning of courts, and access to finance as key determinants of misallocation within countries. Political instability, labor regulations, and access to infrastructure, appear as relevant obstacles explaining misallocation between countries.
    Keywords: firm level; misallocation; potential growth; productivity
    JEL: O40 O43 O47
    Date: 2016–04–08
  9. By: Baziki, Selva B. (Central Bank of Turkey); Ginja, Rita (Uppsala University); Borota Milicevic, Teodora (Uppsala University)
    Abstract: This paper provides new evidence on the reallocation of workers across firms and industries with different technologies in response to increased import competition from developing countries. Using employer-employee matched data for the Swedish manufacturing sector, we find increased assortative matching of workers in ICT (information and communication technologies) intensive industries, that is, high(low)-wage workers sort into high(low)-wage firms. Industries with low ICT intensity do not exhibit these sorting patterns. A labour market matching model explains the increased assortative matching in ICT intensive industries in response to stronger import competition through an increase in the relative demand for qualified workers.
    Keywords: wage inequality, employment dynamics, assortative matching, import competition, technological change
    JEL: F16 J63 O33
    Date: 2016–07
  10. By: Sen, Kunal (University of Manchester)
    Abstract: Structural transformation—the movement of workers from low-productivity to high-productivity activities—is an essential ingredient of inclusive growth. This paper reviews the evidence on why the pace of structural transformation has differed widely across countries in Asia, with a specific focus on the People’s Republic of China, India, and Thailand. It argues that both government failures relating to the functioning of labor, land, and product markets; and market failures relating to coordination of investment, credit market imperfections, and human capital formation have been the primary causes of the slow pace of structural transformation in several Asian countries. The paper suggests that a specific focus is needed to reform policies that impede the functioning of labor, land, and product markets as well as on strengthening industrial and education policies to address specific market failures around investment coordination and human capital formation.
    Keywords: Asia; government failure; market failure; structural transformation
    JEL: O14 O53 P51
    Date: 2016–03–29
  11. By: Martorano, Bruno (Institute of Development Studies); Park, Donghyun (Asian Development Bank); Sanfilippo, Marco (University of Antwerp)
    Abstract: While structural transformation, driven by technological progress, productivity growth, and capital deepening, has contributed to Asia’s sustained rapid growth, its effect on income inequality is uncertain. The central objective of our paper is to empirically examine the effect of structural change on wage inequality in Asia, using industry-level data for three skill groups of workers. Our evidence indicates that structural change, pushed by productivity catch-up with advanced economies, capital deepness, and the shift of the economic structures to more skill-intensive industries, has exacerbated inequality in the region. However, we also find that policy responses, especially investment in education matching the higher demand for skills and competitive exchange rates, can mitigate the increase in inequality.
    Keywords: Asia; inequality; productivity; structural change; wage gap
    JEL: E24 L16
    Date: 2016–06–21
  12. By: Intarakumnerd, Patarapong (Asian Development Bank Institute); Goto, Akira (Asian Development Bank Institute)
    Abstract: Policies for stimulating technological development and innovation in small and medium-sized enterprises can be divided into three groups. Supply-side policies aim at increasing firms’ incentives to invest in innovation by reducing costs. Demand-side policies are public actions to induce innovation and/or speed up the diffusion of innovation. Systemic policies focus on strengthening interactive learning between actors in innovation systems. Policies can be implemented through various instruments comprising tax incentives, grants or direct subsidies, low-interest loans, and the government’s direct equity participation. These instruments have pros and cons. The experiences of four late-industrializing East Asian economies—Taipei,China; Singapore; Malaysia; and Thailand—provide key lessons. Firms at different levels of technological and innovative capability need different policy instruments. The more successful economies have a higher level of flexibility and policy coordination and learning. The amount, duration, and continuity of government supporting schemes are crucial. Policy makers must have a deep understanding of what constitutes innovations and innovation systems, and how they evolve over time. Innovation financing policies require other corresponding policy initiatives to make them successful. Lastly, institutional factors do shape the choices and effective implementation of these policies.
    Keywords: technological development; East Asia SMEs; diffusion of innovation; demand-side policies
    JEL: D22 L25 O31
    Date: 2016–07–20
  13. By: Foster-McGregor, Neil (UNU-Merit); Verspagen, Bart (UNU-Merit)
    Abstract: The transition from low-income developing country to high-income developed country involves a deep process of structural transformation in which the productive structure of an economy changes. In this paper we examine this process of structural change and its link to productivity growth for a sample of Asian countries. In particular, the paper addresses the following questions: What is the typical pattern of structural change that countries experience when they catch up from low-income levels to the economic frontier?; To what extent and in which form did structural change contribute to productivity growth in Asia since 1990?; How does the contribution of structural change to productivity growth compare to the effects of deviations of actual growth from potential growth?; How does the effect of structural change differ between total factor productivity growth and labor productivity growth?; And, what is the order of magnitude of the productivity effects that can be expected from further convergence of Asian countries to the economic structure that characterizes middle-income and high-income countries?
    Keywords: labor productivity; structural decomposition; total factor productivity
    JEL: O14 O47
    Date: 2016–03–29

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