nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2016‒09‒25
eight papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Sector dynamics and demographics of top R&D firms in the global economy By Pietro Moncada-Paternò-Castello
  2. Long run effect of public grants on the R&D investment: A non-stationary panel data approach By Álvarez, Inmaculada C.; Kao, Chihwa; Romero-Jordán, Desiderio
  3. Government Debt and the Returns to Innovation By Massimiliano Croce, Mariano; Nguyen, Thien Tung; McGregor Raymond, Steve; Schmid, Lukas
  4. Government Assistance and Total Factor Productivity: Firm-level Evidence from China, 1998-2007 By Richard Harris; Shengyu Li
  5. Measures, Drivers and Effects of Green Employment : evidence from US local Labor Markets, 2006-2014 By Francesco Vona; G. Marin; D. Consoli
  6. Barriers to Innovation in Indian Small and Medium-Sized Enterprises By Pachouri, Anshul; Sharma, Sankalp
  7. Better, Faster, Stronger: Global Innovation and Trade Liberalization By Coelli, Federica; Moxnes, Andreas; Ulltveit-Moe, Karen-Helene
  8. Exports and growth in the New Member States. The role of global value chains By Jan Hagemejer

  1. By: Pietro Moncada-Paternò-Castello (European Commission – JRC)
    Abstract: This paper investigates the sectoral dynamics of the major economies during the last decade through the lens of the top 1000 R&D investors worldwide and looks at how firms’ demographics are related to sector distribution. In doing so, it contributes to the literature on the EU corporate R&D intensity gap as well as on that on industrial dynamics. Contrary to the common understanding, the results show that in the EU the distribution of R&D among sectors has changed more than in the USA, which has experienced a shift mainly towards ICT-related sectors. In both the EU and the USA the pace of R&D change is slower than in the emerging economies. Furthermore, the EU has been better able than the USA and Japan to maintain its world share of R&D investment. Even more interestingly, the results show that age is strongly related to the sector (and dominant technology) in which firms operate. This suggests that focusing on sector (technological) dynamics could be even more relevant from a policy perspective than focusing only on young leading innovators. In fact, EU firms are less able to create or enter new high-tech sectors in a timely way and fully exploit the growth opportunities offered by first mover advantages.
    Keywords: Corporate R&D, sector dynamics, firms’ age, EU R&D intensity deficit
    JEL: O30 O32 O38 O57
    Date: 2016–09
  2. By: Álvarez, Inmaculada C.; Kao, Chihwa; Romero-Jordán, Desiderio
    Abstract: From a macroeconomic point of view, the relationship between R&D investment and growth is well-known. At a firm level, extensive literature exists that analyzes the determinants behind R&D investment decision-making –basically comprising economic and financial factors-. Using cointegration techniques, the aim of this paper is analyze the long run effect of public grants on R&D investment for the Spanish case. Classifying the sample according to cointegration, we eliminate the possible existence of spurious correlation using the most suitable econometric techniques. Results in the long-run show that sales possesses a high pro-cyclical component with an elasticity of approximately 0.6. Subsidies generate additionality with an elasticity ranging from 0.17 to 0.2. Nevertheless, the capacity to promote investment for each euro of public funds is greater than the tax credit, with elasticities which can reach 0.7. In addition it worth highlight that we observe a higher impact of subsidies in cointegrated firms that are those with more investment in I+D.
    Date: 2016
  3. By: Massimiliano Croce, Mariano (University of North Carolina); Nguyen, Thien Tung (Ohio State University); McGregor Raymond, Steve (University of North Carolina); Schmid, Lukas (Duke University)
    Abstract: Elevated levels of government debt raise concerns about their effects on long-term growth prospects. This study shows that (i) high-R&D firms are more exposed to government debt and pay higher expected returns than low-R&D firms; and (ii) higher levels of the debt-to-GDP ratio predict higher risk premia for high-R&D firms. Furthermore, rises in the cost of capital for innovation-intensive firms are associated with declines in subsequent R&D activity and economic growth. We study these findings in a production-based asset pricing model with endogenous innovation. By accounting for fiscal and political risk, our model reproduces several aspects of the empirical evidence.
    JEL: C62 F31 G12
    Date: 2016–05
  4. By: Richard Harris (Durham Business School); Shengyu Li (Durham Business School)
    Abstract: The provision of large-scale assistance to industry is very important in China. The major contribution of this paper is to use Chinese firm-level panel data for 1998-2007 to introduce measures of assistance received by each firm directly into industry-level production functions determining firm output. Our results indicate inverted U-shaped gains from assistance: across the 26 industries considered, firms receiving assistance rates of 1-10%, 10-19%, 20-49% and 50+% experienced on average 4.5%, 9.4%, 9.2% and -3% gains in TFP, respectively. We also provide a simple agency model that justifies such a result
    Keywords: Subsidies; TFP; China; firm-level
    JEL: D24 O14 O43
    Date: 2016–09
  5. By: Francesco Vona (OFCE Sciences PO et SKEMA Business School); G. Marin (IRCrES-CNR); D. Consoli (INGENIO CSIC-UPV)
    Abstract: This paper explores the nature and the key empirical regularities of green employment in US local labor markets between 2006 and 2014. We construct a new measure of green employment based on the task content of occupations. Descriptive analysis reveals the following: 1. the share of green employment oscillates between 2 and 3 percent, and its trend is strongly pro-cyclical; 2. green jobs yield a 4 percent wage premium; 3. despite moderate catching-up across areas, green jobs remain more geo- graphically concentrated than similar non-green jobs; and 4. the top green areas are mostly high-tech. As regards the drivers, changes in environ- mental regulation are a secondary force compared to the local endowment of green knowledge and resilience in the face of the great recession. To assess the impact of moving to greener activities, we estimate that one additional green job is associated with 4.2 (2.4 in the crisis period) new jobs in non-tradable activities in the local economies.
    Keywords: Green employment, local labor market, environmental regulation, environmental technologies, local multipliers
    JEL: J23 O33 Q52 R23
    Date: 2016–07
  6. By: Pachouri, Anshul (Asian Development Bank Institute); Sharma, Sankalp (Asian Development Bank Institute)
    Abstract: Innovation plays a critical role in shaping the industrial and firm competitiveness of any nation. Innovation is often discussed in the setting of developed countries, but the rise of emerging economies such as India has generated a new interest in understanding innovation in developing economies. This paper aims to study and present the current state of innovation in small and medium-sized enterprises (SMEs) in India. The focus of the paper is to bring out the key barriers SMEs face in the innovation process in the context of the existing government policy. India, being a developing nation, has its own set of unique situations and challenges that impede the innovation potential of SMEs operating in it. Many of these barriers are related to public policy, funding constraints, shortage of skilled research and development (R&D) workforce, and weak linkages between institutions and the firms, among others.
    Keywords: SME innovation; innovation policy framework; public policy barriers; innovation potential
    JEL: G20 G28 O38
    Date: 2016–09–22
  7. By: Coelli, Federica; Moxnes, Andreas; Ulltveit-Moe, Karen-Helene
    Abstract: This paper estimates the effect of trade policy during the Great Liberalization of the 1990s on innovation in over 60 countries using international firm-level patent data. The empirical strategy exploits ex-ante differences in firms' exposure to countries and industries, allowing us to construct firm-specific measures of tariffs. This provides asource of variation that enables us to establish the causal impact of trade policy on innovation. Our results suggest that trade liberalization has economically significant effects on innovation and, ultimately, on technical change and growth. According to our estimates, about 7 percent of the increase in knowledge creation during the 1990s can be explained by trade policy reforms. Furthermore, we find that the increase in patenting reflects innovation, rather than simply more protection of existing knowledge. Both improved market access and more import competition contribute to the positive innovation response to trade liberalization.
    Keywords: innovation; patents; trade liberalization
    JEL: F0 F1 F13 F6
    Date: 2016–09
  8. By: Jan Hagemejer (Faculty of Economic Sciences, University of Warsaw; Economic Institute, National Bank of Poland)
    Abstract: We analyze the determinants of value added and productivity growth of New Member States in the period between 1995 and 2009. We show that in the analyzed countries exports contributed to between 30 to over 40% of the overall growth of GDP while the contribution of the domestic component varied from negative to over 60%. We show that in the most important export manufacturing industries of the NMS, the growth in exported value added was substantial, while the growth of the domestic component of GDP was mostly due to the growth in services. We associate growth of sectoral productivity with the foreign direct investment and exporting but, more importantly, with the position of a sector/country in the global value chains. We show that sectors that have imported intermediate goods have experienced higher productivity growth. Moreover, productivity growth was found in sectors further away from the final demand and in sectors exporting intermediate goods.
    Keywords: global value chains, productivity, economic growth, openness
    JEL: C23 F21 O33
    Date: 2016

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