nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2016‒11‒13
fifteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. The EU 2020 innovation indicator: A step forward in measuring innovation outputs and outcomes? By Janger, Jürgen; Schubert, Torben; Andries, Petra; Rammer, Christian; Hoskens, Machteld
  2. High Growth Young Firms: Contribution to Job, Output and Productivity Growth By John Haltiwanger; Ron S Jarmin; Robert Kulick; Javier Miranda*
  3. Innovation and Lock-in By Uwe Cantner; Simone Vannuccini
  4. Transplanting clean-tech paths from elsewhere: The emergence of the Chinese solar PV industry By Binz, Christian; Diaz Anadon, Laura
  5. Innovation, Competition and Technical Efficiency By Elina Berghäll
  6. Misallocation, Establishment Size, and Productivity By Pedro Bento; Diego Restuccia
  7. The Aggregate Implications of Size Dependent Distortions By Roys, Nicolas
  8. Natural resource knowledge idiosyncrasy, innovation, industry dynamics, and sustainability By Allan Dahl Andersen; Olav Wicken
  9. Two Blades of Grass: The Impact of the Green Revolution By Gollin, Douglas; Hansen, Casper Worm; Wingender, Asger
  10. Lost in space? NASA and the changing publicprivate eco-system in space By Mariana Mazzucato; Douglas K Robinson
  11. On the relation between patent citations and patent value By Jurriën Bakker
  12. Taste for science, academic boundary spanning and inventive performance of industrial scientists and engineers By Sam Arts; Reinhilde Veugelers
  13. Complexity and the Economics of Climate Change: a Survey and a Look Forward By Tomas Balint; Francesco Lamperti; Antoine Mandel; Mauro Napoletano; Andrea Roventini; Alessandro Sapio
  14. The Global Diffusion of Ideas By Buera, Francisco J.; Oberfield, Ezra
  15. Has the German reunification strengthened Germany's national innovation system? Triple helix dynamics of Germany's innovation system By Yi, Sæung-gyu; Jun, Bogang

  1. By: Janger, Jürgen; Schubert, Torben; Andries, Petra; Rammer, Christian; Hoskens, Machteld
    Abstract: In October 2013, the European Commission presented a new indicator intended to capture innovation outputs and outcomes and thereby "support policy-makers in establishing new or reinforced actions to remove bottlenecks that prevent innovators from translating ideas into products and services that can be successful on the market". This article aims to evaluate the usefulness of the new indicator against the background of the difficulties in measuring innovation outputs and outcomes. We develop a unique conceptual framework for measuring innovation outcomes that distinguishes structural change and structural upgrading as two key dimensions in both manufacturing and services. We conclude that the new indicator is biased towards a somewhat narrowly defined "high-tech" understanding of innovation outcomes. We illustrate our framework proposing a broader set of outcome indicators capturing also structural upgrading. We find that the results for the modified indicator differ substantially for a number of countries, with potentially wide-ranging consequences for innovation and industrial policies.
    Keywords: Innovation Output,Innovation Outcome,Innovation Measurement,Structural Change,Structural Upgrading,EU 2020 Strategy,Innovation Policy
    JEL: O25 O31 O38 O52
    Date: 2016
  2. By: John Haltiwanger; Ron S Jarmin; Robert Kulick; Javier Miranda*
    Abstract: Recent research shows that the job creating prowess of small firms in the U.S. is better attributed to startups and young firms that are small. But most startups and young firms either fail or don’t create jobs. A small proportion of young firms grow rapidly and they account for the long lasting contribution of startups to job growth. High growth firms are not well understood in terms of either theory or evidence. Although the evidence of their role in job creation is mounting, little is known about their life cycle dynamics, or their contribution to other key outcomes such as real output growth and productivity. In this paper, we enhance the Longitudinal Business Database with gross output (real revenue) measures. We find that the patterns for high output growth firms largely mimic those for high employment growth firms. High growth output firms are disproportionately young and make disproportionate contributions to output and productivity growth. The share of activity accounted for by high growth output and employment firms varies substantially across industries – in the post 2000 period the share of activity accounted for by high growth firms is significantly higher in the High Tech and Energy related industries. A firm in a small business intensive industry is less likely to be a high output growth firm but small business intensive industries don’t have significantly smaller shares of either employment or output activity accounted for by high growth firms.
    Date: 2016–01
  3. By: Uwe Cantner (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Simone Vannuccini (School of Economics and Business Administration, Friedrich-Schiller-University Jena)
    Abstract: This study focuses on a well-known but yet elusive concept: (technological) lock-in. We summarize what is known about the nature of lock-in and offer a critical view on history-dependent processes based on recent contributions to the literature. We discuss if lock-ins are really inescapable, especially when innovation is concerned. Also, we address the question if lock-in is a well-defined concept at all. To offer a fresh view on lock-in and to tackle the issues just raised, we employ the replicator dynamics model. By making a parallel between monopolization in the replicator dynamics and the occurrence of lock-ins, we show that the convergence of a system to a given outcome can be reversed, under certain conditions. We highlight the need for a more precise demarcation of the conceptual boundaries of lock-in and path dependence, both from the formal and the empirical side, and suggest that further structural features - for example users heterogeneity - may play a relevant role in affecting the outcome of dynamic allocation and competition processes.
    Keywords: Lock-in, path dependence, history dependent processes, innovation, competitive diffusion, Polya urn
    JEL: L15 O31 O33
    Date: 2016–11–03
  4. By: Binz, Christian (CIRCLE, Lund University); Diaz Anadon, Laura (Harvard University)
    Abstract: New clean-tech industries emerge in increasingly complex spatial patterns that challenge existing explanations on industrial path creation. In particular, the case of latecomer regions quickly building up industries in fields that are unrelated to their previous industrial capabilities is not well understood in the literature. This paper aims to address this gap with an analytical framework that draws on technological innovation system and catching-up literatures to specify the place-specific and extra-regional system resources that firms in latecomer regions draw on in the industry formation process. An in-depth case study of the Chinese solar photovoltaics (PV) sector reveals an industry formation process that differs from existing models. Rather than depending on linkages with multinational companies, extensive policy support, or gradual recombination of pre-existing domestic capabilities, early industry formation in the Chinese solar PV sector emerged from path transplantation in a highly internationalized entrepreneurial project. Pioneering actors mobilized knowledge, markets, investment and technology legitimacy developing outside China and re-combined them with the country’s generic capabilities in export-oriented mass manufacturing. This implies that in some industries, globalization may enable a new model of industrial path creation based on bridging domestic resource gaps by directly mobilizing system resources emerging in the international networks of a global innovation system.
    Keywords: cleantech; path creation; technological innovation system; solar photovoltaics; China; transnational entrepreneurship
    JEL: F64 O33 Q55
    Date: 2016–11–05
  5. By: Elina Berghäll
    Abstract: Contradictory empirical and theoretical evidence on the relationship between innovation and competition has been reconciled in a model that yields an inverted U-shaped curve. I test whether the predictions of the model are supported by the data with an unbalanced panel of firms for 1990-2003 in a high productivity growth, high-tech industry, Finnish ICT manufacturing. In particular, I investigate how well alternative, yet rigorous measures of innovation and the technology gap, such as R&D intensity, R&D elasticity, technical change, technical efficiency and total factor productivity fare with respect to competition measured by the Lerner index. The results prove sensitive to the choice of variable. Overall, the model is not supported by the empirical evidence of the industry.
    Keywords: competition, innovation, technical efficiency, technology frontier, R&D intensity
    JEL: O25 L50 L60 D20 O30
    Date: 2016–10–12
  6. By: Pedro Bento; Diego Restuccia
    Abstract: We consider a tractable model of heterogeneous production units that features endogenous entry and productivity investment to assess the quantitative impact of policy distortions on aggregate output and establishment size. Relative to the standard factor misallocation framework, policy distortions featuring a positive productivity elasticity of distortions imply larger reductions in output through smaller investments in establishment productivity. A calibrated version of the model implies that when the productivity elasticity of distortions increases from 0.09 in the U.S. to 0.5 in India, aggregate output and average establishment size fall by 53 and 86 percent, compared to 37 and 0 percent in the standard factor misallocation model. Entry productivity investment and factor misallocation contribute equally to the reduction in output, whereas the effect of lower life-cycle productivity growth is fully offset by increased entry and reduced productivity dispersion. Establishment size differences in the model are consistent with evidence from a comprehensive dataset we construct on average establishment size in manufacturing using census data for 134 countries.
    JEL: O1 O4
    Date: 2016–11
  7. By: Roys, Nicolas (Federal Reserve Bank of St. Louis)
    Abstract: This paper examines the aggregate implications of size-dependent distortions. These regulations misallocate labor across firms and hence reduce aggregate productivity. It then considers a case-study of labor laws in France where firms that have 50 employees or more face substantially more regulation than firms that have less than 50. The size distribution of firms is visibly distorted by these regulations: there are many firms with exactly 49 employees. A quantitative model is developed with a payroll tax of 0.15% that only applies to firm above 50 employees. Removing the regulation improves labor allocation across firms, leading in steady state to an increase in output per worker slightly less than 0.3%.
    Keywords: Firm size distribution; regulation; threshold effect; reallocation
    JEL: E23 O1 O40
    Date: 2016–10–05
  8. By: Allan Dahl Andersen (TIK Centre, University of Oslo); Olav Wicken (TIK Centre, University of Oslo)
    Abstract: Natural resource based industries (NRBIs) have received only limited attention in Innovation Studies. In this paper we explore how qualitative diversity of ecological and geological conditions influence innovation—a phenomenon we denote natural resource knowledge idiosyncrasy (NKI)—as one particular aspect of change in NRBIs. We find that the dominant thinking in Innovation Studies about innovation and industry change—which is largely informed by studies of high-tech manufacturing industries—does not allow us to achieve a full understanding of change in NRBIs. To advance our thinking about NRBIs we propose a definition of NKI, a conceptualization of how NKI influence innovation and industry change, and explore implications of the latter for strategies for resource based development and sustainability in natural resources. Lastly, we argue that a new model of innovation is required for grasping and guiding innovation and transformation in NRBIs.
    Date: 2016–11
  9. By: Gollin, Douglas; Hansen, Casper Worm; Wingender, Asger
    Abstract: We examine the impact of the Green Revolution, defined as the diffusion of high-yielding crop varieties (HYVs), on aggregate economic outcomes in developing countries during the second half of the 20th century. We use time variation in the development and diffusion of HYVs of 10 major crops, and the spatial variation in agro-climatically suitability for growing them, to identify the causal effects of adoption. In a sample of 84 counties, we estimate that a 10 percentage points increase in HYV adoption increases GDP per capita by about 15 percent. This effect is fully accounted for by a combination of the direct effect on crop yields, factor adjustment in agriculture, and structural transformation. Our analysis also reveals that the Green Revolution reduced fertility and that the reduction was only partly offset by decreasing mortality rates. The net effect on population growth was therefore negative.
    Keywords: agriculture; Green Revolution; High Yielding Variety crops; macoeconomic development; productivity shock
    JEL: N50 O11 O13 O50 Q16
    Date: 2016–11
  10. By: Mariana Mazzucato (Science Policy Research Unit, University of Sussex, UK); Douglas K Robinson (Science Policy Research Unit, University of Sussex, UK)
    Abstract: U.S. public activities in space directed via NASA are undergoing change. While NASA has historically been able to drive market creation, through its procurement policy (which is much weaker in Europe), the past decade has seen a visible shift in US space policy, away from NASA-directed developments in low-Earth orbit (LEO) towards an ecosystem with a mix of private, not-for-profit, and public actors in LEO. This has fundamentally changed NASA‘s role from an orchestrating/directing role, to a more ‘facilitating’ one driven by commercialization needs. This shift in mission and approach has ramifications for the LEO ecosystem as well as NASA’s innovation policy, which has previously centred on clearly defined “mission-oriented” objectives, such as putting a man on the moon or creating the shuttle fleet. Such objectives required ‘active’ innovation policy whereby NASA both funded and ‘directed’ the innovation, within its walls and with its partners. The emerging multi-actor ecosystem approach has involved a more open-ended objective that does not have a unified nor clearly defined end-game. In this situation, NASA’s ability to shape activities in a direction in line with its mission will depend on its relationships with other members in the system. The rise of new actors in the space eco-system, and new relationships between them, presents interesting challenges for innovation policy informed by an Innovation System approach. In this paper, we critique the market failure approach of public intervention in markets and describe further work to be done in the innovation systems literature - more focus on the interactions between agents (and the type of agents) as complimentary to the dominant focus on funding programmes in innovation systems. In this paper, we present the evolving processes of NASA’s engagement in building a low-earth orbit economy to draw out case specific insights into a public agency shifting its mission to incorporate approaches to facilitate the market creation policy. The paper focuses on the way that NASA structures its new innovation policy, away from a classical supply side oriented R&D investment through NASA itself, towards a policy of orchestration and combination of instruments rather. We close the paper with a reflection on the ramifications of NASA’s approach to building a sustainable low-Earth orbit economic ecosystem.
    Keywords: Space economy, market creation, innovation ecosystem, mission-oriented innovation policy, NASA
  11. By: Jurriën Bakker
    Abstract: This paper reports the results of an analysis of patent citation and patent renewal data, advancing a log-linear relation between patent citations and patent value. A complementary analysis of firms’ patent portfolios confirms that modelling the relation between citations and firm value benefits from the adoption of the log-linear form.
    Keywords: patent citations, patent value, patent renewal, Tobin’s Q
    Date: 2016–10
  12. By: Sam Arts; Reinhilde Veugelers
    Abstract: Matching survey data on Ph.D. scientists and engineers currently working in an R&D job in industry with their publications and patents, we study the relationship between their motives and their inventive performance. We find that individuals with a strong taste for science, i.e. motivated by intellectual challenge, independence, and contribution to society, create more novel and valuable patents. We find partial mediation of the effect of taste for science on value-weighted inventive output through academic boundary spanning, proxied by scientific publications co-authored with academic scientists. For novelty of inventive output, we find no mediation through academic boundary spanning. We confirm the negative relation between academic co-publications and annual base salary in industry. This helps to explain why individuals with a strong taste for salary collaborate less with academic scientists, negatively affecting their value-weighted inventive output.
    Keywords: taste for science, boundary spanning, industry-science links
    Date: 2016–11
  13. By: Tomas Balint (Centre d'Economie de la Sorbonne); Francesco Lamperti (Scuola Superiore Sant'Anna di Pisa - Institute of Economics and LEM); Antoine Mandel (Centre d'Economie de la Sorbonne - Paris School of Economics); Mauro Napoletano (OFCE-Sciences Po and SKEMA Business School (Sophia-Antipolis)); Andrea Roventini (Scuola Superiore Sant'Anna di Pisa - LEM and OFCE); Alessandro Sapio (University Parthenope of Naples)
    Abstract: We provide a survey of the micro and macro economics of climate change from a complexity science perspective and we discuss the challenges ahead for this line of research. We identify four areas of the literature where complex system models have already produced valuable insights: (i) coalition formation and climate negotiations, (ii) macroeconomic impacts of climate-related events, (iii) energy markets and (iv) diffusion of climate-friendly technologies. On each of these issues, accounting for heterogeneity, interactions and disequilibrium dynamics provides a complementary and novel perspective to the one of standard equilibrium models. Furthermore, it highlights the potential economic benefits of mitigation and adaptation policies and the risk of under-estimating systemic climate change-related risks
    Keywords: climate change; climate policy; climate economics; complex systems; agent-based models; socio-economic networks
    JEL: C63 Q40 Q50 Q54
    Date: 2016–07
  14. By: Buera, Francisco J. (Federal Reserve Bank of Chicago); Oberfield, Ezra (Federal Reserve Bank of Chicago)
    Abstract: We provide a tractable theory of innovation and technology diffusion to explore the role of international trade in the process of development. We model innovation and diffusion as a process involving the combination of new ideas with insights from other industries or countries. We provide conditions under which each country's equilibrium frontier of knowledge converges to a Frechet distribution, and derive a system of differential equations describing the evolution of the scale parameters of these distributions, i.e., countries' stocks of knowledge. In particular, the growth of a country's stock of knowledge depends only on its trade shares and the stocks of knowledge of its trading partners. We use the framework to quantify the contribution of bilateral trade costs to cross-sectional TFP differences, long-run changes in TFP, and individual post-war growth miracles.
    Keywords: Frechet distribution; global outlook; technology diffusion; trade
    JEL: F1 F43 O33 O47
    Date: 2015–12–31
  15. By: Yi, Sæung-gyu; Jun, Bogang
    Abstract: This paper investigates whether the German reunification strengthened the country's national innovation system, using the Triple Helix model. In particular, it assesses the various dimensions of the innovation system by analyzing co-authorship networks from 1973 to 2014. Despite the series of policies promoting collaboration between the two regions and the rise in the number of regional collaborations and in the number of papers, the results show that the national innovation system of Germany has worsened since the reunification in 1990, and the role of government is critical in encouraging collaboration. Finally, this paper uses survey data on the type of Triple Helix configuration that actually occurred in East Germany as a robustness check.
    Keywords: Triple Helix model,German reunification,National innovation system
    Date: 2016

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