nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2017‒01‒01
fourteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Innovation, Creative Destruction and Structural Change: Firm-level Evidence from European Countries By Bernhard Dachs; Martin Hud; Christian Köhler; Bettina Peters
  2. Invention and diffusion of water supply and water efficiency technologies: insights from a global patent dataset By Declan Conway; Antoine Dechezlepretre; Ivan Haščič; Nick Johnstone
  3. Imported Intermediates, Absorptive Capacity and Productivity: Evidence from Ghanaian Manufacturing Firms By Luke Emeka Okafor; Mita Bhattacharya; Harry Bloch
  4. Idiosyncratic Distortions and Technology Adoption By Stephen Ayerst
  5. How labor regulation a.ects innovation and investment: A neo-Schumpeterian approach. By Giorgio Calcagnini; Germana Giombini; Giuseppe Travaglini
  6. Public subsidies for SME research and development: Empirical evaluation of collaborative versus individual place-based programs By Andrea Bellucci; Luca Pennacchio; Alberto Zazzaro
  7. EU Wholesale Trade: Analysis of the Sector and Value Chains By Ella Broos; Bernhard Dachs; Martina Dünser; Doris Hanzl-Weiss; Kristof Mertens; Doris Schartinger; Robert Stehrer; Valentijn Vanoeteren
  8. Knowledge Creates Markets: The Influence of Entrepreneurial Support and Patent Rights on Academic Entrepreneurship By Dirk Czarnitzk; Thorsten Doherr; Paula Schliessler; Katrin Hussinger; Andrew Toole
  9. Product mix and firm productivity responses to trade competition By Mayer, Thierry; Melitz, Marc J.; Ottaviano, Gianmarco I. P.
  10. How Does Technological Change Affect Quality-Adjusted Prices in Health Care? Systematic Evidence from Thousands of Innovations By Kristopher J. Hult; Sonia Jaffe; Tomas J. Philipson
  11. The impact of trade and technology on wage components By Borrs, Linda; Knauth, Florian
  12. Scientific research, firm heterogeneity and foreign R&D locations of multinational firms By Rene Belderbos; Bart Leten; Shinya Suzuki
  13. The slowdown in US productivity growth - what explains it and will it persist? By Ursel Baumann; Melina Vasardani
  14. Firm structure and the location decision of German manufacturing firms: Evidence from official firm-level data By Krenz, Astrid

  1. By: Bernhard Dachs (Austrian Institute of Technology, Vienna); Martin Hud (ZEW Centre for European Economic Research, Mannheim); Christian Köhler (ZEW Centre for European Economic Research, Mannheim); Bettina Peters (ZEW, Mannheim, and CREA, University of Luxembourg)
    Abstract: The shift of employment from lower to higher productive firms is an important driver for structural change and industry dynamics. We investigate this reallocation in terms of employment gains and losses from innovation. New employment created by product innovation may be offset by employment losses in related products, known as ‘cannibalisation’ or ‘business stealing’ effects in the literature, by employment losses from process and organisational innovation and by general productivity increases. The paper investigates this effect empirically with a large dataset from the European Community Innovation Survey (CIS). We find that employment gains and losses increase with technology intensity of the sector. High-technology manufacturing shows the strongest employment gains and losses from innovation, followed by knowledge-intensive services, low- technology manufacturing and less knowledge-intensive services. The net contribution of innovation to employment growth is mostly positive, an exception being manufacturing industries in recession periods.
    Keywords: Innovation, employment, reallocation, technology intensity, compensation effect, displacement effect, cannibalisation effect.
    JEL: O33 J23 C26 D2
    Date: 2016
  2. By: Declan Conway; Antoine Dechezlepretre; Ivan Haščič; Nick Johnstone
    Abstract: This paper identifies over 50 000 patents filed worldwide in various water-related technologies between 1990 and 2010, distinguishing between those related to availability (supply) and conservation (demand) technologies. Patenting activity is analysed – including inventive activity by country and technology, international diffusion of such water-related technologies, and international collaboration in technology development. Three results stand out from our analysis. First, although inventive activity in water-related technologies has been increasing over the last two decades, this growth has been disproportionately concentrated on supply-side technologies. Second, whilst 80% of water-related invention worldwide occurs in countries with low or moderate water scarcity, several countries with absolute or chronic water scarcity are relatively specialized in water efficiency technologies. Finally, although we observe a positive correlation between water scarcity and local filings of water patents, some countries with high water availability, in particular Switzerland or Norway, nevertheless appear as significant markets for water-efficiency technologies. This suggests that drivers other than local demand, like regulation and social and cultural factors, play a role in explaining the global flows of technologies. And finally, the extent to which innovation is "internationalised" shows some distinct patterns relative to those observed for innovation in technologies in general.
    Keywords: water security; resource scarcity; invention; international technology diffusion
    JEL: Q25 Q31 Q55
    Date: 2015–12–15
  3. By: Luke Emeka Okafor; Mita Bhattacharya; Harry Bloch
    Abstract: This paper analyses whether the use of imported intermediates improves productivity using firm-level panel data of manufacturing firms in Ghana covering the period between 1991 and 2002. This includes examining the importance of absorptive capacity in enhancing the productivity gains from imported intermediates. We propose lagged relative productivity as a new measure of absorptive capacity (ABC). For any given period, ABC is defined as the natural logarithm of a firm’s total factor productivity in the previous period relative to the firm’s initial total factor productivity. An alternative measure of ABC considers real value added per worker in lieu of total factor productivity. Overall, we find that firms with high levels of absorptive capacity derive productivity gains from the contemporaneous and prior use of imported intermediates, particularly for firms operating in the input-intensive industries. Our findings are robust to different specifications of the base model and different estimation techniques.
    Keywords: Trade, Absorptive capacity, Productivity, Manufacturing, Imported intermediates,Ghana.
    JEL: F14 D22 D24 O33
    Date: 2016–11
  4. By: Stephen Ayerst
    Abstract: Empirical evidence indicates that resource misallocation has a substantial negative effect on aggregate productivity in developing countries. I show that the same underlying institutions that create misallocation are also important for explaining cross-country technology differences. I study a model of heterogeneous firms that choose both labour and technology inputs. Distortions are modeled as idiosyncratic wedges on firm revenues and delay adoption by disincentivizing firms from investing in newer technologies. At the aggregate level, distortions targeting high productivity firms delay the initial adoption of new technologies. In the calibrated model, distortions account for a large portion of the observed cross-country technology differences. Moving from the distortions of the bottom decile economy to the United States' level explains just under half of the observed adoption lag and increases productivity by 89%. Over half of the productivity increase is from firms adjusting technology.
    Keywords: Productivity, Misallocation, Technology Diffusion.
    Date: 2016–12–18
  5. By: Giorgio Calcagnini (Department of Economics, Society, and Politics Universita' di Urbino Carlo Bo); Germana Giombini (Department of Economics, Society, and Politics Universita' di Urbino Carlo Bo); Giuseppe Travaglini (Universita' di Urbino Carlo Bo, Facolta' di Economia, DESP, Dipartimento di Economia Societa' e Politica)
    Abstract: Theoretical and empirical models provide ambiguous responses on the relationship between labor regulation, innovation and investment. Labor regulation tends to raise firms. adjustment costs. But, also, labor regulation stimulates firms to make innovations and investment to recover productivity in the long-run. In this paper we present a neo- Schumpeterian endogenous growth model, which explains how these opposite forces operate over time, and why a stricter labor regulation may positively a.ect innovation and investment.
    Keywords: Endogenous growth model; Labor regulation; Innovation, Investment.
    JEL: O4 J5
    Date: 2016–12
  6. By: Andrea Bellucci (Institute for Applied Economic Research (IAW), Germany, MoFiR, Italy); Luca Pennacchio (Dipartimento di Scienze Economiche e Statistiche - Universita' degli Studi di Napoli - "Federico II"); Alberto Zazzaro (Universita' Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali, MoFiR - Ancona, Italy, CSEF, Naples, Italy)
    Abstract: This paper provides novel empirical evidence on the effectiveness of regional research and innovation policies for small and medium-sized firms (SMEs). Two subsidy programs implemented at the regional level in central Italy are investigated. One program targeted firms' individual research, while the other addressed collaborative research between firms and universities. Using a matched difference-in-differences approach our empirical analysis shows a differentiated impact of the two programs. The first was successful in stimulating additional private R&D investment and, at least partially, in improving firms. performance. The second program had weaker effects, mostly restricted to R&D expenditure and employment. Otherwise, subsidized firms show a reduction in their tangible and intangible investments, thus casting doubts on the benefits of subsidies forcing R&D collaborations.
    Keywords: Research and innovation; place-based regional subsidies; impact evaluation, small- and mediumsized firms, collaborative research programs.
    JEL: G32 H81 L52 O38 R58
    Date: 2016–12
  7. By: Ella Broos; Bernhard Dachs; Martina Dünser; Doris Hanzl-Weiss (The Vienna Institute for International Economic Studies, wiiw); Kristof Mertens; Doris Schartinger; Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw); Valentijn Vanoeteren
    Abstract: Abstract This report investigates wholesale as one of the main service industries in the European economy. Wholesale is the resale of new and used goods to retailers, industrial, commercial, institutional or professional users, or to other wholesalers on their own account or for third parties. It plays a pivotal role in the European Single Market by bridging national markets and connecting producers, retail trade and industrial demand across Europe. Wholesale employs about 10 million persons in the EU-28 and accounts for a share of 7-9% in total employment in most EU Member States. The share of micro and small enterprises is considerably higher than in manufacturing. The sector reveals considerable heterogeneity in terms of firm size, productivity and profitability across EU Member States and wholesale sub-sectors. Moreover, the report sheds light on the integration of the wholesale sector in value chains with upstream manufacturers and downstream retailers, and on the role of technology and innovation in wholesale.
    Keywords: wholesale, EU integration, value chains, services, innovation
    JEL: L16 L81
    Date: 2016–12
  8. By: Dirk Czarnitzk (KU Leuven, Belgium); Thorsten Doherr (Centre for European Economic Research (ZEW), Mannheim); Paula Schliessler (Centre for European Economic Research (ZEW), Mannheim); Katrin Hussinger (CREA, Université du Luxembourg); Andrew Toole (US Patent and Trademark Office, Alexandria, USA)
    Abstract: We use an exogenous change in German Federal law to examine how entrepreneurial support and the ownership of patent rights influence academic entrepreneurship. In 2002, the German Federal Government enacted a major reform called Knowledge Creates Markets that set up new infrastructure to facilitate university-industry technology transfer and shifted the ownership of patent rights from university researchers to their universities. Based on a novel researcher-level panel database that includes a control group not affected by the policy change, we find no evidence that the new infrastructure resulted in an increase in start-up companies by university researchers. The shift in patent rights may have strengthened the relationship between patents on university-discovered inventions and university start-ups; however, it substantially decreased the volume of patents with the largest decrease taking place in faculty-firm patenting relationships.
    Keywords: Intellectual property, patents, technology transfer, policy evaluation
    JEL: O34 O38
    Date: 2016
  9. By: Mayer, Thierry; Melitz, Marc J.; Ottaviano, Gianmarco I. P.
    Abstract: We document how demand shocks in export markets lead French multi-product exporters to re-allocate the mix of products sold in those destinations. In response to positive demand shocks, those French firms skew their export sales towards their best performing products; and also extend the range of products sold to that market. We develop a theoretical model of multiproduct firms and derive the specific demand and cost conditions needed to generate these product-mix reallocations. Our theoretical model highlights how the increased competition from demand shocks in export markets - and the induced product mix reallocations - induce productivity changes within the firm. We then empirically test for this connection between the demand shocks and the productivity of multi-product firms exporting to those destinations. We find that the effect of those demand shocks on productivity are substantial - and explain an important share of aggregate productivity fluctuations for French manufacturing.
    Date: 2016
  10. By: Kristopher J. Hult; Sonia Jaffe; Tomas J. Philipson
    Abstract: Medical innovations have improved survival and treatment for many diseases but have simultaneously raised spending on health care. Many health economists believe that technological change is the major factor driving the growth of the heath care sector. Whether quality has increased as much as spending is a central question for both positive and normative analysis of this sector. This is a question of the impact of new innovations on quality-adjusted prices in health care. We perform a systematic analysis of the impact of technological change on quality-adjusted prices, with over six thousand comparisons of innovations to incumbent technologies. For each innovation in our dataset, we observe its price and quality, as well as the price and quality of an incumbent technology treating the same disease. Our main finding is that an innovation’s quality-adjusted prices is higher than the incumbent’s for about two-thirds (68%) of innovations. Despite this finding, we argue that quality-adjusted prices may fall or rise over time depending on how fast prices decline for a given treatment over time. We calibrate that price declines of 4% between the time when a treatment is a new innovation and the time when it has become the incumbent would be sufficient to offset the observed price difference between innovators and incumbents for a majority of indications. Using standard duopoly models of price competition for differentiated products, we analyze and assess empirically the conditions under which quality-adjusted prices will be higher for innovators than incumbents. We conclude by discussing the conditions particular to the health care industry that may result in less rapid declines, or even increases, in quality-adjusted prices over time.
    JEL: I1 O3
    Date: 2016–12
  11. By: Borrs, Linda; Knauth, Florian
    Abstract: We use a large sample of German workers to analyze the effect of low-wage competition with China and Eastern Europe (the East) on the wage structure within German manufacturing industries. Utilizing the method by Abowd et al. (1999), we decompose wages into firm and worker components. We find that the rise of market access and competitiveness of the East has a substantial impact on the dispersion of the worker wage component and in part on positive assortative matching. Trade fails to explain changes in the firm wage premium. The rising dispersion in worker-specific wages can be attributed to increasing skill premia and to changes in the extensive margin of the workforce, leading to a wage polarization for the remaining within-industry workers. We also account for technological change by considering how many routine-intensive jobs are substituted within an industry. The more routine jobs are cut, the higher is the effect on wage inequality, especially on the dispersion of worker-specific wages. Overall, trade explains up to 19% of the recent increase in wage inequality and slightly exceeds the technology effect that accounts for approximately 17%.
    Keywords: wage decomposition,wage inequality,globalization,gravity
    JEL: F16 J31 O33 F14
    Date: 2016
  12. By: Rene Belderbos; Bart Leten; Shinya Suzuki
    Abstract: We examine the influence of host countries’ scientific research strengths on global R&D location choices by multinational firms. In an analysis of 277 new R&D activities identified for 175 firms in 40 host countries and 30 technology fields, we find that the strength of relevant university research positively affects the likelihood that host countries attract foreign R&D. When allowing for firm heterogeneity, university scientific research appears only a significant factor for firms with a strong science orientation in their R&D activities. Host countries’ corporate scientific research has no systematic influence on R&D location choices. Empirical results are replicated in an analysis at the regional level covering regions in Europe the US, and Japan.
    Keywords: R&D Internationalization, Knowledge sourcing, Absorptive capacity, Industry-science links
    Date: 2016–12
  13. By: Ursel Baumann (European Central Bank); Melina Vasardani (Bank of Greece)
    Abstract: The US recovery following the Great Recession has been marked by persistent low growth. At the same time, productivity growth has consistently disappointed in the aftermath of the last recession. This has raised doubts about the long-term growth prospects of the US economy and led to worries about secular stagnation. This paper contributes to the debate by empirically revising the main determinants of labour productivity growth over the period 1999-2013 for a panel of US states, focusing on capital deepening, R&D spending, the sectoral composition, financial factors and business dynamism. We find that more than half of the slowdown in productivity growth in the period 2011-13 relative to its sample average is due to a decline in the rate of capital deepening. The other major factor explaining the recent weakness in productivity growth - more closely related to TFP - is the slowdown in business dynamism experienced by the US economy. By contrast, financial factors appear to have become supportive of productivity growth in that period.
    Keywords: Labour productivity; Total factor productivity; Potential output; Business dynamism.
    JEL: D24 E24 J24 O47
    Date: 2016–11
  14. By: Krenz, Astrid
    Abstract: This paper uses a comprehensive, official firm-level dataset for German manufacturing firms to investigate the location decision of new firm activity in the German regional economy, differentiated by firm structure. The rich regional dimension of this dataset is investigated for the first time in regard to the location choices of firms. Results reveal that agglomeration economies play a significant role for small firms, but not for medium-sized and large firms. Whereas the market potential exerts a significant positive impact for all firms, labor costs do not exert a significant impact on large firms' location decisions.
    Keywords: Firm location,Regional economy,Agglomeration economies
    JEL: R11 R12
    Date: 2016

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