nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2017‒04‒02
fourteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Is innovation destroying jobs? Firm-level evidence from the EU By Piva, Mariacristina; Vivarelli, Marco
  2. What Drives Differences in Management? By Nicholas Bloom; Erik Brynjolfsson; Lucia Foster; Ron Jarmin; Megha Patnaik; Itay Saporta-Eksten; John Van Reenen
  3. Product versus Process: Innovation Strategies of Multi-Product Firms By Flach, Lisandra; Irlacher, Michael
  4. PUBLIC R&D SUPPORT IN ITALY. EVIDENCE FROM A NEW FIRM-LEVEL PATENT DATA SET By Francesco Aiello; Giuseppe Albanese; Paolo Piselli
  5. A New Measure of Inter-Industry Distance and Its Application to the U.S. Regional Growth By Yoon, Yeo Joon; Whang, Unjung
  6. Racing With or Against the Machine? Evidence from Europe By Terry Gregory; A.M. Salomons; Ulrich Zierahn
  7. Identifying Productivity Spillovers Using the Structure of Production Networks By Bazzi, Samuel; Chari, Amalavoyal V.; Nataraj, Shanthi; Rothenberg, Alexander D.
  8. Where Do Green Technologies Come From? Inventor Teams’ Recombinant Capabilities and the Creation of New Knowledge. By Orsatti, Gianluca; Pezzoni, Michele; Quatraro, Francesco
  9. Financial Development and Growth: Panel Cointegration Evidence from South-Eastern and Central Europe By Stojkoski, Viktor; Popova, Kristina
  10. The pattern of structural change: testing the Product Space framework By Nicola Daniele Coniglio; Raffaele Lagravinese; Davide Vurchio; Massimo Armenise
  11. Novelty, Knowledge Spillovers and Innovation: Evidence from Nobel Laureates By Ham, John C.; Weinberg, Bruce A.
  12. R&D cooperation within Italian technological districts: A microeconometric analysis By Otello Ardovino; Maria Rosaria Carillo; Luca Pennacchio
  13. Firm Dynamics, Misallocation, and Targeted Policies By In Hwan JO; SENGA Tatsuro
  14. Variation in structural change around the world, 1985–2015: Patterns, causes and implications By Adrian Wood

  1. By: Piva, Mariacristina (Università Cattolica del Sacro Cuore, Milano); Vivarelli, Marco (UNU-MERIT, Università Cattolica del Sacro Cuore, Milano, and IZA, Bonn)
    Abstract: Using a unique firm-level database comprising the top European R&D investors over the period 2002-2013 and running LSDVC estimates, this study finds a significant labour-friendly impact of R&D expenditures. However, this positive employment effect appears limited in magnitude and entirely due to the medium-and high-tech sectors, while no effect can be detected in the low-tech industries. From a policy point of view, this outcome is supporting the EU2020 strategy, but - taking into account that most European economies are specialised in low-tech activities - is also worrying in terms of future perspectives of the European labour market.
    Keywords: Innovation, R&D, innovation, employment, firm-level analysis, EU
    JEL: E24 O14 O15 O33 O52
    Date: 2017–03–10
  2. By: Nicholas Bloom; Erik Brynjolfsson; Lucia Foster; Ron Jarmin; Megha Patnaik; Itay Saporta-Eksten; John Van Reenen
    Abstract: Partnering with the Census we implement a new survey of "structured" management practices in 32,000 US manufacturing plants. We find an enormous dispersion of management practices across plants, with 40% of this variation across plants within the same firm. This management variation accounts for about a fifth of the spread of productivity, a similar fraction as that accounted for by R&D, and twice as much as explained by IT. We find evidence for four "drivers" of management: competition, business environment, learning spillovers and human capital. Collectively, these drivers account for about a third of the dispersion of structured management practices. Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the U.S. Census Bureau. All results have been reviewed to ensure that no confidential information was disclosed.
    Keywords: management, productivity, competition, learning
    JEL: L2 M2 O32 O33
    Date: 2017–03
  3. By: Flach, Lisandra; Irlacher, Michael
    Abstract: We investigate the effects of better access to foreign markets on innovation strategies of multi-product firms in industries with different scope for product differentiation. Industry-specific demand and cost linkages induce a distinction between the returns to innovation. In differentiated industries, cannibalization is lower and firms invest more in product innovation. In homogeneous industries, firms internalize intra-firm spillovers and invest more in process innovation. Using firm-level data and large exchange rate devaluations, we show that better access to foreign markets increases the incentive to innovate. However, we exploit differential effects across industries and show that the innovation strategies depend on the scope of differentiation.
    Keywords: Cannibalization Effect; innovation; Market Size Effect.; multi-product firms; product differentiation; Spillovers
    JEL: F12 F14 L25
    Date: 2017–03
  4. By: Francesco Aiello; Giuseppe Albanese; Paolo Piselli (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria)
    Abstract: This paper evaluates the impact of R&D public support on the innovation activities of a sample of Italian SMEs. Unlike most of the literature, the analysis focuses more deeply on the innovation output than on the innovation input. The innovation output is measured through patent data. By using a new data set obtained by combining information from EPO records and the Capitalia data set on Italian corporations, we find that publicly supported firms have similar patenting activity to other R&D performers, regardless of the type of policy tool used to foster innovation. However, as far as patenting is concerned, supported SMEs face higher R&D spending than others.
    Keywords: Patents, R&D policy support, SMEs
    JEL: O31 O38 L1 C21
    Date: 2017–03
  5. By: Yoon, Yeo Joon (Korea Institute for International Economic Policy); Whang, Unjung (Korea Institute for International Economic Policy)
    Abstract: We propose a new measure of inter-industry 'distance'. This is constructed a la Antras et al. (2012). While they measure the distance of an industry from its final use - what they call 'downstreamness' of an industry - we measure the distance between a pair of industries. Our proposed index is a measure of input-output linkages between industries that incorporates a 'distance' flavor. Our measure distinguishes the number of vertical production stages that an industry's product goes through until it is finally used by another industry by assigning larger weights to the value of input use with longer production chains. Hence our measure contains more information on the relation between two industries along the vertical production chain. We use this index to construct an aggregate measure of 'industry connectedness' of regions in the U.S. It measures the degree of industrial linkages of a region. We then empirically establish that each region's labor productivity is positively associated with the 'industry connectedness'. The result contributes to the large literature of agglomeration economies that the industrial linkage is one of the main sources of agglomeration economies and productivity growth, as emphasized by Marshall (1920). It also suggests that our index can serve as an alternative measure of the industrial linkages.
    Keywords: Inter-industry Distance; Regional Growth; Input-Output Linkages
    JEL: F43 F63 O11
    Date: 2016–12–30
  6. By: Terry Gregory; A.M. Salomons; Ulrich Zierahn
    Abstract: A fast-growing literature shows that technological change is replacing labor in routine tasks, raising concerns that labor is racing against the machine. This paper is the first to estimate the labor demand effects of routine-replacing technological change (RRTC) for Europe as a whole and at the level of 238 European regions. We develop and estimate a task framework of regional labor demand in tradable and non-tradable industries, building on Autor & Dorn (2013a) and Goos, Manning and Salomons (2014), and distinguish the main channels through which technological change affects labor demand. These channels include the direct substitution of capital for labor in task production, but also the compensating effects operating through product demand and local demand spillovers. Our results show that RRTC has on net led to positive labor demand effects across 27 European countries over 1999-2010, indicating that labor is racing with the machine. This is not due to limited scope for human-machine substitution, but rather because sizable substitution effects have been overcompensated by product demand and its associated spillovers. However, the size of the product demand spillover -- and therefore also RRTC's total labor demand effect-- depends critically on where the gains from the increased productivity of technological capital accrue.
    Keywords: Labor Demand, Routine-Replacing Technological Change, Tasks, Local Demand Spillovers
    Date: 2016
  7. By: Bazzi, Samuel; Chari, Amalavoyal V.; Nataraj, Shanthi; Rothenberg, Alexander D.
    Abstract: Despite the importance of agglomeration externalities in theoretical work, evidence for their nature, scale, and scope remains elusive, particularly in developing countries. Identification of productivity spillovers between firms is a challenging task, and estimation typically requires, at a minimum, panel data, which are often not available in developing country contexts. In this paper, we develop a novel identification strategy that uses information on the network structure of producer relationships to provide estimates of the size of productivity spillovers. Our strategy builds on that proposed by Bramoulle et al. (2009) for estimating peer effects, and is one of the first applications of this idea to the estimation of productivity spillovers. We improve upon the network structure identification strategy by using panel data and validate it with exchange-rate induced trade shocks that provide additional identifying variation. We apply this strategy to a long panel dataset of manufacturers in Indonesia to provide new estimates of the scale and size of productivity spillovers. Our results suggest positive productivity spillovers between manufacturers in Indonesia, but estimates of TFP spillovers are considerably smaller than similar estimates based on firm-level data from the U.S. and Europe, and they are only observed in a few industries.
    Date: 2017–02
  8. By: Orsatti, Gianluca; Pezzoni, Michele; Quatraro, Francesco (University of Turin)
    Abstract: By exploiting the EPO universe of patent data, we investigate how inventors’ teams recombinant capabilities drive the creation of Green Technologies (GTs).Results suggest the importance of recombinant creation patterns in fostering the generation of GTs. We also find diverse moderating effects of technological green experience and environmental regulation stringency on exploration behaviors. Precisely, the positive effect of team’s explorative behaviors is magnified for teams lacking technological green experience, even more in regimes of weak environmental regulation. Conversely, the effect of explorative behaviors is reduced for green experienced teams, especially in regimes of weak environmental regulation. Finally, we find positive effects of both team’s previous technological green experience and environmental regulation stringency.
    Date: 2017–03
  9. By: Stojkoski, Viktor; Popova, Kristina
    Abstract: Ever since Schumpeter, macroeconomists have argued that financial development has a large and direct effect on the long run wealth of a nation. In this paper, we empirically investigate this relationship for a panel of 16 South-Eastern and Central European countries over the period 1995-2014 by employing a state-of-the-art panel cointegration technique. We find that financial development has a positive effect on the income per capita. The effect is statistically robust to other estimation methods and is economically large since it is almost twice the size of the gross capital formation. Nevertheless, the panel cointegration tests indicate a possibility of an endogenous relationship between the phenomena.
    Keywords: panel-cointegration, financial development, economic growth
    JEL: C23 C51 E50 O11 O47 O52
    Date: 2016–01–24
  10. By: Nicola Daniele Coniglio (Università degli Studi di Bari "Aldo Moro"); Raffaele Lagravinese (Università degli Studi di Bari "Aldo Moro”); Davide Vurchio (Università degli Studi di Bari "Aldo Moro"); Massimo Armenise (ISTAT)
    Abstract: The set of available local ‘capabilities’ determines what an economy produces today (its static comparative advantage) and, at the same time, defines the trajectories that the process of structural change may take in the future. The Product Space (PS) framework developed in recent seminal works by economists and physicists suggests that path dependence characterizes the evolution of the production basket (Hausmann and Klinger, 2007; Hidalgo et al. 2007). These authors represent economies as sets of productive capabilities that can be combined in different ways to produce different products. Countries progressively change their production baskets and move towards goods that require capabilities that are already available; on the contrary radical structural change rarely happens. In this paper, we analyse the evolution over time of the production baskets in 107 Italian provinces (NUTS 3) and perform the first test on the PS hypothesis of path dependence. We investigate whether new products entering the provincial production baskets are non-randomly related to initial production baskets. We confirm the general tendency of path dependence, but highlight at the same time that a sizable share of ‘new products’ are an exception to this general pattern. These ‘random entries’ over the PS are particularly interesting for industrial policy since they represent radical deviations from the initial comparative advantage. In the final part of the paper, we investigate using parametric analysis the product and provincial characteristics that determine these deviations from the PS pattern.
    Keywords: product space; structural change; trade specialisation, Italy
    JEL: F1 R3 R11 R13
    Date: 2017–03
  11. By: Ham, John C.; Weinberg, Bruce A.
    Abstract: Using a new identification strategy and unique, rich data on Nobel laureates, we show that being in new or multiple locations, as measures of exposure to novel combinations of ideas, and the number of other local important innovators, all increase the probability that eventual Nobel laureates begin their Nobel prize winning work. Strikingly, and consistent with our identifying assumptions, we find that none of these measures increase the probability of doing Nobel prize winning work. Our results strongly suggest that spillovers affect the generation of ideas, and help us understand the weak spillover effects previously estimated in the economics literature.
    Keywords: Knowledge spillovers,Innovation,Nobel Prize,Duration models
    Date: 2017
  12. By: Otello Ardovino; Maria Rosaria Carillo; Luca Pennacchio (-)
    Abstract: The purpose of this paper is to investigate the determinants of inter-firm R&D collaborations in a particular type of innovation network, the technological districts created in Italy under a specific public policy to foster innovation and economic development at the local level. Using an original database containing information on the collaborative research projects activated by the districts, we find that the structural characteristics of the individual districts play an important role upon firms’ collaboration choices: the probability of cooperating is higher in districts in which universities have a major weight and in districts with governance more oriented towards market logic. As regards the governance, the estimates also reveal a strong moderating effect on other important determinants of R&D cooperation, such as geographical proximity and absorptive capacity.
    Keywords: : R&D cooperation, innovation networks, firm behaviour, dyadic regession model
    JEL: L14 O31 O32
    Date: 2016–09–05
  13. By: In Hwan JO; SENGA Tatsuro
    Abstract: Access to external finance is a major obstacle for small and young firms. Thus, providing subsidized credit to small and young firms is a widely used policy option across countries. We study the impact of such targeted policies on aggregate output and productivity and highlight indirect general equilibrium effects. To do so, we build a model of heterogeneous firms with endogenous entry and exit, wherein each firm may be subject to a forward-looking collateral constraint for external borrowing. Subsidized credit alleviates credit constraints facing small and young firms, which helps them achieve an efficient and larger scale of production. This direct effect, however, is either reinforced or offset by indirect general equilibrium effects. Factor prices increase as subsidized firms demand more capital and labor. As a result, higher production costs induce more unproductive incumbents to exit, while replacing them selectively with productive entrants. This cleansing effect reinforces the direct effect by enhancing the aggregate productivity. However, the number of firms in operation decreases in equilibrium, and this, in turn, depresses the aggregate productivity.
    Date: 2017–03
  14. By: Adrian Wood
    Abstract: During 1985–2015, globalization intensified the factor-endowment-related pattern of sectoral specialization. In skill-abundant developed countries, manufacturing became more skill-intensive. In land-scarce developing East Asia, labour-intensive manufacturing expanded, especially in China. In land-abundant developing regions, however, manufacturing stagnated or declined, while in land-scarce South Asia manufacturing was held back by low literacy and weak infrastructure. The shares of service sectors in output and employment increased in most countries, but mainly for reasons unrelated to globalization. Changes in sectoral structure in the decades ahead are subject to much uncertainty, but will continue to be shaped by differences among countries in land abundance and skill supplies.
    Date: 2017

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