nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2017‒04‒16
nineteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Optimal Clean Energy R&D Investments Under Uncertainty By Giacomo Marangoni; Gauthier De Maere; Valentina Bosetti
  2. What Drives Differences in Management? By Nicholas Bloom; Erik Brynjolfsson; Lucia Foster; Ron Jarmin; Megha Patnaik; Itay Saporta-Eksten
  3. Faraway, so close : coupled climate and economic dynamics in an agent-based integrated assessment model By Francesco Lamperti; Giovanni Dosi; Mauro Napoletano; Andrea Roventini; Sandro Sapio
  4. Regulation, Institutions and Productivity: New Macroeconomic Evidence From OECD Countries By Balázs Égert
  5. Joint and Cross-border Patents as Proxies for International Technology Diffusion By Chang, C-L.; McAleer, M.J.; Tang, J-T.
  6. Sophisticated jobs matter for economic development: an empirical analysis based on input-output matrices and economic complexity By Gala, Paulo; Camargo, Jhean; Magacho, Guilherme; Rocha, Igor
  7. Patent Networks, Collaboration Patterns, and National Innovation Systems. Sweden and Spain during the Second Industrial Revolution By Andersson, David E.; Galaso, Pablo; Saiz, Patricio
  8. Do migrants transfer productive knowledge back to their origin countries? By Jérome Valette
  9. The Role of Structural Transformation in Regional Productivity Growth and Convergence in Japan: 1874 - 2008 By Paul, Saumik; Fukao, Kyoji
  10. The links between global value chains and global innovation networks: An exploration By OECD
  11. Policy Distortions and Aggregate Productivity with Endogenous Establishment-Level Productivity By Jose-Maria Da-Rocha; Marina Mendes Tavares; Diego Restuccia
  12. New and Improved: Does FDI Boost Production Complexity in Host Countries? By Javorcik, Beata; Lo Turco, Alessia; Maggioni, Daniela
  13. Determinants of Demand for Technology in Relationships with Complementary Assets among Japanese Firms By Masayo Kani; Kazuyuki Motohashi
  14. Is the CO2 Emissions Reduction from Scale Change, Structural Change or Technology Change? Evidence from Non-metallic Sector of 11 Major Economies in 1995-2009 By Jin-Wei Wang; Hua Liao; Bao-Jun Tang; Ruo-Yu Ke; Yi-Ming Wei
  15. R&D Effects on Firm Productivity, Exports, and OFDI: Korean Firm-Level Analysis By Lee, Seungrae; Park, Ji Hyun; Kim, Hyuk-Hwang; Lee, Joun Won
  16. Structural shift and increasing variety of Korea, 1960-2010 : Empirical verification of the economic development model by the creation of new sectors By Jung-In Yeon; Andreas Pyka; Tai-Yoo Kim
  17. Intra-Industry Trade and Labour Market Adjustment: Indian Manufacturing Sector By Varma, Poornima; Issar Akash
  18. The effects of Chinese import penetration on firm innovation: Evidence from the Vietnamese manufacturing sector By Duc Anh Dang
  19. The Impact of the Opening of High-Speed Rail on Innovation By INOUE Hiroyasu; NAKAJIMA Kentaro; SAITO Yukiko

  1. By: Giacomo Marangoni (FEEM, CMCC and Politecnico di Milano); Gauthier De Maere (FEEM); Valentina Bosetti (FEEM, CMCC and Bocconi University)
    Abstract: The availability of technology plays a major role in the feasibility and costs of climate policy. Nonetheless, technological change is highly uncertain and capital intensive, requiring risky efforts in research and development of clean energy technologies. In this paper, we introduce a two-track method that makes it possible to maintain the rich set of information produced by climate-economy models while introducing the dimension of uncertainty in innovation ef- forts, without succumbing to computation complexity. In particular, we solve the problem of an optimal R&D portfolio by employing Approximate Dynamic Programming, through multiple runs of an integrated assessment model (IAM) for the purpose of computing the value function, and expert elicitation data to quantify the relevant uncertainties. We exemplify the methodology with the problem of evaluating optimal near-term innovation investment portfolios in four key clean energy technologies (solar, biofuels, bioelectricity and personal electric vehicle batteries), taking into account the uncertainty surrounding the effectiveness of innovation to improve the performance of these technologies. We employ an IAM (WITCH) which has a fairly rich description of the energy technologies and experts’ beliefs on future costs for the above-mentioned technologies. Focusing on Europe and its short-term climate policy commitments, we find that batteries in personal transportation dominate the optimal public R&D portfolio. The resulting ranking across technologies is robust to changes in risk-aversion, R&D budget limitation and assump- tions on crowding out of other investments. These results suggest an important upscaling of R&D efforts compared to the recent past.
    Keywords: Energy, Innovation, Technological Change, Uncertainty, Climate Policy
    JEL: O30 O33 Q40 Q41 Q50 Q55
    Date: 2017–04
  2. By: Nicholas Bloom; Erik Brynjolfsson; Lucia Foster; Ron Jarmin; Megha Patnaik; Itay Saporta-Eksten
    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. 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.
    Keywords: Management, productivity, competition, learning
    JEL: L2 M2 O32 O33
    Date: 2017–01
  3. By: Francesco Lamperti (Université Panthéon-Sorbonne - Paris 1 (UP1)); Giovanni Dosi (Laboratory of Economics and Management); Mauro Napoletano (Observatoire français des conjonctures économiques); Andrea Roventini (Laboratory of Economics and Management); Sandro Sapio (Universita degli studi di Napoli "Parthenope" [Napoli])
    Abstract: In this paperwe develop the first agent-based integrated assessment model, which offers an alternative to standard, computable general-equilibrium frameworks. The Dystopian Schumpeter meeting Keynes (DSK) model is composed of heterogeneous firms belonging to capital-good, consumption-good and energy sectors. Production and energy generation lead to greenhouse gas emissions, which affect temperature dynamics in a non-linear way. Increasing temperature triggers climate damages hitting, at the micro-level, workers’ labor productivity, energy efficiency, capital stock and inventories of firms. In that, aggregate damages are emerging properties of the out-of-equilibrium interactions among heterogeneous and boundedly rational agents. We find the DSK model is able to account for a wide ensemble of micro and macro empirical regularities concerning both economic and climate dynamics. Moreover, different types of shocks have heterogeneous impact on output growth, unemployment rate, and the likelihood of economic crises. Finally, we show that the magnitude and the uncertainty associated to climate change impacts increase over time, and that climate damages much larger than those estimated through standard IAMs. Our results point to the presence of tipping points and irreversible trajectories, thereby suggesting the need of urgent policy interventions.
    Keywords: Climate change; Agent-based model; Integrated assessment; Macroeconomic dynamics; Climate damages
    JEL: C63 Q40 Q50 Q54
    Date: 2017–04
  4. By: Balázs Égert
    Abstract: Empirical research on the drivers of multi-factor productivity (MFP) is abundant at the firm- and industry level but surprisingly little research has been conducted on the determinants of MFP at the macroeconomic level. In this paper, we seek to understand the drivers of country-level MFP with a special emphasis on product and labour market policies and the quality of institutions. For a panel of OECD countries, we find that anticompetitive product market regulations are associated with lower MFP levels and that higher innovation intensity and greater openness go in tandem with higher MFP. We also find that the impact of product market regulations on MFP may depend on the level of labour market regulations. Better institutions, a more business friendly environment and lower barriers to trade and investment amplify the positive impact of R&D spending on MFP. Finally, we also show that cross-country MFP variations can be explained to a considerable extent by cross-country variation in labour market regulations, barriers to trade and investment and institutions (including corruption).
    Keywords: multi-factor productivity, trade openness, innovation, product market regulation, labour market regulation, institutions, policy interactions, OECD.
    JEL: C23 C51 J2 L43 L51 O4
    Date: 2017
  5. By: Chang, C-L.; McAleer, M.J.; Tang, J-T.
    Abstract: With the advent of globalization, economic and financial interactions among countries have become widespread. Given technological advancements, the factors of production can no longer be considered to be just labor and capital. In the pursuit of economic growth, every country has sensibly invested in international cooperation, learning, innovation, technology diffusion and knowledge, and outward direct investment. In this paper, we use a panel data set of 40 countries from 1981 to 2008 and a negative binomial model, using a novel set of cross-border patents and joint patents as proxy variables for technology diffusion, in order to investigate such diffusion. The empirical results suggest that, if it is desired to shift from foreign to domestic technology, it is necessary to increase expenditure on R&D for business enterprises and higher education, exports and technology. If the focus is on increasing bilateral technology diffusion, it is necessary to increase expenditure on R&D for higher education and technology. It is also found that outward foreign direct investment has no significant impact on either joint or cross-border patents, whereas inward foreign direct investment has a significant negative impact on cross-border patents but no impact on joint patents. Moreover, government expenditure on higher education has a significant impact on both cross-border and joint patents
    Keywords: International Technology Diffusion, Exports, Imports, Joint Patent, Cross-border Patent, R&D, Negative Binomial Panel Data
    JEL: F14 F21 O30 O57
    Date: 2016–12–01
  6. By: Gala, Paulo; Camargo, Jhean; Magacho, Guilherme; Rocha, Igor
    Abstract: A wide range of economic development theoreticians have discussed the manufacturing sector’s properties as an engine for economic growth. More recently, the sophisticated services sector began to share similar characteristics with the industrial sector as a driver for economic growth, particularly as a locus of technological innovation. This paper considers the symbiotic relationship between these two sectors, and assesses their importance in the technological development of countries. More precisely, this study uses economic complexity analysis and input-output matrices to assess the importance of employment creation in advanced sectors for development of countries. Results show that in the long-run, economic development depends on the effort and the ability of countries to generate employment in advanced sectors.
    Date: 2017–01–24
  7. By: Andersson, David E. (Department of Business Studies, Uppsala University); Galaso, Pablo (Instituto de Economía, Universidad de la República); Saiz, Patricio (Departamento de Análisis Económico: Teoría Económica e Historia Económica. Universidad Autónoma de Madrid)
    Abstract: Sweden and Spain have developed very distinct systems of innovation over the long term. The former has a highly innovative economy while the latter drags serious problems in science and technology. However, during the first half of the nineteenth century both countries were latecomers to the industrial revolution in the European periphery with similar economic, technological, and institutional challenges ahead. In this paper, we hypothesize that one possible reason for this long-term divergence lies in the different collaboration patterns that emerge from interactions among innovative agents. To analyse such cooperation patterns we apply social network analysis methods and study co-patent networks in Sweden and Spain during the second industrial revolution (1878-1914). The results demonstrate that collaboration among innovators and openness to foreign influence was greater in Sweden than in Spain. This research opens new paths for further studies both on economic history and innovation networks dynamics.
    Keywords: collaboration, innovation networks, patents, social network analysis, Sweden, Spain, second industrial revolution
    JEL: N01 N73 O30 O33 Z13
    Date: 2017–02
  8. By: Jérome Valette (CERDI - Centre d'études et de recherches sur le developpement international - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper analyses whether international migrants contribute to foster innovation in developing countries by inducing a transfer of productive knowledge from destination to the migrants’ home countries. Using the Economic Complexity Index as a proxy for the amount of productive knowledge embedded in each countries, and bilateral migrant stocks to 20 OECD destination countries, we show that international emigration is a strong channel of technological transmission. Diasporas foster the local adoption of new technologies by connecting high technology countries with low ones, reducing the uncertainty surrounding their profitability. Our empirical results support the fact that technological transfers are more likely to occur out of more technologically advanced destinations and when emigration rates particularly high.
    Keywords: International migration,Technology transfer,Export sophistication,Diaspora externalities.
    Date: 2017–01–03
  9. By: Paul, Saumik; Fukao, Kyoji
    Abstract: Japan’s regional convergence of productivity levels throughout the 20th century can be best described as a cumulative process of “catching up, forging ahead, and falling behind”. Using a novel dataset spanning 135 years (1874 – 2008), this study finds support for a crucial role played by structural transformation in convergence. The pace of productivity catch-up and convergence accelerated in the mid-1950s with the help of structural transformation, particularly in the period from 1955–1965. Structural transformation explains, on average, about 30% of the aggregate productivity growth, and its effect intensified in prefectures with faster movements of labor across sectors and larger sectoral productivity gaps. However, since the early 1970s, its contribution to the convergence was frequently offset by within-sector productivity growth, in turn thwarting the pace of convergence. These counter-balancing effects contributed to the diverse pathways of productivity catch-up at the prefecture level.
    Keywords: Economic Growth and Aggregate Productivity, Japan
    JEL: O40 O10
    Date: 2017–02
  10. By: OECD
    Abstract: Economic globalisation has given rise to two types of networks that stretch out across OECD and emerging economies. At the one side, global value chains (GVCs) can be thought of as the “material” transfers of goods and services (final as well as intermediate) across borders. At the other side, Global Innovation Networks (GINs) refer to the transfers of intangibles and immaterial assets between countries. Concerns are increasingly raised in policy discussions that countries are not able to capture the value of their innovative activities, hence the clear need to better understand the interdependencies between these two types of networks.
    Date: 2017–04–10
  11. By: Jose-Maria Da-Rocha; Marina Mendes Tavares; Diego Restuccia
    Abstract: What accounts for differences in output per capita and total factor productivity (TFP) across countries? Empirical evidence points to resource misallocation across heterogeneous production units as an important factor. We study resource misallocation in a model where establishment-level productivity is endogenous and responds to the same policy distortions that create misallocation. In this framework, policy distortions not only misallocate resources across a given set of productive units (static effect), but also create disincentives for productivity improvement (dynamic effect) thereby affecting the productivity distribution and further contributing to lower aggregate output and productivity. The dynamic effect is substantial quantitatively. Reducing the dispersion in revenue productivity in the model by 25 percentage points to the level of the U.S. benchmark implies an increase in aggregate output and TFP by a factor of 2.9-fold. Improved resource allocation accounts for 42 percent of the gain, whereas the change in the productivity distribution accounts for the remaining 58 percent.
    Keywords: distortions, misallocation, investment, endogenous productivity, establishments.
    JEL: O1 O4 E0 E1
    Date: 2017–04–08
  12. By: Javorcik, Beata; Lo Turco, Alessia; Maggioni, Daniela
    Abstract: This paper examines the relationship between the presence of foreign affiliates and product upgrading by Turkish manufacturing firms. The analysis suggests that Turkish firms in sectors and regions more likely to supply foreign affiliates tend to introduce more complex products, where complexity is captured using a measure developed by Hausmann and Hidalgo (2009). This finding is robust to controlling for omitted variables, sample selection and potential simultaneity bias. It is also in line with the view that inflows of foreign direct investment stimulate upgrading of indigenous production capabilities in host countries.
    Keywords: Backward Linkages; FDI; Product Innovation; Production Upgrading; Turkey
    JEL: D22 F23 L20
    Date: 2017–03
  13. By: Masayo Kani; Kazuyuki Motohashi
    Abstract: There has been growing interest in open innovation, where firms create value by combining internal and external ideas. Technology insourcing, however, has not been satisfactorily investigated in the empirical literature compared to technology outsourcing. In this paper, we examine the determinants of external technology sourcing by the type of counterpart in the new product development (NPD) process. We use a novel dataset at the product level, compiled by the Research Institute of Economy, Trade and Industry in 2011. We distinguish whether the technology partner is also a business partner, such as a supplier or customer. Our findings show that when the technology partner is not a business partner, patents play an important role in moderating the transaction costs in a partnership. On the other hand, when the technology partner is also a business partner, we find cospecialisation of technology and its complementary assets with the partner firm.
    Keywords: technology sourcing, co-specialisation, complementary assets, division of innovative labour
    JEL: D22 L22 O32
    Date: 2017–03
  14. By: Jin-Wei Wang; Hua Liao; Bao-Jun Tang; Ruo-Yu Ke; Yi-Ming Wei (Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology)
    Abstract: The contribution of non-metallic sector to global CO2 emissions is increasing. However, there are very few studies on non-metallic sector CO2 emissions from international comparative perspective. This paper proposes an integrated model employing LMDI (Logarithmic Mean Divisia Index) decomposition technique and TOPSIS (the Technique for Order Preference by Similarity to Ideal Solution) method to contribute to the existing literature by filling the gap that the drivers of aggregate and national level non-metallic sector CO2 emissions and its impacts on CO2 emissions reduction have not been estimated by relevant models. First, we analyze drivers of non-metallic sector CO2 emissions in BRIC countries and G7 countries using LMDI decomposition method. Second, we evaluate the low-carbon development of non-metallic sector in the 11 major economies from a comprehensive viewpoint of main drivers using TOPSIS assessment model. Finally, based on the results of the model, this paper presents some implications for the non-metallic sector CO2 emissions reduction and low-carbon development.
    Keywords: CO2 emissions; Non-metallic sector; Cement; Logarithmic mean divisia index decomposition; WIOD database
    JEL: Q54 Q40
    Date: 2017–03–01
  15. By: Lee, Seungrae (Korea Institute for International Economic Policy); Park, Ji Hyun (Korea Institute for International Economic Policy); Kim, Hyuk-Hwang (Korea Institute for International Economic Policy); Lee, Joun Won (Korea Institute for International Economic Policy)
    Abstract: This report empirically analyzes the effects of firm R&D on firm performance, particularly on firm productivity, exports, and outward foreign direct investment (OFDI) by using Korean firm-level data. While this report lies in line with prior literatures that examined firm R&D effects on firm performance, we further explores the pathway connection between the two. That is, we not only examine firm R&D effects on particular firm performance, but also study the significance of firm productivity as a pathway that links firm R&D with firm exports and OFDI. Our estimation results indicate that firm R&D significantly heightens firm performance, particularly by showing stronger impact on firm performance over time. On the other hand, by using firm productivity as a mediator variable in a triangular structural equation to estimate direct R&D effects and indirect R&D effects through firm productivity, our results show that firm R&D has significant effects on export and OFDI increase directly and indirectly through firm productivity increase. Examining direct and indirect firm R&D effects across different industry sectors, we found that firm R&D is significantly effective on exports and OFDI among capital-intensive sectors, while it does not exhibit a significant influence among labor-intensive sectors. Our estimation results imply that while R&D promotion policies towards the private sector are effective for improving firm performance, these policies would yield more effective consequences if they are targeted at specific industry sectors. In particular, our results suggest that R&D promotion policies towards firms inside capital-intensive sectors would be more effective on exports and OFDI than policies towards firms inside labor-intensive sectors.
    Keywords: Firm R&D; Productivity; Exports; OFDI
    Date: 2015–10–08
  16. By: Jung-In Yeon; Andreas Pyka; Tai-Yoo Kim
    Abstract: In this paper, we examine the experiences of Korean economy to verify the theoretical knowledge of economic development and structural change. To demonstrate the generalized hypotheses in structural changes, input-output tables of Korea, from 1960 to 2010, are analyzed. Our interest in taking a time series form of Input-output tables originates from the following two questions. Firstly, we inquire whether the change of Korean industrial structure has been followed a certain pattern of structural shift as well as increasing variety. Secondly, if so, it is questioned how the meso-level conditions for the economic development could be explained out of such a pattern. To complete the set of answers, we start from adopting a model of the economic development by the creation of new sectors, TEVECON model, as our theoretical framework. Using this growth model, it is preliminarily experimented how the structural change could impact on the economic development, and then, we figured out how the empirical analysis of Korean economy verifies and more deepens our understandings of the structural change and development. Therefore, this paper contributes to empirically identify the theoretical knowledge of economic development by the emerging of key sectors as well as the creation of new sectors. To complete the set of answers, we start from choosing the model of the economic development by the creation of new sectors, TEVECON, as our theoretical framework. Using this simulation model, it is preliminarily experimented how the different scenarios upon meso-level conditions could impact on the economic development. In the other hand, as analyzing the classification of industries over time and each set of sectoral outcomes and demand-induced outputs, we figured out how the empirical analysis of Korean economy supported and more deepened theoretical understandings of structural change and development. Accordingly, the presented empirical results provide a starting point to expand the model, TEVECON, into a history-friendly model, bridging the gap between the artificial world of formal theories and the real world of historical experiences. In this regard, this paper is the first to identify and enhance empirically the theoretical model of economic development by the creation of new sectors.
    Keywords: South Korea, Growth, Sectoral issues
    Date: 2016–07–04
  17. By: Varma, Poornima; Issar Akash
    Abstract: The study investigates the role of trade, labor market regulations and institutions on labour adjustment costs. The study develops a linear dynamic panel model using quasi-maximum likelihood fixed effects estimator. Using a panel data of 40 Indian manufacturing sectors we find that the better labour market regulations and institutions reduce the labour market adjustment costs. This result using both the set of proxies for labour adjustment costs -job re-allocation rates as well as absolute employment change- supported this view. We find the same to be true when examining the male and female labour adjustment costs individually. Nonetheless, the study did not find any evidence to support the impact of trade expansion as well as the structure of trade expansion on labour market adjustment costs. The results are robust to static and dynamic panel methods.
  18. By: Duc Anh Dang
    Abstract: This paper evaluates the impact of Chinese import penetration on the innovation of Vietnamese manufacturing firms from 2011 to 2015, exploiting variations in import exposure by industry specialization and instrumenting for Chinese import penetration using Chinese global exports. Contrary to the existing literature, the paper finds no systematic evidence that rising imports from China make domestic firms adopt new technologies or innovations in their products.
    Date: 2017
  19. By: INOUE Hiroyasu; NAKAJIMA Kentaro; SAITO Yukiko
    Abstract: This paper investigates how the reduction of the travel costs through improvement in transportation infrastructure lead to knowledge diffusion. Using the case of the opening of the Nagano-Hokuriku shinkansen, and applying the difference-in-differences approach, we estimate the impact of the high-speed rail on innovative activities along the line. We find that after the opening of the high-speed rail, innovative activities by establishments along the line significantly increased. Furthermore, collaborative patents across establishments along the line and citations of patents published by the establishments in Tokyo increased. These imply that the innovative activities along the line are increased through knowledge diffusion from nearby establishments and those in Tokyo.
    Date: 2017–03

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