nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2017‒06‒11
fourteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Empirical Models of Firms and Industries By Aguirregabiria, Victor; Slade, Margaret
  2. Do toll-free highways foster firm formation and employment growth? Results from a quasi-natural experiment By Audretsch, David B.; Dohse, Dirk; dos Santos, João Pereira
  3. Regulation, institutions and productivity: New macroeconomic evidence from OECD countries By Balázs Égert
  4. Regional variation of innovation activity in Poland. The positive role of location in metropolitan areas affirmed By Tomasz; Anna Golejewska
  5. Estimating technological spillover effects in presence of knowledge heterogeneous foreign subsidiaries: Evidence from Colombia By Nadia Albis; Isabel Álvarez
  6. Risk Analysis of Product Innovation Using Markov Process Methodology By Thangamani Gurunathan
  7. Estimating Mark-ups and the Effect of Product Market Regulations in Selected Professional Services Sectors: A Firm-level Analysis By Anna Thum-Thysen; Erik Canton
  8. Using Input–Output Analysis Framework to Explain Economic Diversification and Structural Transformation in Bangladesh By Mercer-Blackman , Valerie; Foronda , Amador; Mariasingham , Mahinthan J.
  9. Structural Change and the China Syndrome: Baumol vs Trade Effects By Coricelli, Fabrizio; Ravasan, Farshad R
  10. Innovation and product market concentration: Schumpeter, Arrow and the inverted-U shape curve By F. Delbono; L. Lambertini
  11. Entrepreneurship and policy dynamics: a theoretical framework By Trofimov, Ivan
  12. Testing for localization: A new approach By Yasusada Murata; Ryo Nakajima; Ryuichi Tamura
  13. Skilling and Deskilling Technological Change in Classical Economic Theory and Its Empirical Evidence By Florian Brugger; Christian Gehrke
  14. Green Growth Opportunities for Asia By Fankhauser, Sam; Kazaglis, Alex; Srivastav, Sugandha

  1. By: Aguirregabiria, Victor; Slade, Margaret
    Abstract: We review important developments in Empirical Industrial Organization (IO) over the last three decades. The paper is organized around six topics: collusion, demand, productivity, industry dynamics, inter-firm contracts, and auctions. We present models that are workhorses in empirical IO, and describe applications. For each topic, we discuss at least one empirical application using Canadian data.
    Keywords: Collusion; demand for differentiated products; dynamic structural models; empirical auction models; Empirical IO; inter-firm contracts; production functions
    JEL: C57 L10 L20 L30 L40 L50
    Date: 2017–06
  2. By: Audretsch, David B.; Dohse, Dirk; dos Santos, João Pereira
    Abstract: The paper studies the impact of a switch from free to charged highway provision on firm numbers and private sector employment in a cross-section of Portuguese municipalities. It exploits the fact that highway tolls in Portugal were unexpectedly raised in reaction to the financial crisis to establish causality. Results from a difference-in-differences analysis indicate a significantly negative effect of highway tolls on number of firms and employment in treated municipalities vis-à-vis the control group. We also find negative effects of tolls in municipalities not directly traversed by the treated highways, with larger firms and manufacturing firms being most strongly affected.
    Keywords: infrastructure provision,regional economic development,quasi-natural experiment
    JEL: R48 L25 R12
    Date: 2017
  3. 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: human capital, measurement, multi-factor productivity, OECD
    JEL: C2 J2 O4
    Date: 2017–06–08
  4. By: Tomasz (Faculty of Economics, University of Gdansk; Institute for Development); Anna Golejewska (Faculty of Economics, University of Gdansk)
    Abstract: Poland’s innovation performance is unsatisfactory. In the context of the required shift of the present mostly-extensive growth paradigm to more knowledge and innovation-intensive one has to take into account the regional variation in innovative and economic activity in this middle-sized open economy in order to fine-tune its regional development and innovation policies. Using the firm-level data for manufacturing sector aggregated to NUTS3 regions as well as firm-level data from a unique qualitative survey carried out by the Institute for Development we try to identify the determinants of variation in innovative activity of firms within Poland in order to account for regional differences in particular between metropolitan and non-metropolitan regions. The analysis at aggregated NUTS3 level does not bring satisfactory results. The difference between metropolitan and non-metropolitan regions is statistically insignificant and the overall results are mixed. In the second step, we apply more sophisticated econometric methods controlling for firm-specific, sector-specific and region-specific features as suggested in the literature of the subject identifying the positive effect of location within metropolitan regions on the innovative performance of companies. Furthermore, the results point to the significance of firm-specific, internal, as well as region-specific – factors external to a firm, nonetheless, supporting the notion of regional innovation systems in which firms are embedded.
    Keywords: innovation, regional innovation system, regional economic performance, firm-level, logit model, Poisson model, negative binomial model
    JEL: O30 R11 R12 R58 C21
    Date: 2017–05
  5. By: Nadia Albis (Instituto Complutense de Estudios Internacionales (ICEI) and Observatorio Colombiano de Ciencia y Tecnología.); Isabel Álvarez (Instituto Complutense de Estudios Internacionales (ICEI). Universidad Complutense de Madrid.)
    Abstract: This paper analyses the effects of heterogeneous foreign subsidiaries in the generation of knowledge spillovers beneficial for domestic owned firms. The empirical analysis uses firm-level panel data for manufacturing firms in Colombia for the period 2003-2012. We identify two different types of subsidiaries according to their technological responsibilities and mandates, to empirically test the existence of differential effects on domestic firms’ productivity. Our results confirm that only those subsidiaries oriented to creative technological activities exert significant and positive effects, while those subsidiaries oriented to exploitative technological activities do not generate knowledge spillover effects. These findings contribute to arguments in the existing literature supporting the distinctive role and relevance of heterogeneous foreign subsidiaries in developing host contexts.
    Keywords: Technological spillovers; Multinational; Subsidiaries; Firms; Heterogeneity.
    Date: 2017
  6. By: Thangamani Gurunathan (Indian Institute of Management Kozhikode)
    Abstract: Product Innovation is a key aspect of any company and central to the New Product Development (NPD) process. Companies must take risks to launch innovative new products speedily and successfully for its survival and sustainability. Despite meticulous efforts by companies to bring innovations, most of them are failing in the market place and hence the ability to diagnose and manage risk is a very important activity in high risk innovations. This paper presents a new Product Innovation and Development (PID) process and a quantitative methodology for risk assessment. FMEA (Failure Modes and Effects Analysis) and Markov process analysis are combined and presented as the risk assessment method. This methodology also investigates the overall Product innovation and Development process and explores various risks, categorize them according to their sources, assess those risks and explores various risk mitigation techniques. The methodology is demonstrated using a case study on a new innovative home appliance project.
    Date: 2017–05
  7. By: Anna Thum-Thysen; Erik Canton
    Abstract: In this paper we estimate mark-ups and their association with product market regulations (PMR) in professional services sectors using the Orbis firm-level database for 13 EU member states. We will concentrate on engineering and accounting. Results indicate a significant effect of PMR on mark-ups, which confirms findings based on sectoral data (cf. Thum-Thysen and Canton, 2015) but a more granular analysis on the firm level gives additional insights. Compared to estimates of mark-ups based on sectoral data, the mark-up levels in the two analysed sectors using firm-level data are found to be higher. This may be due to a more granular sectoral definition, only covering regulated professions, where firms can gain market power and charge higher mark-ups. The new empirical findings could be useful for the analytical work on estimating the impact of structural reforms.
    JEL: D40 E31 L51
    Date: 2017–05
  8. By: Mercer-Blackman , Valerie (Asian Development Bank); Foronda , Amador (Asian Development Bank); Mariasingham , Mahinthan J. (Asian Development Bank)
    Abstract: Existing literature on economic growth and structural change relies on trade data to make pronouncements about a country’s competitiveness and long-term growth prospects through the acquisition of capabilities. However, insufficient data give us a limited view of what is happening within the domestic economy, and how the development of manufacturing through links in the production process leads to the export of intermediate or final products. Using input–output data, this paper devises an agglomeration indicator to measure economic diversification and to compare Bangladesh with other key economies. In the process, we shed light on the symbiotic relationship between manufacturing and services as the country develops. Despite Bangladesh’s astounding growth over the past 15 years, diversification has been somewhat slower than expected for its level of development.
    Keywords: Bangladesh; business services; economic diversification; global value chains; input–output tables; ready-made garments; structural transformation
    JEL: D24 D57 F15 O14
    Date: 2017–05–24
  9. By: Coricelli, Fabrizio; Ravasan, Farshad R
    Abstract: In the process of economic development, the share of manufacturing in total employment first increases and then declines after incomes per capita have passed a given threshold. Advanced economies are all beyond that threshold and thus experience a secular decline in the share of manufacturing. Baumol explained such a process of deindustrialization as resulting from faster productivity growth in manufacturing relative to services. More recently, trade with emerging economies, especially with China, is often identified as the main determinant of deindustrialization in advanced economies. Disentangling the trade channel from the traditional productivity channel is a complicated task. In this paper, we develop a simple model of structural change in an open economy to derive empirical implications, which we analyze for a sample of OECD countries. The model is based on trade between advanced and emerging economies. In a closed economy framework, faster productivity in manufacturing induces a fall in the share of manufacturing in total employment but not in total value added. By contrast, in open economies, what matters is not only the relative growth of productivity in manufacturing versus domestic services, but also relative productivity growth of domestic versus foreign manufacturing. When productivity growth of domestic manufacturing is faster than that of services but slower than that of foreign manufacturing, the share of manufacturing in advanced economies may fall, both in terms of value added and of employment. We call this phenomenon "twin deindustrialization." We exploit the comparison between estimates for the employment and value added shares to identify the relevance of the trade channel relative to the pure productivity channel. We find significant and quantitatively relevant effects of trade on structural change in advanced economies. Furthermore, we show that the strength of the trade effect depends on the nature of technological progress occurring in emerging economies.
    Keywords: deindustrialization; open economies; structural change
    JEL: E21 E22 F31 F41 O40
    Date: 2017–05
  10. By: F. Delbono; L. Lambertini
    Abstract: We investigate the relationship between market concentration and industry innovative effort within a familiar two-stage model of R&D race in which fi rms compete à la Cournot in the product market. With the help of numerical simulations, we show that such a setting is rich enough to generate Arrovian, Schumpeterian and inverted-U curves. We interpret these different patterns on the basis of the relative strength of the technological incentive and the strategic incentive.
    JEL: L13 O31
    Date: 2017–06
  11. By: Trofimov, Ivan
    Abstract: This paper examines the current state of entrepreneurship theory in the public domain and proposes a theoretical framework applying the concepts of entrepreneurship developed by I. M. Kirzner and J. A. Schumpeter in the field of economics to the field of public policy. A distinction is made between political and policy entrepreneurship. Three generic policy entrepreneurship functions (policy leadership, innovation and coordination) which are performed by specific means by a variety of actors scattered across the policy system, are identified. It is shown that these entrepreneurial functions can provide a complete explanation of adjustments taking place during policy regime formation (including agenda setting and policy negotiation). It is postulated that during this process (denoted as policy equilibration), the complementarity of entrepreneurship functions is essential. The paper also considers possible exercise of policy entrepreneurship functions in the trade policy domain and examines what actors can act as entrepreneurs.
    Keywords: Entrepreneurship; trade policy; agenda setting
    JEL: D78 F13 L26
    Date: 2017
  12. By: Yasusada Murata (Nihon University Population Research Institute (NUPRI); and University Research Center, Nihon University.); Ryo Nakajima (Faculty of Economics, Keio University); Ryuichi Tamura (Faculty of Economics, Keio University)
    Abstract: Recent empirical studies document that knowledge spillovers attenuate and industry localization decays with distance. It is thus imperative to detect localization accurately especially at short distances. We propose a new approach to testing for localization that corrects the first-order bias at and near the boundary in existing methods while retaining all desirable properties at interior points. Employing the NBER U.S. Patent Citations Data File, we illustrate the performance of our localization measure based on local linear density estimators. Our results suggest that the existing kernel density methods and regression approaches can be substantially biased at short distances.
    Keywords: localization, knowledge spillovers, local linear density, boundary bias, micro-geographic data
    JEL: R12 O31
    Date: 2017–05–03
  13. By: Florian Brugger (Department of Sociology, University of Graz); Christian Gehrke (Department of Economics, University of Graz)
    Abstract: The paper provides a summary account of the views of the classical political economists on the effects of technical change on the demand for labour, and in particular for skilled versus unskilled labour. The views of the classical economic theorists, from Smith to Ricardo, Babbage, Ure and Marx, are then contrasted with the historical record of the bias of technical change with regard to de-qualifying and skill-enhancing tendencies in the 18th and 19th century that emerges from studies of economic historians. The paper shows that some of the classical economists made a serious effort to account for heterogeneous labour in a changing technical environment. While Smith and Marx envisaged the de-qualification of the workforce as the main characteristic of technological development and as a purposely intended consequence of the introduction of new technologies, other authors like Babbage also took into account capital - skilled labour complementarities and skill-enhancing effects of technological change. While for Smith the deskilling bias is a by-product of progress, Marx and Ure regarded directed technological change as a bourgeois weapon in the class struggle for the reduction of the bargaining power of the proletariat. Economic historians found strong confirmation for Marx’s hypotheses that technical change was used as a weapon against the proletariat. But most empirical studies found no evidence for a deskilling tendency of industrialization as a whole. According to those studies industrialization was accompanied by a polarization of labour. On the one hand, industrialization deskilled part of the labour force and on the other hand it sharply raised the demand for highly skilled workers.
    Date: 2017–05–31
  14. By: Fankhauser, Sam (Vivid Economics); Kazaglis, Alex (Vivid Economics); Srivastav, Sugandha (Vivid Economics)
    Abstract: This paper assesses the low-carbon economy in Asia: how large it is today and how well it will fare in the future. Using patent and trade data, it analyzes the potential of Asian economies to capture value from the design and export of low-carbon technologies, acknowledging that these are only two dimensions of a multidimensional low-carbon economy. It conducts country-level analysis to identify which technologies different countries can specialize in and potentially scale up. The work shows that, overall, Asia has an innovation specialization and revealed comparative advantage in climate change mitigation technologies. Particular strengths include efficient lighting, photovoltaics, and energy storage technologies. Further opportunities include nuclear and smart grids. However, within Asia, there are regional disparities, with countries such as the People’s Republic of China, Japan, and the Republic of Korea outperforming others. This paper highlights how the analytical framework it presents can be used to strategically inform environmental policy makers and concludes with an overview of the green growth policy tool kit.
    Keywords: climate change; economic growth; energy; environment; urban development
    JEL: Q42 Q43 Q54 Q56
    Date: 2017–01–27

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