|
on Technology and Industrial Dynamics |
| By: | Saleh Albeaik; Mary Kaltenberg; Mansour Alsaleh; Cesar A. Hidalgo |
| Abstract: | How much knowledge is there in an economy? In recent years, data on the mix of products that countries export has been used to construct measures of economic complexity that estimate the knowledge available in an economy and predict future economic growth. Here we introduce a new and simpler metric of economic complexity (ECI+) that measures the total exports of an economy corrected by how difficult it is to export each product. We use data from 1973 to 2013 to compare the ability of ECI+, the Economic Complexity Index (ECI), and Fitness complexity, to predict future economic growth using 5, 10, and 20-year panels in a pooled OLS, a random effects model, and a fixed effects model. We find that ECI+ outperforms ECI and Fitness in its ability to predict economic growth and in the consistency of its estimators across most econometric specifications. On average, one standard deviation increase in ECI+ is associated with an increase in annualized growth of about 4% to 5%. We then combine ECI+ with measures of physical capital, human capital, and institutions, to find a robust model of economic growth. The ability of ECI+ to predict growth, and the value of its coefficient, is robust to these controls. Also, we find that human capital, political stability, and control of corruption; are positively associated with future economic growth, and that income is negatively associated with growth, in agreement with the traditional growth literature. Finally, we use ECI+ to generate economic growth predictions for the next 20 years and compare these predictions with the ones obtained using ECI and Fitness. These findings improve the methods available to estimate the knowledge intensity of economies and predict future economic growth. |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1707.05826&r=tid |
| By: | Dora Benedek; Pragyan Deb; Borja Gracia; Sergejs Saksonovs; Anna Shabunina; Nina T Budina |
| Abstract: | Some countries support smaller firms through tax incentives in an effort to stimulate job creation and startups, or alleviate specific distortions, such as financial constraints or high regulatory or tax compliance costs. In addition to fiscal costs, tax incentives that discriminate by firm size without specifically targeting R&D investment can create disincentives for firms to invest and grow, negatively affecting firm productivity and growth. This paper analyzes the relationship between size-related corporate income tax incentives and firm productivity and growth, controlling for other policy and firm-level factors, including product market regulation, financial constraints and innovation. Using firm level data from four European economies over 2001–13, we find evidence that size-related tax incentives that do not specifically target R&D investment can weigh on firm productivity and growth. These results suggest that when designing size-based tax incentives, it is important to address their potential disincentive effects, including by making them temporary and targeting young and innovative firms, and R&D investment explicitly. |
| Keywords: | Productivity;size-based taxation, growth, structural reforms |
| Date: | 2017–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:17/139&r=tid |
| By: | Steve Raymond (UNC); Lukas Schmid (Duke University); Anastasios Karantounias (Federal Reserve Bank of Atlanta); Mariano Croce (University of North Carolina at Chapel H) |
| Abstract: | In times when elevated government debt raises concerns about dimmer global growth prospects, we ask: How can the government provide incentives for innovation in a fiscally sustainable way? We address this question by examining the Ramsey problem of finding optimal tax and subsidy schemes in a model in which growth is endogenously sustained by risky innovation. We characterize the shadow value of growth and entry in the innovation sector. We find that a profit tax is required to replicate the first-best in order to balance the positive spillovers of innovative activity. At the second-best, the profit tax is designed to optimally respond to growth shocks above and beyond what is prescribed by the standard tax-smoothing incentives in economies with exogenous growth. The interplay of risk and innovation opens a new margin for optimal taxation. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:109&r=tid |
| By: | Hui He; Hanya Li; Jinfan Zhang |
| Abstract: | The paper analyses the effect of the stock market on firm innovation through the lens of initial public offering (IPO) using uniquely matched Chinese firm-level data. We find that IPOs lead to an increase in both the quantity and quality of firm innovation activity. In addition, IPOs expand a firm’s scope of innovation beyond its core business. The impact of IPOs on firm innovation varies across financial constraints, corporate governance, and ownership structures. Our results further illustrate that IPOs induce a firm to increase the number of inventors and enable better retention of existing inventors after the IPO. Finally, we show that the enhanced innovation activity resulting from IPOs increases a firm’s Tobin’s Q in the long run. |
| Date: | 2017–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:17/147&r=tid |
| By: | Petr Sedlacek (Bonn University); Benjamin Pugsley (Federal Reserve Bank of NY); Vincent Sterk (University College London) |
| Abstract: | There are vast differences in the growth patterns of firms: high-growth, young businesses, or “gazelles†, account for the vast majority of employment growth at incumbent firms. Using a large administrative panel data set for the United States, we provide evidence that ex-ante differences in the growth potential of firms account for most of the size heterogeneity across firms of a given age. First, we estimate a reduced-form employment process, allowing for heterogeneity in steady-state levels and deriving parameter identification from the autocovariance function of employment. Next, we estimate a general equilibrium firm dynamics model and explore the implications for firm selection and the macro effects of firm-level distortions. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:196&r=tid |
| By: | Antonelli, Cristiano (University of Turin) |
| Abstract: | This paper accommodates the new understanding of the limited exhaustibility of knowledge into the Schumpeterian frame of the creative response to articulate a comprehensive model of Schumpeterian growth. The limited exhaustibility of knowledge and its transient appropriability favor the accumulation of a stock of quasi-public knowledge. The increasing stock of quasi-public knowledge together with appropriate knowledge governance conditions account for the secular decline of knowledge costs and the increase of diachronic and pecuniary knowledge externalities. Because of its limited exhaustibility and the consequent cumulability, knowledge is an endogenous endowment that accounts for growth. Unexpected out-of-equilibrium conditions in product and factor markets stir the response of firms. The availability of knowledge externalities accounts for the rate of innovation as they help making the reaction creative so as to enable the introduction of innovations. The search for technological congruence and the secular decline of the cost of technological knowledge accounts for its knowledge intensive direction as it induces the introduction of biased technological changes that augment the output elasticity of knowledge as an input. The limited exhaustibility of knowledge accounts for the secular trend towards the knowledge economy. |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:uto:dipeco:201726&r=tid |
| By: | Krammer, Sorin M.S. |
| Abstract: | Smart specialization (SS) is a policy concept that has gained significant momentum in Europe despite a frail theoretical background and implementation difficulties. These challenges become critical in the case of less-developed economies that often lack regional autonomy, a strong STI base, and local capabilities to identify and sustain such SS strategies. Combining elements from evolutionary economics and the export-led literature, I propose a framework that anchors the role of SS in the national innovation policy of such laggards, as a complementary avenue for improving competitiveness and growth. Moreover, to assist policy makers in lagging regions or countries, I advance a diagnostic tool to identify potential areas for SS, and also address the systemic and the regional-sectoral bottlenecks in these domains. I exemplify the use of this tool in the case of Bulgaria by using a large battery of quantitative and qualitative indicators from publicly available data. This type of investigation may be useful for other less-developed economies to kick-start this process and identify prima facie SS candidates. |
| Keywords: | Smart Specialization; Innovation Systems; Exports; Patents; Scientific publications; |
| JEL: | F14 O14 O31 O38 O52 |
| Date: | 2015–12–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:80203&r=tid |
| By: | Alexander Kleibrink (European Commission – JRC); Philippe Laredo (Université Paris Est Marne la Vallée (IFRIS) and University of Manchester (MIOIR)); Stefan Philipp (Centre for Social Innovation (ZSI)) |
| Abstract: | Innovation policies seek to prepare an economy for the future by steering it on a transformation path to make it more competitive in increasingly global and interconnected markets. While most advanced economies have a tradition of strategymaking for territorially-based innovation and economic development, transition countries moving from centralised unaccountable planning to decentralised democratic policymaking have no working, market-based practices to build on. Governments in such contexts often resort to mimicking the economic priorities and instruments of advanced countries. We suggest a trajectory for transition countries to avoid the widespread pitfall of poorly defined innovation policies by upgrading and changing their industrial polices in line with the ideas embedded in the concept of innovation strategies for smart specialisation (RIS3): (1) Build a trusted 'competence centre' to provide a comprehensive analysis of your economic fabric and coordinate the process. (2) Begin with one strong economic domain in which engaged stakeholders work together with government bodies to define joint priorities and actions (domain experimentation). (3) Start with one region to experiment different approaches at subnational level (territorial experimentation). (4) Sequence your process in a way you can harvest the low-hanging fruits in the short-term (non-R&D measures), focus on the core of your activities with high potential in the medium term, and leave R&D-heavy breakthrough programmes for the longer term. |
| Keywords: | innovation policy; transition countries; smart specialisation |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc106260&r=tid |
| By: | Grillitsch, Markus (KEG, Lund University); Asheim, Bjorn (University of Stavanger); Trippl, Michaela (University of Vienna) |
| Abstract: | The paper engages in a critical discussion of the related variety – regional branching argument and foregrounds a more differentiated perspective on regional industrial path development. It contributes by i) sharpening the definition of key concepts, namely specialisation and diversity, related and unrelated variety, ii) discussing their relevance in local and non-local spaces, iii) scrutinizing related variety as source for regional branching, and iv) developing a conceptual framework capturing the opportunity space for regional structural change that unveils the relevance of path upgrading, path importation, path branching, path diversification, and new path creation as different forms of new path development. |
| Keywords: | industrial path development; economic diversification; regional structural change; specialisation and diversity; related and unrelated variety; knowledge base combinations |
| JEL: | B52 O10 R10 R58 |
| Date: | 2017–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2017_010&r=tid |
| By: | Ganau, Roberto; Rodríguez-Pose, Andrés |
| Abstract: | We examine whether organized crime affects firms' performance (defined using Total Factor Productivity growth) both directly and indirectly, by downsizing the positive externalities arising from the geographic concentration of (intra- and inter-industry) market-related firms. The analysis uses a large sample of Italian small- and medium-sized manufacturing firms over the period 2010-2013. The results highlight the negative direct effects of organized crime on firms' productivity growth. Any positive effect derived from industrial clustering is thoroughly debilitated by a strong presence of organized crime, and the negative moderation effect of organized crime on productivity growth is greater for smaller than for larger firms. |
| Keywords: | Total Factor Productivity; Organized crime; Industrial clustering; Externalities; Italy |
| JEL: | D24 L25 R11 R12 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12140&r=tid |
| By: | Behrens, Vanessa; Berger, Marius; Hud, Martin; Hünermund, Paul; Iferd, Younes; Peters, Bettina; Rammer, Christian; Schubert, Torben |
| Abstract: | Innovation is regarded as a key driver of productivity and market growth and thus has a great potential for increasing wealth. Surveying innovation activities of firms is an important contribution to a better understanding of the process of innovation and how policy may intervene to maximise the social returns of private investment into innovation. Over the past three decades, research has developed a detailed methodology to collect and analyse innovation activities at the firm level. The Oslo Manual, published by OECD and Eurostat (2005) is one important outcome of these efforts. In 1993 both organisations have started a joint initiative, known as the Community Innovation Survey (CIS), to collect firm level data on innovation across countries in concord (with each other). The German contribution to this activity is the so-called Mannheim Innovation Panel (MIP), an annual survey implemented with the first CIS wave in 1993. The MIP fully applies the methodological recommendations laid down in the Oslo Manual. It is designed as a panel survey, i.e. the same gross sample of firms is surveyed each year, with a biannual refreshment of the sample. The MIP is commissioned by the German Federal Ministry of Education and Research (BMBF) and conducted by the Centre for European Economic Research (ZEW) in cooperation with the Fraunhofer Institute for Systems and Innovation Research (ISI) and the Institute for Applied Social Science (infas). This publication reports main results of the MIP surveys conducted in the years 2013, 2014, 2015 and 2016. The surveys of the years 2013 and 2015 were the German contribution to the CIS for the reference years 2012 and 2014. The purpose of this report is to present descriptive results on various innovation indicators for the German enterprise sector. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdok:1704&r=tid |
| By: | Nancy L Stokey (Department of Economics) |
| Abstract: | This paper develops a model in which heterogeneous firms invest in technology to increase their profits, and heterogeneous workers invest in human capital to increase their earnings. Production functions are log supermodular in technology and human capital, so the competitive equilibrium features positively assortative matching between firms and workers. Continued investment in technology is profitable only because human capital is growing, and continued investment in human capital is worthwhile only because technology is growing. Both investment technologies have stochastic components, and the balanced growth path has stationary, nondegenerate distributions of technology and human capital, with both growing at a common, constant rate. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:199&r=tid |