nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2017‒08‒20
twelve papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Directed Technological Change & Cross Country Income Differences: A Quantitative Analysis By Jerzmanowski, Michal; Tamura, Robert
  2. R&D Efficiency in High-Tech Firms in China By Lee, Sang-Ho; Chen, Zhao; Xu, Wei
  3. Firm age and the probability of product innovation. Do CEO tenure and product tenure matter? By Marco Cucculelli
  4. Technology networks: the autocatalytic origins of innovation By Paolo Zeppini; Evangelos Evangelou; Emanuele Pugliese; Lorenzo Napolitano; Graham Room
  5. Macro and Micro Dynamics of Productivity: From Devilish Details to Insights By Lucia S. Foster; Cheryl A. Grim; John Haltiwanger; Zoltan Wolf
  6. Dynamic heterogeneous R&D with cross-technologies interactions By Anton Bondarev; Frank C. Krysiak
  7. Foreign Investment and Domestic Productivity: Identifying Knowledge Spillovers and Competition Effects By Fons-Rosen, Christian; Kalemli-Ozcan, Sebnem; Sørensen, Bent E; Villegas-Sanchez, Carolina; Volosovych, Vadym
  8. Work organisation, human capital and innovation strategies: new evidence from firm-level Italian data By Capriati, Michele; Divella, Marialuisa
  9. The Growth Disease at 50 – Baumol after Oulton By Jochen Hartwig; Hagen Krämer
  10. Is Industrial Production Still the Dominant Factor for the US Economy? By Andreou, Elena; Gagliardini, Patrick; Ghysels, Eric; Rubin, Mirco
  11. Human Capital and Structural Change By Porzio, Tommaso; Santangelo, Gabriella
  12. Location of Universities and National Research Institutes and Firms' Location Choice of R&D Facilities (Japanese) By EDAMURA Kazuma; INUI Tomohiko; YAMAUCHI Isamu

  1. By: Jerzmanowski, Michal; Tamura, Robert
    Abstract: Research aimed at understanding cross-country income differences finds that inputs of human and physical capital play a limited role in explaining those differences. However, most of this work assumes workers with different education levels are perfect substitutes. Does moving away from this assumption affect our conclusions about the causes of long run development? To answer this question we construct measures of skill-specific productivity and barriers to innovation for a large sample of countries over the period 1910-2010. We use a model of endogenous directed technological change together with a new data set on output and labor force composition across countries. We find that rich countries use labor of all skill categories more efficiently, however, in the absence or barriers to entry, poor countries would actually be more efficient at using low-skill labor. Our estimates imply that after 1950 the world technology frontier expanded much faster for college-educated workers than for those with lower skill sets. This technology diffused to many countries, allowing even poorer countries to experience relatively robust growth of high-skill-specific productivity. Their GDP growth failed to reflect that because of their labor composition; they have very few workers in the higher skilled category. Finally, we investigate the relative importance of factor endowments versus barriers to technology in explaining the current disparities of standards of living and find it to depend crucially on the value of the elasticity of substitution between skill-types. Under a lower value of 1.6, our model yields barrier estimates that are lower and relatively less important in explaining cross-country income differences: in this scenario physical and human capital account almost 70% of variance in 2010 GDP per worker in our sample. Using elasticity of 2.6, we find barriers that are higher and explain most of the variation in output. We provide some evidence that the higher value of elasticity is preferred.
    Keywords: endogenous directed technology, heterogeneous labor, cross country income differences
    JEL: E1 J0 O1
    Date: 2017–08–01
  2. By: Lee, Sang-Ho; Chen, Zhao; Xu, Wei
    Abstract: Using firm-level data from Changzhou, one of the representative prefectural cities in the Yangzi River Delta in China, we investigate the performances of both internal and external R&D in high-tech firms. We find that, on average, high-tech firms with more internal R&D expenditure apply for more patents in terms of both the total number of patents and the number of invention patents. Internal R&D is the most efficient in foreign firms, followed by private firms and then followed by SOEs (state-owned enterprises). These findings highlight the importance of privatizing high-tech firms in China if the Chinese government intends to accelerate industrial upgrading and convert the pattern of “Made in China” into “Created in China.”
    Keywords: internal R&D; external R&D; high-tech firms; R&D performances
    JEL: D22 H76 L25
    Date: 2017–08
  3. By: Marco Cucculelli (Universita' Politecnica delle Marche, Dipartimento di Scienze economiche e sociali)
    Abstract: This paper examines the influence that the age of a firm has on the probability of product innovation by taking into account two factors: the role of the CEO's tenure and the lifecycle of the last product introduced. In a sample of Italian manufacturing firms (n = 2,163), analysis reveals that the new entrants’ high innovative activity is mainly driven by the new CEO's innovation propensity, which is strictly dependent on his tenure. Likewise, the lower innovation activity observed in mature firms is mostly explained by the dynamics of the product’s lifecycle and the CEO's tenure. More generally, the existence of a negative relationship between innovation and firm age is questioned, as controlling for time-related variables that overlap during the company's lifecycle - product age and CEO's tenure — turns the relationship positive. Finally, the innovative behaviour of incumbent companies turns out to be dependent on the renewal abilities of newly appointed external CEOs, whereas, CEOs from within the family play a minor role.
    Keywords: Product innovation, firm age, CEO tenure, product tenure, product lifecycle, industry lifecycle
    JEL: D22 G34 L25 O32
    Date: 2017–09
  4. By: Paolo Zeppini; Evangelos Evangelou; Emanuele Pugliese; Lorenzo Napolitano; Graham Room
    Abstract: We search an autocatalytic structure in networks of technological fields and evaluate its significance for technological change. To this aim we define a technology network based on the International Patents Classification, and we study if autocatalytic structures in the network foster innovation as measured by the rate of production of patents. The network is identified through patenting activity of geographical regions in different technology fields. Through our analysis we show how the technological landscape of the patents database evolves as a self-organising autocatalytic structure that grows in size, and arrives to cover the most part of the technology network. Technology classes in the core of the autocatalytic structure perform better in terms of their innovativeness, as measured by the rate of growth of the number of patents. Finally, the links between classes that define the autocatalytic structure of the technology network break the hierarchical structure of the database, and indicate that recombinant innovation and its autocatalytic patterns are an important stylised fact of technological change.
    Date: 2017–08
  5. By: Lucia S. Foster; Cheryl A. Grim; John Haltiwanger; Zoltan Wolf
    Abstract: Researchers use a variety of methods to estimate total factor productivity (TFP) at the firm level and, while these may seem broadly equivalent, how the resulting measures relate to the TFP concept in theoretical models depends on the assumptions about the environment in which firms operate. Interpreting these measures and drawing insights based upon their characteristics thus must take into account these conceptual differences. Absent data on prices and quantities, most methods yield ``revenue productivity" measures. We focus on two broad classes of revenue productivity measures in our examination of the relationship between measured and conceptual TFP (TFPQ). The first measure has been increasingly used as a measure of idiosyncratic distortions and to assess the degree of misallocation. The second measure is, under standard assumptions, a function of fundamentals (e.g., TFPQ). Using plant-level U.S. manufacturing data, we find these alternative measures are (i) highly correlated; (ii) exhibit similar dispersion; and (iii) have similar relationships with growth and survival. These findings raise questions about interpreting the first measure as a measure of idiosyncratic distortions. We also explore the sensitivity of estimates of the contribution of reallocation to aggregate productivity growth to these alternative approaches. We use recently developed structural decompositions of aggregate productivity growth that depend critically on estimates of output versus revenue elasticities. We find alternative approaches all yield a significant contribution of reallocation to productivity growth (although the quantitative contribution varies across approaches).
    JEL: E24 L22 O4
    Date: 2017–08
  6. By: Anton Bondarev; Frank C. Krysiak (University of Basel)
    Abstract: In many countries, inducing large-scale technological changes has become an important policy objective, as in the context of climate policy or energy transitions. Such large-scale changes require the development of strongly interlinked technologies. But current economic models have little flexibility for describing such linkages. We present a model of induced technological change that covers a fairly large set of cross-technology interactions and that can describe a wide variety of long-run developments. Using this model, we analyse and compare the development induced by optimal fi rm behaviour and the socially optimal dynamics. We show that the structure of cross-technology interactions is highly important. It shapes the dynamics of technological change in the decentralised and the socially optimal solution, including the prospects of continued productivity growth. It determines whether the decentralised and the socially optimal solution have similar or qualitatively di fferent dynamics. Finally, it is highly important for the question whether simple r&d policies can induce efficient technological change.
    Keywords: technological spillovers; social optimality; market inefficiency; optimal control; heterogeneous innovations
    JEL: O33 C02 C61 D62
    Date: 2017
  7. By: Fons-Rosen, Christian; Kalemli-Ozcan, Sebnem; Sørensen, Bent E; Villegas-Sanchez, Carolina; Volosovych, Vadym
    Abstract: We study the impact of foreign direct investment (FDI) on total factor productivity (TFP) of domestic firms using a new, representative firm-level data set spanning six countries. A novel finding is that firm-level spillovers from foreign firms to domestic companies can be significantly positive, non-existent, or even negative, depending on which sectors receive FDI. When foreign firms produce in the same narrow sector as domestic firms, the latter are negatively affected by increasing competition and positively affected by knowledge spillovers. We find that the positive spillovers dominate if foreign firms enter sectors where firms are "technologically close,'' controlling for the endogeneity of their entry decision into such sectors. Positive technology spillovers also affect firms in other sectors, if those sectors are technologically close to the sectors receiving FDI. Increasing FDI in sectors that are technologically close to other sectors boosts TFP of domestic firms by twice as much as increasing FDI by the same amount across all sectors.
    Keywords: competition; FDI; multinationals; selection; technology; TFP
    JEL: E32 F15 F36 O16
    Date: 2017–08
  8. By: Capriati, Michele; Divella, Marialuisa
    Abstract: By using firm-level data provided by the fourth round of the (Italian) Community Innovation Survey (CIS 2012), this paper explores whether the implementation of specific changes in work organisation within a firm influences its innovation performance, not only directly, but also via reinforcing the link between human capital resources and innovation. The authors also analyse the overall effect of human capital and work organisation, which enables them to identify which combination of these variables leads to the highest level of firms’ technological capabilities. Main findings confirm that not only the acquisition of new skills through the hiring of qualified personnel, but also how personnel management affects individual employees on the work floor should be considered to the development of firms’ innovation capacity: indeed, work organisation as well as strong positive complementarities or synergy effects between human capital and work organisation have been found to give firms a clear competitive advantage vis à vis both non­innovating firms and firms unable to internally generate new products and processes (i.e. entirely or at least partly by themselves). These positive effects are present and relevant in both manufacturing and service firms, whilst a more differentiated impact has emerged between firms in high-tech and low-tech sectors of the economy. On the whole, the contribution raises some relevant issues about the Italian lack of innovation in work organisation, which requires particular attention by the human resources management of firms and the industrial policy of governments.
    Keywords: work organisation,human capital,technological capabilities,innovation generation,firms,industries
    JEL: O30 O31 O32
    Date: 2017
  9. By: Jochen Hartwig (Faculty of Economics and Business Administration, Chemnitz University of Technology, Germany); Hagen Krämer (Faculty of Management Science and Engineering, Karlsruhe University of Applied Sciences, Germany)
    Abstract: The year 2017 marks the 50th anniversary of William J. Baumol’s seminal model of ‘unbalanced growth’, which predicts the so-called ‘Growth Disease’, i.e., the tendency of aggregate productivity growth to slow down in the process of tertiarisation. In an important contribution published in 2001, however, Nicholas Oulton showed that the shift of resources to the service sector may raise rather than lower aggregate productivity growth if the service industries produce intermediate rather than final products. While Oulton’s reasoning is logically consistent, the question arises whether it is also valid from an empirical point of view. We use the 2011 release of EU KLEMS data to determine whether the shift of resources to services has raised or lowered aggregate productivity growth in the G7 countries.
    Keywords: Baumol’s Disease, productivity growth, EU KLEMS
    JEL: E24 O14 O41 O47 O57
    Date: 2017–07
  10. By: Andreou, Elena; Gagliardini, Patrick; Ghysels, Eric; Rubin, Mirco
    Abstract: We propose a new class of large approximate factor models which enable us to study the full spectrum of quarterly Industrial Production (IP) sector data combined with annual non-IP sectors of the economy. We derive the large sample properties of the estimators and test statistics for the new class of unobservable factor models involving mixed frequency data and common as well as frequency-specific factors. Despite the growth of service sectors, we find that a single common factor explaining 90% of the variability in IP output growth index also explains 60% of total GDP output growth fluctuations. A single low frequency factor unrelated to manufacturing explains 14% of GDP growth. The picture with a structural factor model featuring technological innovations is quite different. Last but not least, our identification and inference methodology rely on novel results on group factor models that are of general interest beyond the mixed frequency framework and the application of the paper.
    Keywords: GDP growth; Group Factor models; MIDAS
    JEL: C32 C33 C38 E32
    Date: 2017–08
  11. By: Porzio, Tommaso; Santangelo, Gabriella
    Abstract: What explains labor reallocation out of agriculture? We propose an accounting framework that leverages observable variation across birth cohorts to study the role of human capital accumulation. We model a dynamic overlapping generations economy where heterogeneous individuals choose whether to stay in or move out of agriculture, subject to mobility frictions. The model shows analytically that labor reallocation within- and across-cohorts pins down the relative role of human capital vs. sectoral prices/productivities in labor reallocation. We apply the framework to micro data from 52 countries. We document novel empirical patterns on labor reallocation by cohort and use them, through the lens of our model, to discipline the size of mobility frictions and show two results: (i) human capital explains one third of labor reallocation, on average; but (ii) it has a minor role in explaining why some countries have faster reallocation than others. Furthermore, we use years of schooling as a direct measure of human capital to validate our main approach and we exploit a large-scale school construction program in Indonesia as a natural experiment to study the effects of an exogenous increase in human capital. We show that the program led to labor reallocation out of agriculture.
    Keywords: Social and Behavioral Sciences, Human Capital, Structural Change, Agriculture, Development, Schooling
    Date: 2017–08–16
  12. By: EDAMURA Kazuma; INUI Tomohiko; YAMAUCHI Isamu
    Abstract: Using plant- and half-year-level micro data for the period 2007-2011, this paper analyzes the location decision of a research and development (R&D) facility on a plant in Japan. We control the effects of the characteristics of the plant, the population, labor cost, industry agglomeration, and other fixed effects of the prefecture in which it is located. The results by logit model show that firms tend to locate their R&D facility on plants near universities or national research institutes with comparatively large research expenditures and a greater number of researchers.
    Date: 2017–08

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