nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2017‒09‒10
twelve papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry By Philippe Aghion; Antoine Dechezleprêtre; David Hémous; Ralf Martin; John Van Reenen
  2. Firm Capabilities, Technological Dynamism and Innovation Internationalisation – a Behavioural Approach By Schubert, Torben; Baier, Elisabeth; Rammer, Christian
  3. The Dynamics of Inter-firm Networks and Firm Growth By FUJII Daisuke; SAITO Yukiko; SENGA Tatsuro
  4. Accounting for the Role of Information and Communication Technology in China's Productivity Growth By Harry X. WU; David T. LIANG
  5. The Role of Structural Transformation in Regional Convergence in Japan: 1874-2008 By Fukao, Kyoji; Paul, Saumik
  6. Measuring Productivity Dispersion: Lessons from counting one-hundred million ballots By Ethan Ilzetzki; Saverio Simonelli
  7. Moving Citizens and Deterring Criminals: Innovation in Public Transport Facilities By Canavire-Bacarreza, Gustavo; Duque, Juan Carlos; Urrego, Joaquin A.
  8. A Long-Run Perspective on the Spatial Concentration of Manufacturing Industries in the United States By Crafts, Nicholas; Klein, Alex
  9. Impact of innovation policy on firm innovation – A comparison of Finland and Sweden, 1970-2013 By Torregrosa, Sara; Pelkonen, Antti; Oksanen, Juha; Kander, Astrid
  10. Accessibility, absorptive capacity and innovation in European urban areas By Clément Gorin
  11. Measuring Productivity and Absorptive Capacity Evolution in OECD Economies By De Visscher, Stef; Eberhardt, Markus; Everaert, Gerdie
  12. Governing supply relationships: evidence from the automotive industry By Alexander Schmitt; Jo Van Biesebroeck

  1. By: Philippe Aghion (CDF - Collège de France - CdF - Collège de France, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics, CIAR - Canadian Institute for Advanced Research - Université de Montréal, Department of Economics, Harvard University); Antoine Dechezleprêtre (Centre for Economic Performance - LSE - London School of Economics and Political Science, Grantham Research Institute on Climate Change and the Environment - LSE - London School of Economics and Political Science); David Hémous (Insead - INSEAD - INSEAD); Ralf Martin (Imperial College London, Grantham Research Institute on Climate Change and the Environment - LSE - London School of Economics and Political Science, Centre for Economic Performance - LSE - London School of Economics and Political Science); John Van Reenen (National Bureau of Economic Research - National Bureau of Economic Research, Centre for Economic Performance - LSE - London School of Economics and Political Science)
    Abstract: Can directed technical change be used to combat climate change? We construct new firm-level panel data on auto industry innovation distinguishing between “dirty” (internal combustion engine) and “clean” (e.g., electric, hybrid, and hydrogen) patents across 80 countries over several decades. We show that firms tend to innovate more in clean (and less in dirty) technologies when they face higher tax-inclusive fuel prices. Furthermore, there is path dependence in the type of innovation (clean/dirty) both from aggregate spillovers and from the firm’s own innovation history. We simulate the increases in carbon taxes needed to allow clean technologies to overtake dirty technologies.
    Keywords: Carbon Taxes
    Date: 2016–01
  2. By: Schubert, Torben (CIRCLE, Lund University); Baier, Elisabeth (HWTK, Baden-Baden); Rammer, Christian (ZEW, Mannheim)
    Abstract: We develop a behavioural framework of bounded rational decision-making under uncertainty by which we analyse the effect of technological dynamism in the firm’s environment on its decisions to internationalise innovation. Arguing that the firm’s technological performance lev-el affects its risk-preferences, a key-prediction is that firms with low technological compe-tences will internationalise innovation when faced by technological uncertainty while firms with high competences will withdraw from international innovation. A fully rational absorptive-capacity framework would predict the opposite relationship because it ignores the role of dif-ferential risk-preferences. We test our framework using data from the German Community Innovation Survey (CIS).
    Keywords: innovation internationalisation; speed of technological change; bounded rationality; prospect theory; uncertainty; technological capabilities
    JEL: F21 F23 L22 O32
    Date: 2017–09–01
  3. By: FUJII Daisuke; SAITO Yukiko; SENGA Tatsuro
    Abstract: Recent empirical evidence has revealed that firm age is one of the key determinants for firm growth, while other literature points out the importance of customer-supplier networks for firm growth. This paper investigates how the inter-firm transaction network evolves over the firm lifecycle and its relationship with firm growth using large-scale firm network data in Japan. Old firms are large in size and well connected compared to young firms. In particular, older firms are connected to other older firms exhibiting positive assortativity of age. Younger firms tend to add and drop links more frequently, and the stability of a transaction link increases with its duration of active relationships, implying gradual learning of link-specific productivity over time. Moreover, firm's sales growth is positively related with the expansion of transaction partners in various measures, conditional on firm age. This suggests that the observed relationship between firm age and firm growth may be due to the lifecycle pattern of building inter-firm networks.
    Date: 2017–08
  4. By: Harry X. WU; David T. LIANG
    Abstract: Applying the Jorgensonian aggregate production possibility frontier (APPF) model to the China Industrial Productivity (CIP) data set constructed in the principle of KLEMS, we scrutinize the role of information and communication technology (ICT) industries in China's post-reform growth from 1981 to 2012. In the absence of a direct measure of ICT assets, we group Chinese industries into ICT-specific groups following the criteria used in the U.S. case (Jorgenson et al. 2005a), and apply the APPF industry origin of productivity framework, incorporating Domar weights for industry aggregation, to the grouped CIP industry data. This allows us to decompose China's productivity growth into the contribution of the ICT-specific groups and the factor reallocation effect across the groups. Our preliminary results show that Chinese ICT-producing and ICT-using manufacturing industries appear to be the most important driver of China's productivity growth over the entire period in question. While sharing 29% of China's 9.38% annual value added growth, these industries contributed 149% to China's 0.83% annual aggregate total factor productivity (TFP) growth. This, together with a strong gain from the labor reallocation effect across industries, has enabled the economy to compensate for its heavy productivity losses by non-ICT services and the economy-wide misallocation of capital resources.
    Date: 2017–08
  5. By: Fukao, Kyoji; Paul, Saumik
    Abstract: Extending the literature on productivity convergence to a multi-sector growth framework, we show that σ-convergence in regional productivity growth can be decomposed into σ-convergence in sectoral productivity growth and σ - convergence in structural transformation-led productivity growth. Empirical support is provided using novel historical datasets at the Japanese prefecture level from 1874 to 2008. In pre-war Japan (1874–1940), regional convergence was primarily driven by productivity growth in the secondary sector. The rapid productivity convergence within the secondary and tertiary sectors relative to that in the primary sector between 1890 and 1940 provided an important base for the large convergence effects of structural transformation in the post-war years through a larger sectoral productivity gap in the lagging regions compared to the leading regions. However, the pace of regional convergence gradually slowed down and since the early 1970s the σ -convergence of structural transformation has been offset by the σ-divergence of within-sector productivity growth and vice versa, thwarting the pace of convergence in aggregate productivity.
    Keywords: Structural transformation, Labor productivity, Regional convergence, Japan
    JEL: O40 O10
    Date: 2017–09
  6. By: Ethan Ilzetzki (London School of Economics (LSE); Centre for Macroeconomics (CFM)); Saverio Simonelli (University of Naplpes Federico II; enter for Studies in Economics and Finance)
    Abstract: We measure output per worker in nearly 8,000 municipalities in the Italian electoral process using ballot counting times in the 2013 general election and two referenda in 2016. We document large productivity dispersion across provinces in this very uniform and low-skill task that involves nearly no technology and requires limited physical capital. Using a development accounting framework, this measure explains up to half of the firm-level productivity dispersion across Italian provinces and more than half the north-south productivity gap in Italy. We explore potential drivers of our measure of labor efficiency and find that its association with measures of work ethic and trust is particularly robust.
    Keywords: Labor productivity, Development accounting, Work ethic, Cultural economics
    JEL: O47 E24 J24 Z10
    Date: 2017–08
  7. By: Canavire-Bacarreza, Gustavo; Duque, Juan Carlos; Urrego, Joaquin A.
    Abstract: This paper explores the relationship between urban public transportation innovation and crime. In 2004, the city of Medellin in Colombia developed an innovative public transportation system based on cable cars (Metrocable) to reach dense, isolated and dangerous neighborhoods. Using Spatial Difference in Difference approaches and a rich dataset at spatial analytical level, using max-p modeling, we explore the effects of the Metrocable on crime and its mechanisms. We find a significant impact on homicides reduction in the treated neighborhoods, especially in the medium run. Homicides decreased around 41% more than the general crime reduction in the city between 2004 and 2006, and by 49% between 2004 and 2012. We explore two mechanisms through which this intervention may affect the level of criminality, one is reducing the travel costs and improving accessibility to the rest of the city for low-income population (socioeconomic mechanism); the other is the increasing of the probability of apprehension for potential and active o enders (deterrent mechanism).
    Keywords: Ciudades, Innovación, Investigación socioeconómica, Pobreza, Seguridad ciudadana, Transporte,
    Date: 2016
  8. By: Crafts, Nicholas; Klein, Alex
    Abstract: We construct spatially-weighted indices of the geographic concentration of U.S. manufacturing industries during the period 1880 to 1997 using data from the Census of Manufactures and the Bureau of Labor Statistics. Several important new results emerge from this exercise. First, we find that average spatial concentration was much lower in the late-20th- than the late-19th century and that this was the outcome of a continuing reduction over time. Second, the persistent tendency to greater spatial dispersion was characteristic of most manufacturing industries. Third, even so, economically and statistically significant spatial concentration was pervasive throughout this period.
    Keywords: manufacturing belt; spatial concentration; transport costs
    JEL: N62 N92 R12
    Date: 2017–08
  9. By: Torregrosa, Sara (Department of Economic History, Lund University); Pelkonen, Antti (VTT Technical Research Centre of Finland); Oksanen, Juha (VTT Technical Research Centre of Finland); Kander, Astrid (Department of Economic History, Lund University)
    Abstract: To what extent have public policies contributed to the innovation performance of Finland and Sweden in the period 1970-2013? This paper aims to assess the share of innovations stimulated by the public sector, specifically because of receiving public funding or being the result of research collaboration with public institutions. We combine survey and LBIO results on these variables, to overcome reporting biases found in the two methods. The main data comes from the new UDIT dataset, which gathers the most significant innovations of both countries for the period, in total about 4,100 Swedish and 2,600 Finnish innovations. It has been constructed following the LBIO method (Literature Based Innovation Output), which obtains information on relevant commercialized innovations from general technology journals as well as industry specific trade journals. Our results indicate that Finland had a substantially larger public involvement in these innovations than Sweden. This is specially true in the years between 1990 and 2000, when we see a drop in the relative role of the Swedish public sector in innovation output, while the Finnish trends are constant or slightly increasing over the period. However, in both countries public policies lie behind a significant share of the innovations (30-50% in Finland, 15-35% in Sweden), and in the Swedish case we can further assess that the publicly stimulated innovations were more often found among the most significant new products (written about in several articles).
    Keywords: public policy; innovation; LBIO method
    JEL: I28 N70 O38 O57
    Date: 2017–04–26
  10. By: Clément Gorin (Univ Lyon, UJM Saint-Etenne, GATE L-SE UMR 5824, F-42023 Saint- Etienne, France)
    Abstract: Empirical studies on the geography of innovation have established that skilled workers’ mobility and collaboration networks shape the diffusion of knowledge across firms and regions. At the same time, the literature on absorptive capacity insisted on the importance of local research capabilities to take advantage of knowledge developed elsewhere. This paper inves- tigates both phenomena in an integrated framework by assuming that mobility and networks provide access to knowledge, but the proportion of accessible knowledge effectively used for innovation depends on absorptive capacity. Such complementaries in regional research efforts are effectively captured using a spatial Durbin model in which the connectivity structure stems from mobility and collaboration patterns. Results confirm the relative importance of these two channels in the diffusion of knowledge, and suggests that human capital increases absorptive capacity. These findings have implications for the geography of innovation. While greater accessibility encourages convergence, the notion of absorptive capacity implies a self-reinforcing effect leading to divergence.
    Keywords: Innovation, Mobility, Network, Absorptive capacity, Spatial Durbin model, Urban areas
    JEL: C33 J61 O31 O33
    Date: 2017
  11. By: De Visscher, Stef; Eberhardt, Markus; Everaert, Gerdie
    Abstract: We develop a new way to estimate cross-country production functions which allows us to parametrize unobserved non-factor inputs (total factor productivity) as a global technology process combined with country-specific time-varying absorptive capacity. The advantage of our approach is that we do not need to adopt proxies for absorptive capacity such as investments in research and development (R&D) or human capital, or specify explicit channels through which global technology can transfer to individual countries, such as trade, FDI or migration: we provide an endogenously-created index for relative absorptive capacity which is easy to interpret and encompasses potential proxies and channels. Our implementation adopts an unobserved component model and uses a Bayesian Markov Chain Monte Carlo (MCMC) algorithm to obtain posterior estimates for all model parameters. This contribution to empirical methodology allows researchers to employ widely-available data for factor inputs (capital, labor) and GDP or value-added in order to arrive at policy-relevant insights for industrial and innovation policy. Applying our methodology to a panel of 31 advanced economies we chart the dynamic evolution of global TFP and country-specific absorptive capacity and then demonstrate the close relationship between our estimates and salient indicators of growth-enhancing economic policy.
    Keywords: absorptive capacity; common factor model; MCMC; time-varying parameters; total factor productivity; unobserved component model
    JEL: C21 C23 F43 O33
    Date: 2017–08
  12. By: Alexander Schmitt; Jo Van Biesebroeck
    Abstract: A large empirical literature analyzes determinants of the make-or-buy decision. Transaction cost economics highlights the role of asset specificity, the property rights theory focuses on the relative marginal contributions to joint surplus creation, and some evidence suggests that making transactions more contractible facilitates outsourcing. We use a unique transaction-level dataset of outsourced automotive components to predict carmakers’ choices between four distinct ways of organizing sourcing relationships. We derive conditional predictions for three characteristics: (i) the complexity or contractibility of a transaction, (ii) how objectively codifiable performance is, and (iii) the supplier’s capabilities. For example, while dominant buyer investments might predict vertical integration, as in the property rights theory, other characteristics might convince a buyer to simply re-organize the collaboration with the supplier in a more suitable way. Our results suggest that “buy” relationships differ systematically and that the predictive power of our variables extend from the make-or-buy decision to how-to-buy.
    Date: 2017–08

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