|
on Technology and Industrial Dynamics |
| By: | Giovanni Dosi; Xiaodan Yu |
| Abstract: | This paper investigates the microeconomics of employment dynamics, using a Chinese manufacturing firm-level dataset over the period 1998-2007. It does so in the light of a scheme of "circular and cumulative causation", whereby firms' heterogeneous productivity gains and sales dynamics, and innovation activities ultimately shape the patterns of employment dynamics. Using firm's productivity growth as a proxy for process innovation, our results show that the latter correlates negatively with firm-level employment growth. Conversely, relative productivity levels, as such a general proxy for the broad technological advantages/disadvantages of each firm, do show positive effect on employment growth in the long-run through replicator-type dynamics. Moreover, firm-level demand dynamics play a significant role in driving employment growth, which more than compensate the labour-saving effect due to technological progress. Finally, and somewhat puzzlingly, the direct effects of product innovation and patenting activities on employment growth appear to be negligible. |
| Keywords: | Employment Growth, Demand, Product Innovation, Process Innovation, Export, China catching-up |
| Date: | 2017–10–24 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2017/27&r=tid |
| By: | Ujjayant Chakravorty; Runjuan Liu; Ruotao Tang |
| Abstract: | In recent years, manufacturing firms in the United States have faced increasing import competition from low-wage countries, especially China. Does this competition hurt or help innovation by firms? This paper studies the effect of the surge in imports from China on innovation in the US manufacturing sector. We combine patent, firm and trade data during 1990-2006 for US publicly-listed firms in the Compustat dataset. We find consistent evidence that Chinese import competition had a positive effect on firm innovation, as measured by citation-weighted patent applications. This positive effect persists when we instrument import competition in the US by using Chinese import penetration in the United Kingdom. Next we investigate this relationship between import competition and innovation by considering industry and firm heterogeneity. We find that firms in low-tech industries and those with a lower degree of product differentiation show a significant positive response to import competition. Firms with a higher capital intensity and lower labor productivity also exhibit a greater response. These results are shown to be robust to a variety of measures for import penetration and innovation. |
| Keywords: | import competition, innovation, international trade, manufacturing firms, patents |
| JEL: | F10 F14 O31 O32 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6569&r=tid |
| By: | Gruber, Harald |
| Abstract: | This paper identifies the main factors for Europe’s delays in embracing the well proven growth enhancing effects of digital technologies. It argues that market failures, including externalities from knowledge spillovers, cybersecurity and first mover advantages justify public support. The whole value added chain of digital production is entailed, starting with infrastructure investment and R&D relevant for digital sectors, along with qualified skills of researchers and of workers, coming to skill sets provided by the education sector. Emphasis is put on the efficient leverage effects that can be achieved by combining public and private sector funds through financial instruments. |
| Keywords: | Industrial policy,ICT,R&D,Innovation,Investment,Education |
| JEL: | L52 O16 O38 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse17:169464&r=tid |
| By: | William F. Maloney; Felipe Valencia Caicedo |
| Abstract: | This paper offers the first systematic historical evidence on the role of a central actor in modern growth theory - the engineer. It collects cross-country and state level data on the labor share of engineers for the Americas, and county level data on engineering and patenting for the US during the Second Industrial Revolution. These are robustly correlated with income today after controlling for literacy, other types of higher order human capital (e.g. lawyers, physicians), demand side factors, and after instrumenting engineering using the Land Grant Colleges program. A one standard deviation increase in engineers in 1880 accounts for a 16% increase in US county income today, and patenting capacity contributes another 10%. We further show engineering density supported technological adoption and structural transformation across intermediate time periods. Our estimates help explain why countries with similar levels of income in 1900, but tenfold differences in engineers diverged in their growth trajectories over the next century. The results are supported by historical case studies from the US and Latin America. |
| Keywords: | innovative capacity, human capital, engineers, technology diffusion, patents, growth, structural transformation, development, history |
| JEL: | O11 O30 N10 I23 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6339&r=tid |
| By: | Balazs Egert |
| 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 J20 L43 L51 O40 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6407&r=tid |
| By: | Heywood, John S. (University of Wisconsin, Milwaukee); Jirjahn, Uwe (University of Trier); Pfister, Annika (University of Trier) |
| Abstract: | Using German establishment data, this paper examines the relationship between product market competition and the extent of employer provided training. We demonstrate that high product market competition is associated with increased training except when the competition is so severe as to threaten liquidation to a firm. We take this as evidence of an inverted U-shaped relationship. We also make clear that while this relationship is very evident for the service sector it is largely missing for manufacturing where we confirm earlier results of no relationship. |
| Keywords: | competition, employer provided training, manufacturing, services |
| JEL: | J24 L00 M53 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11054&r=tid |
| By: | Matsuyama, Kiminori |
| Abstract: | Endogenous demand composition across sectors due to nonhomothetic demand (Engel's Law) affects i) sectoral compositions in employment and in value-added, ii) variations in innovation rates and in productivity change across sectors, iii) intersectoral patterns of trade across countries, and iv) migration of industries from rich to poor countries. This paper offers a unifying perspective on how economic growth and globalization affects the patterns of structural change, innovation and trade across countries and across sectors in the presence of Engel's Law. To this end, we develop a two-country model of directed technological change with a continuum of sectors under nonhomothetic preferences, which is rich enough to capture all these effects as well as their interactions. Among the main messages is that globalization amplifies, instead of reducing, the power of endogenous domestic demand composition differences as a driver of structural change. |
| Keywords: | Factor price convergence; Implicit (direct and indirect) additivity; Isoelastically nonhomothetic CES; Leapfrogging; log-supermodularity; Monotone comparative statics; The Linder effect; The Schmookler effect; Trade patterns reversal; Vernon's product cycle hypothesis |
| JEL: | O11 O19 O33 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12387&r=tid |
| By: | Niebel, Thomas; Rasel, Fabienne; Viete, Steffen |
| Abstract: | This paper analyzes the relationship between firms’ use of big data analytics and their innovative performance for product innovations. Since big data technologies provide new data information practices, they create new decision-making possibilities, which firms can use to realize innovations. Applying German firm-level data we find suggestive evidence that big data analytics matters for the likelihood of becoming a product innovator as well as the market success of the firms’ product innovations. The regression analysis reveals that firms which make use of big data have a higher likelihood of realizing product innovations as well as a higher innovation intensity. Interestingly, the results are of equal magnitude in the manufacturing and services industries. The results support the view that big data analytics have the potential to enable innovation. |
| Keywords: | Big data,data-driven decision-making,innovation,product innovation,firmlevel data |
| JEL: | D22 L20 O33 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse17:169489&r=tid |
| By: | Martin Watzinger; Thomas A. Fackler; Markus Nagler; Monika Schnitzer |
| Abstract: | We study the 1956 consent decree against the Bell System to investigate whether patents held by a dominant firm are harmful for innovation and if so, whether compulsory licensing can provide an effective remedy. The consent decree settled an antitrust lawsuit that charged Bell with having foreclosed the market for telecommunications equipment. The decree forced Bell to license all its existing patents royalty-free. The compulsory licensing increased follow-on innovation building on Bell patents by 17%. This effect is driven mainly by young and small companies. Yet, innovation increased only outside the telecommunications equipment industry, suggesting that compulsory licensing without structural remedies is ineffective in ending market foreclosure. |
| Keywords: | innovation, antitrust, intellectual property, compulsory licensing |
| JEL: | O30 O33 O34 K21 L40 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6351&r=tid |
| By: | Margarida Duarte; Diego Restuccia |
| Abstract: | The relative price of services rises with development. A standard interpretation of this fact is that productivity differences across countries are larger in manufacturing than in services. The service sector comprises heterogeneous categories. We document that many disaggregated service categories--such as transportation, communication, and finance--feature a negative income elasticity of relative prices, whereas the relative price of aggregate services is mostly driven by large expenditure categories in housing, health, and education that feature a positive income elasticity of relative prices. We also document a substantial reallocation of expenditures in services from categories with positive income elasticities (traditional services) to categories with negative elasticities (non-traditional services) as income raises. Using an otherwise standard multi-sector development accounting framework extended to include an input-output structure, we find that the cross-country income elasticity of sectoral productivity is large in non-traditional services (1.14), smaller in manufacturing (1.06) and much smaller in traditional services (0.67). We also find that heterogeneity in services has a substantial impact on aggregate productivity and that the input-output structure is important in this assessment. |
| Keywords: | Productivity, services, input-output structure, non-traditional services. |
| JEL: | O1 O4 E0 |
| Date: | 2017–10–23 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-591&r=tid |
| By: | Pauline LECTARD; Eric ROUGIER |
| Abstract: | Since the 1990’s, developing countries have tried to promote export diversification and sophistication, notably by attracting vertical FDI and by supporting the emergence of new industries whose factor content is distant from the country’s endowment. We investigate whether defying comparative advantage has prompted a more sophisticated and diversified export basket in a large panel of countries over the period 1992-2012. We find that developing countries that defy their comparative advantage tend to export more manufactured items and manufacturing goods that are more sophisticated. As for export diversification, the impact is heterogeneous across development levels: although defying comparative advantage seems to help diversify the export baskets of middle-income and resource-rich countries, it tends to concentrate those of lower-income economies. Moreover, we find that the impact of the distance to comparative advantage on productive transformation is strongly conditioned by the size of FDI stocks and by the country’s specialization in the lower added-value productive tasks of global value chains (GVCs). More specifically, our results suggest that defying comparative advantage by attracting FDI may be a dangerous strategy in the long-term since it tends to bring only partial and artefact industrialization, with manufacturing exports increasing while the manufacturing value-added actually decreases. |
| Keywords: | Trade specialization, export diversification, export sophistication, distance to comparative advantage, FDI |
| JEL: | F14 F21 O14 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:grt:wpegrt:2017-14&r=tid |
| By: | Takalo, Tuomas; Tanayama, Tanja |
| Abstract: | We conduct a welfare analysis of R&D subsidies and tax credits using a model of innovation policy in corporating externalities, limited R&D participation and finanial market imperfetions. We estimate the model using R&D projet level data from Finland. The optimal R&D tax credit rate (0.24) is lower than the average R&D subsidy rate (0.36). The intensive, not the extensive margin of R&D is important for poliy. Tax credits and subsidies inrease R&D investments and spillovers compared to laissez-faire but to levels below the first best. R&D support policies don't improve welfare. |
| JEL: | O38 O31 L53 C31 |
| Date: | 2017–10–16 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofrdp:2017_030&r=tid |
| By: | Giovanni Marin (Department of Economics, Society and Politics, University of Urbino 'Carlo Bo', Italy); Francesco Vona (OFCE-SciencesPo and SKEMA Business School, Sophia Antipolis, France) |
| Abstract: | This paper evaluates the historical influence of energy prices on a series of measures of environmental and economic performance for a panel of French manufacturing establishments over the period 1997-2010. The focus on energy prices is motivated by the fact that changes in environmental and energy policies have been dominated by substantial reductions in discounts for large consumers, making the evaluation of each policy in isolation exceedingly difficult. To identify price effects, we construct a shift-share instrument that captures only the exogenous variation in establishment-specific energy prices. Our results highlight a trade-off between environmental and economic goals: although a 10\% increase in energy prices brings about a 6\% reduction in energy consumption and to a 11\% reduction in CO2 emissions, such an increase also has a modestly negative impact on employment (-2.6\%) and very small impact on wages and productivity. The negative employment effects are mostly concentrated in energy-intensive and trade-exposed sectors. Simulating the effect of a carbon tax, we show that job losses for the most exposed sectors can be quite large. However, these effects are upper bounds and we show that they are significantly mitigated in multi-plant firms by labor reallocation across establishments. |
| Keywords: | energy prices, establishment performance, environmental and energy policy |
| JEL: | Q52 Q48 H23 D22 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:srt:wpaper:0717&r=tid |
| By: | Philippe Aghion; Benjamin F. Jones; Charles I. Jones |
| Abstract: | This paper examines the potential impact of artificial intelligence (A.I.) on economic growth. We model A.I. as the latest form of automation, a broader process dating back more than 200 years. Electricity, internal combustion engines, and semiconductors facilitated automation in the last century, but A.I. now seems poised to automate many tasks once thought to be out of reach, from driving cars to making medical recommendations and beyond. How will this affect economic growth and the division of income between labor and capital? What about the potential emergence of “singularities” and “superintelligence,” concepts that animate many discussions in the machine intelligence community? How will the linkages between A.I. and growth be mediated by firm-level considerations, including organization and market structure? The goal throughout is to refine a set of critical questions about A.I. and economic growth and to contribute to shaping an agenda for the field. One theme that emerges is based on Baumol’s “cost disease” insight: growth may be constrained not by what we are good at but rather by what is essential and yet hard to improve. |
| JEL: | O3 O4 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23928&r=tid |
| By: | Lee, Kyungyul; Kwon, Youngsun |
| Abstract: | Prior studies often examine the effect of inertia on enterprise strategy for attracting new consumers or attacking competitors in an industry. Various sources of the firm act as inertia for the incumbents in the strategy; the most representative example is incentives. For incumbents, large incentives reduce competitive inertia and motivate them to change strategy. For example, poor financial performance acts as an incentive. This study asks the question: does prior good performance motivate managers to retain their strategies in a competitive environment? As products in modern society have a very short life span and change rapidly, it is very dangerous for a company to stay in one place without any change in their strategy. Therefore, this paper focuses on the relationship between past performance and strategic choices of firms, and considers managerial incentive as a mediator between the two, even in a rapidly changing society. We analyze three aspects of change in a firm’s product strategies –market preemption, product diversification, and incremental product innovation–to observe the effect of inertia in the U.S. smartphone market. The results showed that past good performance resulted in some company strategies becoming passive. In addition, the past good performance of a company showed negative effects in expanding its market segment. The results were similar in terms of incremental product innovation. This implies that companies did not devote more time to product development once their products were valued well. Consequently, our paper empirically tested that past good performance caused inertia in product diversification and incremental product innovation strategies. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse17:169477&r=tid |