nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2017‒11‒12
fifteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. The impact of investment in innovation on productivity: firm-level evidence from Ireland By Di Ubaldo, Mattia; Siedschlag, Iulia
  2. Measuring the Spillovers of Venture Capital By Monika Schnitzer; Martin Watzinger
  3. Subsidized and non-subsidized R&D projects: Do they differ? By Koehler, Mila; Peters, Bettina
  4. A Long-Run Perspective on the Spatial Concentration of Manufacturing Industries in the United States By Nicholas Crafts; Alexander Klein
  5. Labour Market Polarization in Advanced Countries: Impact of Global Value Chains, Technology, Import Competition from China and Labour Market Institutions By Koen Breemersch; Jože P. Damijan; Jozef Konings
  6. Can Licensing Induce Productivity? Exploring the IPR Effect By Luis Castro Peñarrieta; Gustavo Canavire-Bacarreza
  7. The division of labour between academia and industry for the generation of radical inventions By Ugo Rizzo; Nicolò Barbieri; Laura Ramaciotti; Demian Iannantuono
  8. The impact of Energy Prices on Employment and Environmental Performance : Evidence from French Manufacturing Establishments By Giovanni Marin; Francesco Vona
  9. Japanese Plants' Heterogeneity in Sales, Factor Inputs, and Participation in Global Value Chains By ITO Koji; Ivan DESEATNICOV; FUKAO Kyoji
  10. Recent US Manufacturing Employment: The Exception that Proves the Rule By Robert Z. Lawrence
  11. Performance Heterogeneity Among Service-Sector Entrepreneurial Spinoffs By Richard A. Hunt; Daniel A. Lerner
  12. The sources of heterogeneity in firm performance: lessons from Italy By A. Arrighetti; E. Bartoloni; F. Landini
  13. What Drives Spatial Clusters of Entrepreneurship in China? Evidence from Economic Census Data By Zheng, Liang; Zhao, Zhong
  14. A Model of Diversification and Growth in Developing Economies By Manuel Agosin
  15. The Life-cycle Growth of Plants in Colombia: Fundamentals vs. Distortions By Eslava, Marcela; Haltiwangerz, John

  1. By: Di Ubaldo, Mattia; Siedschlag, Iulia
    Abstract: This paper examines the relationship between investment in innovation and productivity across firms in Ireland. We estimate a structural model using information from three linked micro data sets over the period 2005-2012 and identify the relationships between investment in innovation, innovation outputs and productivity. Our results indicate that innovation is positively linked to productivity. This result holds for all types of innovation and for both R&D and non-R&D expenditures. The innovation-related productivity gains range from 16.2 per cent to 35.4 per cent. The strongest link between innovation and productivity is found for firms with R&D spending and with product innovation.
    Date: 2017–09
  2. By: Monika Schnitzer; Martin Watzinger
    Abstract: We provide the first measurement of knowledge spillovers from venture capital-financed companies onto the patenting activities of other companies. On average, these spillovers are nine times larger than those generated by the R&D investment of established companies. Spillover effects are larger in complex product industries than in discrete product industries. Start-ups with experienced inventors holding a patent at the time of receiving the first round of investment produce the largest spillovers, indicating that venture capital fosters the commercialization of technologies. Methodologically, we contribute by developing a novel definition of the spillover pool, combining citation-based and technological proximity-based approaches.
    Keywords: venture capital, spillovers, innovation
    JEL: G24 O30 O31 O32
    Date: 2017
  3. By: Koehler, Mila; Peters, Bettina
    Abstract: Little is known about whether and to what extent the outcome of subsidized and non-subsidized R&D projects differ. In this paper we exploit a novel dataset of patent applications filed in Germany between 1995-2005, which allows us to identify if a patent application stems from a subsidized project or not. We use a variety of patent indicators to elucidate to what extent successful subsidized and non-subsidized R&D projects within the same firm differ. Results show that patent applications from subsidized R&D projects have a higher private value, are more often co-applied, more general, but less original, and have larger inventor teams when compared to all other patent applications filed by the same firms. These differences seem to reflect that thematic R&D programs aim to support collaborative R&D projects that have an immediate economic utilization of results.
    Keywords: R&D,subsidies,patents,evaluation,project-level analysis,within firm comparison
    JEL: H25 H50 O31 O34 O38
    Date: 2017
  4. By: Nicholas Crafts; Alexander Klein
    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 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 in 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
  5. By: Koen Breemersch (University of Leuven); Jože P. Damijan (University of Ljubljana); Jozef Konings (Nazarbayev University)
    Abstract: This paper explores the effects of offshoring, technology and Chinese import competition on labor market polarization in European countries. We find that polarization occurs mostly as a result of polarization within individual industries, while the reallocation of employment away from less polarized industries towards more highly polarized industries also contributed to a lesser extent. In manufacturing, within-industry polarization is mostly associated with technological change, but we also find some tentative evidence that Chinese import competition contributed as well. In other private industries outside of manufacturing, technological change and offshoring are the most relevant forces affecting within-industry polarization. The process of between-industry polarization is driven by widespread deindustrialization in developed countries. We find that Chinese import competition contributed to the decline of employment in the less polarized manufacturing industries. Differences in labor market institutions only explain a limited amount of cross-country variation in the association of polarization and the three forces we consider.
    JEL: E24 F14 F16 J23 J31 L60 O47
    Date: 2017–10–31
  6. By: Luis Castro Peñarrieta; Gustavo Canavire-Bacarreza
    Abstract: Licensing is one of the main channels for technology transfer from foreignowned multinational enterprises (MNEs) to domestic plants. This transfer occurs within industries and across industries, which results in technology spillovers that can affect both intra- and inter-industry productivity. We propose a theoretical model that predicts that this effect can be enhanced by the implementation of stronger intelectual property rights (IPR). Using Chilean plant-level data for the 2001–2007 period and exogenous variation from a reform in 2005, we test our theoretical predictions and find positive inter-industry effects, which result in higher productivity for domestic plants. However, there are negative spillovers when licensing is implemented within the same industry. We also test for the effect of stronger IPR and find that stronger IPR reduces intra-sector spillovers but increases inter-industry spillovers. Moreover, the IPR effect is stronger on firms that are, on average, smaller and have low productivity. Our results are robust not only to a series of definitions of IPR, licensing and productivity but also to a set of different specifications.
    Keywords: Technology Licensing, Productivity, Spillovers, Chile
    JEL: O34 O44 C5 K2
    Date: 2017–10–30
  7. By: Ugo Rizzo (Department of Economics and Management, University of Ferrara, Italy); Nicolò Barbieri (Department of Economics and Management, University of Ferrara, Italy); Laura Ramaciotti (Department of Economics and Management, University of Ferrara, Italy); Demian Iannantuono (Department of Economics, University of Parma, Italy)
    Abstract: The paper investigates the relationship between radical technological development and public research. This study draws on the theory of recombinant innovation, and builds on two newly developed indicators of radicalness (Verhoeven et al., 2016) to analyse UK patents filed at the European Patent Office. It assesses whether the proximity of the invention to public research is related to a higher probability of the invention being radical. The results show that, depending on the type of novelty embodied by the radical invention (novelty in recombinant rather than novelty in technological origin), different forms of public research relate to the radicalness of invention in different ways. We found also that these relationships are heterogeneous across technological sectors. Policy implications are derived.
    Keywords: Radical invention, novelty, patent, recombination, public research
    JEL: O30 O31 O34
    Date: 2017–11
  8. By: Giovanni Marin (University of Urbino "Carlo Bo"; SEEDS, Ferrara, Italy.); Francesco Vona (OFCE, Sciences Po Paris, 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 establishmentspecific energy prices. Our results highlight a trade-off between environmental and economic goals: although a 10 percent increase in energy prices brings about a 6 percent reduction in energy consumption and to a 11 percent reduction in CO2 emissions, such an increase also has a modestly negative impact on employment (-2.6 percent) and very small impact on wages and productivity. The negative employment effects are mostly concentrated in energyintensive 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: 2017–10–23
  9. By: ITO Koji; Ivan DESEATNICOV; FUKAO Kyoji
    Abstract: Recent research has emphasized the importance of global value chains (GVCs) in inter-country linkages and international production fragmentation. Several initiatives have attempted to construct multi-country input-output tables (MIOTs) to analyze these trends. However, heterogeneity in export and domestic activities among firms within the same industry may cause biases in analyses that rely on MIOTs. This paper has two main objectives. First, we use matched employer-employee data for Japan to split output in each industry in Japan's manufacturing sector in the Organisation for Economic Co-operation and Development (OECD) Inter-Country Input-Output (ICIO) table into output for export or domestic sale. Second, using our split ICIO table, we compute trade in value added (TiVA) indicators to examine the participation of Japanese manufacturing plants in GVCs and compare our results with the OECD-WTO TiVA indicators. Our estimates suggest that Japan's forward participation in GVCs is lower than in the original OECD-WTO TiVA indicators when we take plant heterogeneity within industries into account. We infer that this result is due to higher cross-border production fragmentation as well as the large presence of multinational companies and intra-industry trade in the manufacturing sector.
    Date: 2017–10
  10. By: Robert Z. Lawrence (Peterson Institute for International Economics)
    Abstract: This Working Paper challenges two widely held views: first that trade performance has been the primary reason for the declining share of manufacturing employment in the United States, and second that recent productivity growth in manufacturing has actually been quite rapid but is not accurately measured. The paper shows that for many decades, faster productivity growth interacting with unresponsive demand has been the dominant force behind the declining share of employment in manufacturing in the United States and other industrial economies. It also shows that since 2010, however, the relationship has been reversed and slower productivity growth in manufacturing has been associated with more robust performance in manufacturing employment. These contrasting experiences suggest a tradeoff between the ability of the manufacturing sector to contribute to productivity growth and its ability to provide employment opportunities. While some blame measurement errors for the recently recorded slowdown in manufacturing productivity growth, spending patterns in the United States and elsewhere suggest that the productivity slowdown is real and that thus far fears about robots and other technological advances in manufacturing displacing large numbers of jobs appear misplaced.
    Keywords: Trade Adjustment Costs, Inequality, Income Distribution
    JEL: D24 J21 O14 F16
    Date: 2017–11
  11. By: Richard A. Hunt (Division of Economics and Business, Colorado School of Mines); Daniel A. Lerner (Deusto Business School, Universidad Deusto)
    Abstract: In recent years, beliefs about entrepreneurial spinoffs have coalesced around several ``stylized facts,'' including the perspective that knowledge is transferred from parent-firms to progeny in hereditary fashion, such that spinoffs emanating from high-quality parent-firms outperform the spinoffs from low-quality parent-firms. This emerging orthodoxy has found some support in fast- changing and technologically complex sectors, but it is less clear whether parental endowments are a key determinant of operational success in the context of service-oriented sectors, which comprise more 80\% of many developed economies. Through the discovery and analysis of a complete industry population, the results of this study suggest that extant perspectives may not fully account for the extreme heterogeneity of performance that is often exhibited by entrepreneurial spinoffs, especially differences among firms spawned by the same parent. These findings contribute to the ongoing discussion of intra-industry entrepreneurial spinoffs by establishing much-needed boundary conditions and by revealing underlying logics that govern the hereditary transfer of knowledge and capabilities among service sector spinoffs.
    Keywords: Entrepreneurial spinoffs, Spinouts, Knowledge transfer, Spillovers, Hereditary endowments, Entrepreneurship, Market entry, New ventures
    Date: 2017–10
  12. By: A. Arrighetti; E. Bartoloni; F. Landini
    Abstract: An extensive literature documents large and persistent within-industry heterogeneity of firm performance. While some authors explain such evidence in terms of factor misallocation, we provide an alternative framework that is based on the interaction among exogenous and endogenous factors. Exogenous factors, both supply and demand-related, define the opportunity set that is available to firms. Endogenous factors reflect instead firm-specific interpretations of such set that combined with the available resources and capabilities determine firm’s strategic responses, which can be markedly heterogeneous. Whenever the diversity of firm conducts is associated with relatively small profit differentials, firm heterogeneity can persist. Evidence based on the evolution of labour productivity dispersion in the Italian manufacturing sector between the 1990s and early 2000s provides support for our interpretative framework.
    Keywords: firm heterogeneity; productivity; profit; misallocation; capabilities; Italy
    JEL: D24 L11 L25
    Date: 2017
  13. By: Zheng, Liang (Central University of Finance and Economics); Zhao, Zhong (Renmin University of China)
    Abstract: Since Chinese government initiated economic reform in the late 1970s, entrepreneurship and private sectors have emerged gradually and played an increasingly important role in promoting economic growth. However, entrepreneurship is distributed unevenly in China. Using micro data from 2008 economic census and 2005 population census, this paper explains spatial clusters of entrepreneurship for both manufacturing and services. For both sectors, entrepreneurship (measured by new private firms) tends to emerge in places with more relevant upstream and downstream firms. Moreover, Chinitz's (1961) theories are also supported for manufacturing: small upstream and downstream firms seem to be more important for manufacturing entrepreneurship. For both sectors, entrepreneurship is positively related to city size, the share of young adults and the elderly population, and foreign direct investment. More migrants are also found to promote service entrepreneurship. Our paper is the first to consider both manufacturing and service entrepreneurship in China and should be of interest to both local and national policymakers who plan to encourage entrepreneurship.
    Keywords: new firm formation, entrepreneurship, Marshallian effect, Chinitz effect, China
    JEL: L26 L60 L80 R10 R12
    Date: 2017–10
  14. By: Manuel Agosin
    Abstract: I build a growth model that resembles the situation of many emerging/developing countries: they are far from the world technological frontier and they have a comparative advantage in one (or a few) primary commodity. Their great challenge is to introduce into the economy goods that are produced elsewhere in the world economy but the technology of which is unknown in the domestic economy. Building new sectors from scratch is hampered by two market failures. In the first place, entrepreneurs must be willing to invest in discovering production technologies abroad and adapting them to local conditions. This process has information externalities: the pioneers have to undertake investments in information that cannot be patented and that can easily be copied by others who haven’t made the investment (copycats). Second, there is a coordination problem. Success in establishing new industries is dependent on non-traded inputs that may serve a whole family of sectors (call them “infrastructure”, for short). In the absence of these inputs, no firms can emerge in any of the sectors composing a given family. This is a task that falls to an extra-market actor (call it the “government”). A simple model allows us to calibrate the conditions under which a government that balances its budget can succeed in maximizing growth. The solution involves subsidizing information investments of pioneers and taxing both the traditional sector and copycats in the modern sectors who may be induced to invest by the investment in information made by pioneers.
    Date: 2017–11
  15. By: Eslava, Marcela; Haltiwangerz, John
    Abstract: We take advantage of rich microdata on Colombian manufacturing establishments to decompose growth over an establishment’s life cycle into that attributable to fundamental sources of idiosyncratic growth \x{0336} physical productivity, demand shocks (firm appeal), and input prices \x{0336} and distortions that weaken the link between those fundamentals and actual growth. We accomplish this using data on quantities and prices for individual products for each manufacturing establishment. Pooling all ages, measured fundamentals explain around 75% of the variability of output relative to birth level, with the remaining 25% explained by distortions and other unobserved factors. Demand shocks and TFPQ are equally important in the explained part, while input prices play a more minor role. Distortions explain more than 50% of the variance in growth up to age seven, but their contribution falls to less than 25% by around age 20. For the fraction explained by fundamentals, early life growth variation is explained by TFPQ with demand and input prices playing a minor role. But demand is the crucial factor in variation in long-run growth, with a contribution that surpases that of TFPQ and unobserved factors by around age 15. In the 2000s compared to the 1980s, two decades separated by a wave of deep structural reforms, the contribution of TFPQ to the variance in life cycle growth grows by around 6 p.p , compensated by a lesser role for input prices and, interestingly, distortions.
    Keywords: Economía, Investigación socioeconómica, Productividad, Sector productivo,
    Date: 2017

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