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

  1. Explaining firm sensitivity to R&D subsidies within a dose-response model: The role of financial constraints, real cost of investment, and strategic value of R&D By Giovanni Cerulli; Bianca Poti'
  2. Modelling the joint impact of R&D and ICT on productivity: A frontier analysis approach By Fabio Pieri; Michela Vecchi; Francesco Venturini
  3. Exploring the Relationship Between Human Capital and Innovation at the Firm Level: A study on a Sample of European Firms By D'AMORE, Rosamaria; IORIO, Roberto; LUBRANO LAVADERA, Giuseppe
  4. Technological Spillovers, Product Market Rivalry and R&D Investment By Thomas Grebel; Lionel Nesta
  5. Structural change, expanding informality and labour productivity growth in Russia By Voskoboynikov, Ilya B.
  6. Services in Global Value Chains: Trade patterns and gains from specialisation By Sébastien Miroudot; Charles Cadestin
  7. Regional Innovator Networks - A Review and an Application with R By Holger Graf
  8. Foreign Investment and Domestic Productivity: Identifying Knowledge Spillovers and Competition Effects By Vadym Volosovych; Carolina Villegas Sanchez; Bent Sorensen; Sebnem Kalemli-Ozcan
  9. Incumbents' responses to innovative entrants: A multi-country dynamic analysis By Diekhof, Josefine; Cantner, Uwe
  10. Capital misallocation and financial development: A sector-level analysis By Daniela Marconi; Christian Upper
  11. The Changing Geography of Innovation and the Role of Multinational Enterprises By Davide Castellani
  12. The Organization of Global Supply Networks By Loredana Fattorini; Armando Rungi; Zhen Zhu
  13. Global Value Chains and Structural Upgrading By Roman Stöllinger
  14. Job Tasks, Time Allocation, and Wages By Ralph Stinebrickner; Todd R. Stinebrickner; Paul J. Sullivan
  15. Resource allocation and productivity across provinces in China By Peng Bin; Xiaolan Chen; Andrea Fracasso; Chiara Tomasi

  1. By: Giovanni Cerulli; Bianca Poti'
    Abstract: This paper analyzes the determinants of firm additional R&D behavior within a second-generation dose-response model. We consider three sets of R&D behavior’s explanatory factors: (i) firm financial constraints; (ii) investment adjustment costs; and (iii) firm R&D market relevance. Using a sample of Italian manufacturing firms, we find a positive effect of R&D subsidization, mainly driven by companies receiving a comparatively lower share of R&D covered by public support: no more than around 20% (or 15%) for gross (or net) R&D (i.e., threshold effect). Three clear conclusions are then drawn from further inspection: (i) liquidity constraints (or funding structure) discriminate between different firm response to public subsidy; (ii) investment adjustment costs, approximated by the size of the R&D project (including the amount of subsidy), discourage firm additionality behavior, and (iii) firm size and strategic relevance of R&D make companies more responsive to public support.
    Keywords: R&D public subsidies; policy evaluation; dose-response models
    Date: 2016
  2. By: Fabio Pieri; Michela Vecchi; Francesco Venturini
    Abstract: This study explores the channels through which technological investments affect productivity performance of industrialized economies. Using a Stochastic Frontier Model (SFM) we estimate the productivity effects of R&D and ICT for a large sample of OECD industries between 1973 and 2007, identifying four channels of transmission: input accumulation, technological change, technical efficiency and spillovers. Our results show that ICT has been particularly effective in reducing production inefficiency and in generating inter-industry spillovers, while R&D has raised the rate of technical change and favoured knowledge spillovers within sectors. We also quantify the contribution of technological investments to output and TFP growth documenting that R&D and ICT accounted for almost 95% of TFP growth in the OECD area.
    Keywords: Research & Development, Information and Communication Technology, Productivity, Stochastic frontier models
    JEL: O14 O32 O47
    Date: 2017
  3. By: D'AMORE, Rosamaria (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy); IORIO, Roberto (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy); LUBRANO LAVADERA, Giuseppe (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy)
    Abstract: In this paper, we explore the relationship between the human capital “embodied” in the workforce and the innovative capabilities of the firm, adopting an international comparative perspective. In fact data come from a survey (EFIGE) run in seven European countries during the 2007-2009 period. They are analysed with several models of multivariate analysis also with the support of a semi-parametric model. Our results show a positive relationship between the ratio of graduated employees and the percentage of turnover from innovative products, being the share of personnel employed in R&D constant. This relationship is not linear: we find decreasing marginal returns for human capital and R&D. We then find a complementarity between human capital and R&D: the strength of the link between human capital and innovation is higher when the firm’s R&D increases. We also find some significant differences in the intensity of the human capital/innovation link across different countries.
    Keywords: Human capital; R&D; Innovation;
    JEL: D22 J24 O32
    Date: 2017–04–29
  4. By: Thomas Grebel (Technische Universität Ilmenau, Germany); Lionel Nesta (Université Côte d'Azur; GREDEG CNRS; OFCE Sciences Po.; SKEMA Business School)
    Abstract: We investigate the determinants of the sign of R&D reaction functions of two rival firms. Using a two-stage Cournot competition game, we show that this sign depends on four types of environments in terms of product rivalry and technology spillovers. We test the predictions of the model on the world's largest manufacturing corporations. Assuming that firms make R&D investments based on the R&D effort of the representative rival company, we develop a dynamic panel data model that accounts for the endogeneity of the decision of the rival firm. Empirical results corroborate the validity of the theoretical model.
    Keywords: Process R&D, Spillovers, Product substitution, Reaction function, GMM
    JEL: D43 L13
    Date: 2017–11
  5. By: Voskoboynikov, Ilya B.
    Abstract: Intensive growth, structural change and expanding informality has characterized many developing and emerging economies in recent decades. Yet most empirical investigations into the relationship between structural change and productivity growth overlook informality. This paper includes the informal sector in an analysis of the effects of structural changes in the Russian economy on aggre-gate labour productivity growth. Using a newly developed dataset for 34 industries covering the period 1995–2012 and applying three alternative approaches, aggregate labour productivity growth is decomposed into intra-industry and inter-industry contributions. All three approaches show that the overall contribution of structural change is growth-enhancing, significant and attenuating over time. Labour reallocation from the formal sector to the informal sector tends to reduce growth through the extension of informal activities with low productivity levels. Sectoral labour reallocation effects are found to be highly sensitive to the methods applied.
    JEL: O11 O17 C82 N14
    Date: 2017–11–29
  6. By: Sébastien Miroudot (OECD); Charles Cadestin (OECD)
    Abstract: Within global value chains (GVCs), services and manufacturing activities are intertwined. This report further investigates the role played by services in GVCs by looking at patterns of specialisation in 23 services industries over the period 2000-2014. Relying on the concept of revealed comparative advantage, it highlights that all countries have a comparative advantage in specific services industries, either in services within manufacturing value chains or in services exported as final products to consumers. A value-added approach is important to analyse the specialisation in services. In addition, there are tangible productivity gains out of this specialisation, as well as gains in terms of employment. Finally, empirical results suggest that services trade restrictiveness negatively affects bilateral flows of service value-added within GVCs. Both domestic reforms and the reduction of barriers in partner countries can benefit services sectors and the activities that rely on services inputs.
    Keywords: global value chains, productivity, revealed comparative advantage, Services, servicification, trade in services, trade in value-added
    JEL: F13 F14 F23 L80
    Date: 2017–12–06
  7. By: Holger Graf (FSU Jena)
    Abstract: The article serves as an introduction to the empirical analysis of innovation or knowledge networks based on patent data with a particular focus on regional networks. I provide a review of the literature of innovation networks and how it connects to systemic approaches within the field of innovation studies. The SNA methodology is introduced by performing a comparative regional network study based on the publicly available OECD patent databases.
    Keywords: Regional Innovation, Network Analysis, Patent Data
    JEL: L14 O31 R11
    Date: 2017–11–08
  8. By: Vadym Volosovych (Erasmus University Rotterdam); Carolina Villegas Sanchez (ESADE Business School); Bent Sorensen (University of Houston); Sebnem Kalemli-Ozcan (University of Maryland)
    Abstract: We identify knowledge spillovers from foreign investment to domestic firms using novel measures of ``closeness'' of foreign-owned and domestic and domestic firms in product space and in technology space. We rely on a new data set that spans six advanced countries connecting firms internationally in order to, a) separate competition effects on domestic firms from knowledge spillovers when domestic and foreign-owned firms are close in product space, and b) identify spillovers from foreign-owned firms that are close to domestic firms in technology space. We find strong negative competition effects on domestic firms that produce in the same {four-digit} sector as the foreign firms and positive knowledge spillovers to domestic firms operating in the same {two-digit} sector (but in different four-digit sectors). Using a measure of ``technological closeness,'' building on the work of Bloom, Schankerman, and van Reenen (2013), we find significant knowledge spillovers to firms which are close in technology space. On average, knowledge spillovers explain 60 percent of the total factor productivity improvement for domestic firms that are technologically close to foreign firms.
    Date: 2017
  9. By: Diekhof, Josefine; Cantner, Uwe
    Abstract: The influence of innovative entrants on incumbents is considered important for technological change. We analyze this influence for the global transition towards alternative technology vehicles (ATVs). Our results indicate that entrants' ATV-related knowledge accumulation stimulates average incumbent's ATV-related research. Regarding global entrants, incumbents with higher ATV patent stocks increased patenting stronger; supporting previous literature on competitive reactions to entry. Responding to domestic entrants, however, incumbents with low ATV patent stocks increased whereas incumbents with high stocks decreased patenting; suggesting that advanced incumbents outsource research or overtake entrants. Further, certain characteristics and not merely the quantity of entrants drive incumbents' responses.
    Keywords: Environmental Economics,Sustainable Development,Technological Innovation,Firm Behavior: Empirical Analysis,Entrepreneurship,Industry Dynamics,Automobile Industry,Electric Vehicle
    JEL: Q01 Q55 D22 L26 L62 O31
    Date: 2017
  10. By: Daniela Marconi; Christian Upper
    Abstract: This study investigates how financial development affects capital allocation across industries in a panel of countries at different stages of development (China, India, Mexico, Korea, Japan and the US) over the period 1980-2014. Following the approach proposed by Chari et al (2007) and Aoki (2012), we compute wedges for capital and labour inputs for 26 industrial sectors in the six countries and add them up to economy-wide measures of capital and labour misallocation. We find that more developed financial systems allocate capital investment more efficiently than less developed ones. If financial development is low, faster capital accumulation is associated with a worsening of allocative efficiency. This effect reverses for higher levels of financial development. Sectors with high R&D expenditures or high capital investment benefit most from financial development. These effects are not only statistically significant, they are also large in economic terms.
    Keywords: factor allocation, total factor productivity, financial development
    JEL: E22 E23 O16 O47
    Date: 2017–11
  11. By: Davide Castellani (Henley Business School, University of Reading)
    Abstract: This paper provides descriptive evidence of the changing geography of inventive activity and the role of MNEs international R&D activities, with quite an extensive geographical coverage. Results highlight that ‘local buzz’ is crucial for the development of knowledge in local economies, and it leads to persistence in innovative activities. However, ‘global pipelines’ are also becoming a crucial element for the successful development of local knowledge. In particular, we first find that the number of regions involved in patenting has increased threefold since the 1980s. Second, despite this increase in the number of regions patenting, 70% of inventions come from the top 100 regions. Third, although the hierarchy of the top patenting regions is not immobile, the propensity to patent is quite dependent on previous innovation. Fourth, international collaboration in patenting has been steadily on the rise over the last three decades. Fifth, international R&D investments of MNEs are indeed also very concentrated in a few locations, which can also be quite distant from the MNEs headquarters’ location.
    Keywords: geography of innovation, MNEs, regions, local buzz, global pipelines
    JEL: F23 R11 O33
    Date: 2017–02
  12. By: Loredana Fattorini (IMT School for advanced studies); Armando Rungi (IMT School for advanced studies); Zhen Zhu (IMT School for advanced studies)
    Abstract: In this contribution, we introduce a network approach for the organization of global production across national borders, beyond the sequential industry-level metrics proposed in the previous literature. First, we show and argue that several characteristics of global production processes would be lost in the analysis when assuming that they could be proxied as linear sequences. Hence, we propose an index that assesses the relevance of any input for the target output, including its role as an input of inputs. Thereafter, we exploit an own-built firm-level dataset of about 20,489 U.S. parent companies integrating more than 154,000 affiliates worldwide. Results show that the technological relevance of an input in a directed supply network is also a good predictor for: i) the probability that an input industry is actually integrated within a firm boundary; ii) the number of affiliates that are controlled by the parent company and active in that input industry.
    Keywords: global value chains, supply networks, vertical integration, upstreamness, firm theory
    JEL: F23 L23 L22 D57 F14
    Date: 2017–11
  13. By: Roman Stöllinger (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Global value chains (GVCs) are increasingly seen as a part of the industrial policy toolkit as they facilitate the entry into global markets and MNEs have greater incentives to share knowledge within their production network. Making use of international input-output data for 53 countries, this paper investigates econometrically how countries’ participation in GVCs affects structural upgrading. A sizeable structural change bonus arising from increasing GVC trade is identified for emerging and transition economies. However, this bonus is not stronger for GVC trade than for trade in general. Therefore, the role of GVCs as an industrial policy tool should not be overestimated.
    Keywords: structural upgrading, global value chains, cross-country production sharing, industrial policy, emerging and transition economies
    JEL: F12 O14 O25
    Date: 2017–11
  14. By: Ralph Stinebrickner; Todd R. Stinebrickner; Paul J. Sullivan
    Abstract: While a burgeoning literature has extolled the conceptual virtues of directly measuring the underlying job tasks that define work activities, in practice task-based approaches have been hampered by well-known data limitations. We study wage determination using data collected specifically to address these limitations. Most fundamentally, we construct the first longitudinal dataset containing job-level task information for individual workers. New quantitative task measures take advantage of unique survey questions that ask respondents to detail the amount of time spent performing People, Information, and Objects tasks at different skill levels. These measures have clear interpretations, suggest natural proxies for on-the-job human capital accumulation, and provide methodological guidance for future data collection initiatives. A model of comparative advantage highlights the benefits of the unique data features, and guides the specification and interpretation of empirical models. We provide new findings about the effect of current and past tasks on wages. First, current job tasks are quantitatively important, with high skilled tasks being paid substantially more than low skilled tasks. Second, there is no evidence of learning-by-doing (i.e., effects of past tasks) for low skilled tasks, but strong evidence for high skilled tasks. Current and past high skilled information tasks are particularly valuable, although high skilled interpersonal tasks also play a significant role. Shifting 10 percent of work time from low skilled people tasks to high skilled information tasks increases a worker’s yearly wage by 22 percent after ten years. The accumulation of valuable task-specific experience accounts for 70 percent of this increase, and the direct current-period effect of performing different tasks accounts for the remainder.
    JEL: J24
    Date: 2017–11
  15. By: Peng Bin; Xiaolan Chen; Andrea Fracasso; Chiara Tomasi
    Abstract: The rapid economic development in China has been characterized by levels of income and productivity very heterogeneous across local areas. This work investigates a previously unexplored aspect of such heterogeneity by assessing the degree of within-industry allocative e ciency across provinces in China over the period 1998-2007. Us- ing firm-level data from the surveys conducted by the National Bureau of Statistics on the Chinese manufacturing firms, we measure the degree of resource misallocation by computing the within-industry covariance between size and productivity at the provincial level. The results suggest that within-industry allocative e ciency varies considerably across local areas and that some place-based factors strongly influence resources mobility. Our work sheds some light on the mechanisms at play in the dis- tribution of resources in China and it contributes to the literature investigating the degree of allocative effciency.
    Keywords: Allocative effciency, Resource allocation, Regional disparities, China
    JEL: D24 L25 O47 F41
    Date: 2017

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