nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2018‒02‒19
thirteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Testing a model of UK growth - a causal role for R&D subsidies By Minford, Lucy; Meenagh, David
  2. Estimating the benefits of R&D subsidies for Germany By Koehler, Mila
  3. Heterogeneous R&D spillovers and sustainable growth: Limits to efficient regulation By Anton Bondarev
  4. Changing demand for general skills, technological uncertainty, and economic growth By Masashi Tanaka
  5. Patent-based Estimation Procedure of Private R&D: The Case of Climate Change and Mitigation Technologies in Europe By Francesco Pasimeni; Alessandro Fiorini; Aliki Georgakaki
  6. Innovative events By Max Nathan; Anna Rosso
  7. From R&D to market: using trademarks to capture the market capability of top R&D investors By Castaldi Carolina; Mafini Dosso
  8. What induces firms to license foreign technologies? International survey evidence By Dohse, Dirk; Goel, Rajeev K.; Nelson, Michael A.
  9. Countries’ attractiveness: An analysis of EU firms’ decisions to (de)localize R&D activities By Michele Cincera; Anabela Marques Santos
  11. New Challenges for Industrial and Structural Policy By Karl Aiginger
  12. Misallocation and Aggregate Productivity across Time and Space By Diego Restuccia
  13. Changing Business Dynamism and Productivity: Shocks vs. Responsiveness By Ryan A. Decker; John C. Haltiwanger; Ron S. Jarmin; Javier Miranda

  1. By: Minford, Lucy (Swansean University); Meenagh, David (Cardiff Business School)
    Abstract: We show that a DSGE model in which subsidies to private sector R&D stimulate economic growth, following the predictions of semi-endogenous growth theory, can account for the joint behaviour of UK output and total factor productivity for 1981-2010. R&D subsidies are measured as government- funded R&D performed by the private sector as a proportion of total private sector R&D. We estimate and test the performance of the model using Indirect Inference, and also investigate the robustness of the results using a Monte Carlo exercise. Our f•ndings indicate that sharp cuts in R&D subsidies tend to have highly persistent growth e¤ects in the UK.
    Keywords: R&D, subsidies, economic growth, government policy.
    JEL: E00 O00 O38 O50
    Date: 2018–01
  2. By: Koehler, Mila
    Abstract: In Germany, R&D subsidies are an important tool to support innovation in the private sector. This paper studies the welfare effects of R&D subsidies distributed through the German federal government's thematic R&D programs between 1994 and 2011. The analysis is based on a structural model of the R&D subsidy process which allows to estimate the benefits of R&D subsides to the German economy. The model takes into account heterogeneous application costs of firms and identifies the effect of the subsidy on the federal government's utility as well as on firm profits. Assuming a welfare-maximizing federal government, the estimated average social rate of return is 34% for Germany in the period 1994 to 2011. Thereby effects on firm profits are similar to effects on spillovers to the rest of the German economy. Besides results show that the subsidy rate decision in Germany remained remarkably stable over time, and that application costs as well as the marginal profitability of subsidized R&D projects are lower after the year 2000 compared to the years before.
    Keywords: R&D,Innovation,R&D Subsidies,Innovation Policy,Welfare Economics
    JEL: D61 H25 L59 O31 O38
    Date: 2018
  3. By: Anton Bondarev (University of Basel)
    Abstract: This paper introduces heterogeneity of cross-technologies interactions into the double-differentiated R&D-based endogenous growth model. In this model new technologies appear continuously and older are outdated generating structural change. All technologies may interact with each other through knowledge spillovers which are technology-specific and this results in innovations' heterogeneity. The conditions on the shape of these interactions for the existence of the (sustained) growth path in the decentralized economy as well as for the social planner's problem are estab- lished. Next the necessity for government interventions depending on the complexity of these interactions is studied. At last the scale and duration of interventions are demonstrated to be functions of spectral properties of the interactions operator.
    Keywords: endogenous structural change; endogenous growth; technological spillovers; R&D policy; government regulation; dynamic stability; spectral theory; optimal control
    JEL: C61 O32 O38 O41 H3
    Date: 2018
  4. By: Masashi Tanaka (Graduate School of Economics, Osaka University)
    Abstract: We develop a simple endogenous growth model featuring individuals f choices between general and firm-specific skills, endogenous technological innovation, and a government subsidy for education. General skills are less productive than are specific skills, but they enable workers to operate all technologies in the economy. We show that demand for general skills increases as countries catch up to the world technology frontier. Further, using aggregated data for 12 European OECD counties, we calibrate the model and compare the theoretical prediction with the data. In cross-country comparisons, we find that the returns on general skills and the impact of general education expenditure on GDP are higher in countries with higher total factor productivity. These findings support our theoretical argument of the positive relationship between firms f demand for general skills and countries f stages of development.
    Keywords: General and specific skills, Technological uncertainty, Education policy, Distance to world technology frontier
    JEL: J24 O33 O40 I22
    Date: 2018–01
  5. By: Francesco Pasimeni (European Commission, JRC , Directorate C7, Knowledge for Energy Union, PO Box 2, NL-1755 ZG Petten, Netherlands; SPRU, University of Sussex, UK); Alessandro Fiorini (European Commission, JRC , Directorate C7, Knowledge for Energy Union, PO Box 2, NL-1755 ZG Petten, Netherlands); Aliki Georgakaki (European Commission, JRC , Directorate C7, Knowledge for Energy Union, PO Box 2, NL-1755 ZG Petten, Netherlands)
    Abstract: Information on R&D expenditure of the private sector is very limited, both in term of availability and data quality, especially when interest focuses on Climate Change Mitigation Technologies (CCMTs). This has an impact on the robustness of quantitative analyses, and, consequently, on the insights deriving from them. This paper proposes a methodology to estimate R&D expenditure in firms simultaneously active in multiple technology sectors, with the focus on those contributing to the development of CCMTs. The methodological approach is applied to measure how the private sector invests in R&D dedicated to CCMTs, and how this differentiates among European countries. Further the paper proposes metrics to analyse the geographical distribution of the R&D expenditures in Multinational Corporations (MNCs) across subsidiaries located in Europe. Early findings are formulated into useful insights for stakeholders and policy makers.
    Keywords: R&D; Patent; Invention; Climate change mitigation technologies; Energy sector
    JEL: C81 O32 O34 O38 Q48
    Date: 2018–01
  6. By: Max Nathan (University of Birmingham); Anna Rosso (University of Milan)
    Abstract: Policymakers need to understand innovation in high-profile sectors like technology. This can be surprisingly hard to observe. We combine UK administrative microdata, media and website content to develop experimental measures of firm innovation – new product/service launches – that complement existing metrics. We then explore the innovative performance of technology sector SMEs – firms also of great policy interest – using panel fixed effects settings, comparing conventional and machine-learning-based definitions of industry space. For companies with event coverage, tech SMEs are substantially more launch-active than non-tech firms, with suggestive evidence of firm-city interactions. We use instruments and reweighting to handle underlying event exposure probabilities.
    Keywords: innovation, ICT, data science
    JEL: L86
    Date: 2017–10–09
  7. By: Castaldi Carolina (School of Innovation Sciences, Eindhoven University of Technology); Mafini Dosso (European Commission - JRC)
    Abstract: This paper investigates the links between the market capability of top corporate R&D investors (EU Industrial R&D Investment Scoreboards), as captured by trademark data and their economic performance in terms of net sales growth. It provides empirical evidence to better understand the extent to which companies, operating in different industrial sectors, combine technological capabilities with commercialization efforts to generate and appropriate the economic returns of their R&D investments. This paper shows how different dimensions of firms’ market capabilities can be captured through trademark indicators. The results suggest that complementing R&D efforts and patenting activities with strong and specific market capabilities can indeed yield significant growth premiums. Moreover, offering services seems to pay off depending on the intensity of R&D investments. Yet, a quantile regression approach and a series of robustness checks indicate that such effects differ across the quantiles of the conditional sales growth distribution.
    Keywords: R&D, trademarks, innovation, sales, services
    JEL: O32 O34 L10
    Date: 2018–01
  8. By: Dohse, Dirk; Goel, Rajeev K.; Nelson, Michael A.
    Abstract: The paper provides firm-level insights into the drivers of foreign technology licensing from the perspective of the licensee, using data across 114 nations. Drawing on the theoretical foundations related to knowledge spillovers, results show that manufacturing firms with own R&D capabilities were more likely to license foreign technologies, as were larger firms and those situated in the nations' main business city. Greater literacy facilitated foreign technology licensing, while overall economic prosperity of a nation did not have a significant impact. Interestingly, higher domestic interest rates, related to capital costs and to overall monetary policy, induced firms to license technology from abroad. Finally, some institutions like greater economic freedom aided technology licensing, while others like strong patent protection were not found to have a sizable impact.
    Keywords: technology licensing,R&D,firm size,location,taxes,informal competition
    JEL: L24 O33 O57
    Date: 2018
  9. By: Michele Cincera; Anabela Marques Santos
    Abstract: The aim of the paper is to explore which factors explain the reasons for firms’ decisions to delocalize their R&D activities outside or within the EU. Special attention is given to the influence of public policies to support R&D on the decisions to (de)localize R&D activities. The main source of information is “The EU survey on R&D Investment Business Trends” for the years 2007-2013. The methodology is based on a descriptive analysis of these surveys, on benchmarking with other economic studies in the field and a SWOT analysis of R&D activity location in the EU. The analysis reveals that the quality of R&D personnel and access to network knowledge (with firms, universities and public organizations) are the most important factors for locating R&D activities in a given region or country. Public support for R&D appears to be relegated to a secondary position in the decision to locate R&D activities.
    Keywords: R&D localization; public support; Europe
    Date: 2017–12
  10. By: Bettina Peters; Rebecca Riley; Iulia Siedschlag; Priit Vahter; John McQuinn
    Abstract: This paper examines the links between internationalisation, innovation and productivity in service enterprises. For this purpose, we use micro data from the Community Innovation Survey 2008 in Germany, Ireland and the United Kingdom, and estimate an augmented structural model. Our empirical evidence highlights the importance of internationalisation in the context of innovation outputs in all three countries. Our results indicate that innovation in service enterprises is linked to higher productivity. In all three countries analysed, among the innovation types that we consider, the strongest link between innovation and productivity was found with marketing innovations.
    Keywords: internationalisation of services; innovation; productivity
    JEL: L25 O31
    Date: 2018
  11. By: Karl Aiginger (WIFO)
    Abstract: Competitiveness is an important goal for economic policy and companies. However, it is defined in highly different ways, and this often results in contradictory economic policy conclusions. The present paper shows the path from a purely cost-oriented point of view to a definition based on economic and societal goals. This definition allows consistent pursuit of a high-road strategy: it uses innovation, skills and ambitions to achieve high income levels, social cohesion and ecological excellence. The concept as well as the economic development recommends also redefining industrial policy as systemic policy and a concept of structural policy focussing on innovation, skill upgrading, sustainability and the quality of the public sector and to change from a purely market based to a "responsible" globalisation. On the basis of the new concept, the competitiveness of European countries based on broader welfare indicators is definitely higher than on per-capita income alone. None of the more successful European countries is pursuing a cost-oriented, low-road strategy.
    Keywords: Wettbewerbsfähigkeit, systemische Industriepolitik, Beyond-GDP-Ziele, Sustainable Development, investive Sozialpolitik, verantwortungsbewusste Innovationen
    Date: 2018–02–03
  12. By: Diego Restuccia
    Abstract: Productivity is at the core of the large differences in per-capita income across countries. What accounts for international productivity differences? I discuss the possible cross-country differences in the allocation of inputs across heterogeneous production units---misallocation---as a factor in accounting for aggregate productivity. The policies and institutions generating misallocation are prevalent in poor and developing countries, and may also be responsible for differences in the selection and technology use of operating producers, contributing substantially to per-capita income differences across countries.
    Keywords: productivity, misallocation, selection, technology, regulation, trade, financial frictions, agriculture.
    JEL: O11 O14 O4
    Date: 2018–02–08
  13. By: Ryan A. Decker; John C. Haltiwanger; Ron S. Jarmin; Javier Miranda
    Abstract: The pace of job reallocation has declined in all U.S. sectors since 2000. In standard models, aggregate job reallocation depends on (a) the dispersion of idiosyncratic productivity shocks faced by businesses and (b) the marginal responsiveness of businesses to those shocks. Using several novel empirical facts from business microdata, we infer that the pervasive post-2000 decline in reallocation reflects weaker responsiveness in a manner consistent with rising adjustment frictions and not lower dispersion of shocks. The within-industry dispersion of TFP and output per worker has risen, while the marginal responsiveness of employment growth to business-level productivity has weakened. The responsiveness in the post-2000 period for young firms in the high-tech sector is only about half (in manufacturing) to two thirds (economy wide) of the peak in the 1990s. Counterfactuals show that weakening productivity responsiveness since 2000 accounts for a significant drag on aggregate productivity.
    JEL: D24 E24 J23 L26
    Date: 2018–01

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