nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2018‒05‒14
eleven papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Competition effect on innovation and productivity - The Portuguese case By Anabela Santos; Michele Cincera; Paulo Neto; Maria Manuel Serrano
  2. Trade with Benefits: New Insights on Competition and Innovation By JaeBin Ahn; Hyoungmin Han; Yi Huang
  3. Green Technologies and Smart Specialisation Strategies: A European Patent-Based Analysis of the Intertwining of Technological Relatedness and Key-Enabling-Technologies. By Sandro Montresor; Francesco Quatraro,
  4. Academic Inventors and the Antecedents of Green Technologies. A Regional Analysis of Italian Patent Data. By Quatraro, Francesco; Scandura, Alessandra
  5. China's trajectory from production to innovation: Insights from the photovoltaics sector By Gandenberger, Carsten
  6. Innovation, Finance, and Economic Growth : an agent-based model By Giorgio Fagiolo; Daniele Giachini; Andrea Roventini
  7. The Locus of Knowledge Externalities and the Cost of Knowledge. By Antonelli, Cristiano; Colombelli, Alessandra
  8. Structural change in times of increasing openness: assessing path dependency in European economic integration By Claudius Graebner; Philipp Heimberger; Jakob Kapeller; Bernhard Schuetz
  9. Who benefited from industrialization? The local effects of hydropower technology adoption By Stefan Leknes; Jørgen Modalsli
  10. Reconciling the Firm Size and Innovation Puzzle By Anne Marie Knott; Carl Vieregger
  11. Innovation and Trade Policy in a Globalized World By Ufuk Akcigit; Sina T. Ates; Giammario Impullitti

  1. By: Anabela Santos (Université Libre de Bruxelles, iCite); Michele Cincera (Université Libre de Bruxelles, iCite and ECARES); Paulo Neto (Universidade de Évora – Departamento de Economia, UMPP, CEFAGE-UÉ and CIEO-UALG); Maria Manuel Serrano (Universidade de Évora – Departamento de Sociologia, UMPP and SOCIUS-CSG/ISEG-UL)
    Abstract: The aim of the present paper is to assess the effect of competition on innovation (patent applications) and on productivity (Total Factor Productivity and Labour Productivity), using data from 654 Portuguese firms, according to 208 NACE 4-digits sectors, and over the period 2007 to 2015. For this purpose, two different methodological approaches were used, a Poisson regression model for the patent function and a log-log fixed effect model for the productivity function. The results reveal that, on average, competition has a negative, U-shaped form effect on innovation in the short term, and a positive effect in the medium-long term. Nevertheless, the model focusing only on manufacturing sectors shows some differences from the model considering all economic activities, namely a linear positive effect of competition on innovation. Concerning the effect of competition on productivity, a positive effect on Total Factor Productivity emerged from the analysis, while for labour productivity a negative one prevails.
    Keywords: Competition, Innovation, Productivity.
    JEL: L10 O31 D24
    Date: 2018–05
  2. By: JaeBin Ahn (International Monetary Fund); Hyoungmin Han (The Graduate Institute of International and Development Studies, Geneva); Yi Huang (The Graduate Institute of International and Development Studies, Geneva)
    Abstract: This paper examines how Korea’s import and export linkages with China affect the innovation outcomes of Korean manufacturing firms. Using our automated algorithm, we match Korean patent data to KIS-Value firm data from 1996 to 2015. We find that rising import and export with China lead to more patent applications by Korean manufacturing firms, with the positive impact particularly driven by large or public firms compared to SMEs or private firms. Most importantly, all of these results hold only in those sectors with higher quality products than Chinese products, shedding lights on reconciling recent empirical studies that found conflicting evidence on ’Schumpeterian force’ and ’escaping competition.’
    Keywords: Competition, Innovation, China Shock, Schumpeterian Force, Escaping Competition
    JEL: F14 F16 O34
    Date: 2018–05
  3. By: Sandro Montresor; Francesco Quatraro, (University of Turin)
    Abstract: This paper investigates the move of regions towards sustainable growth through their specialisation in new green technologies. In particular, we analyse the role that smart specialisation strategies (S3) can have in this respect by addressing two research questions. First of all, we investigate whether the environmental diversification of regional technologies is, according to the S3 logic, driven by their “relatedness” to existing knowledge of green and non-green nature. Second, we analyse the role of the Key Enabling Technologies (KETs) that S3 policies recommend regions to prioritise, not only in fostering the adoption of environmental technologies, but also in affecting its dependence on the pre-existing knowledge-base. Combining regional patent and economic data for a 34-year panel (1980-2013) of 180 European regions, we find that the relatedness to the existing technological-base of the region actually makes the acquisition of a new green-tech specialisation more probable. This holds true with respect to both the green and non-green extant knowledge, pointing to a regional diversification that also benefits from the “hybridisation” of non-environmental technologies. The latter however requires a higher degree of relatedness than a “pure” green branching process. Regional KETs also help the transition towards sustainable technologies. What is more, they negatively moderate the green impact of the relatedness to pre-existing technologies, of both green and non-green nature, and thus attenuate the boundaries the latter could pose to regions in their environmental specialisation. These results confirm that S3 policies can actually boost the intertwining of a smart and sustainable kind of growth, and that the KETs inclusion within S3 can amplify the virtuous interaction between these two objectives.
    Date: 2018–04
  4. By: Quatraro, Francesco; Scandura, Alessandra (University of Turin)
    Abstract: This work investigates the generation of green technologies (GTs) in Italian NUTS 3 regions across time, by focusing on the knowledge generation mechanisms underlying the creation of green patents. Firstly, we hypothesize that inventions in non-green technological domains positively influence the generation of GTs, because the latter occur as the outcome of a recombination process among a wide array of technological domains. Secondly, we hypothesise that the involvement of academic inventors in patenting activity bears positive effects on the generation of GTs, because they are able to manage the recombination across different technological domains. Thirdly, we explore the interaction effect between academic inventors’ involvement and non-green technologies to investigate whether the former are especially relevant in presence of higher or lower levels of the latter. We estimate zero-inflated negative binomial, spatial durbin and logistic regressions on a dataset of 103 Italian NUTS 3 regions for which we collected patent and regional data for the time span 1998-2009. The results suggest that both academic inventors and spillovers from polluting technologies bear positive direct effects on the generation of GTs; moreover, we find that academic inventors compensate for low levels of spillovers.
    Date: 2018–04
  5. By: Gandenberger, Carsten
    Abstract: China's photovoltaics sector provides an interesting case to examine, if and how the country is aiming at innovation leadership after having established itself as the global manufacturing leader. Due to the dominance of Chinese companies in the global PV market, their innovation and production decisions have become crucially important for the global transition towards renewable energy. Another aspect of PV technology is that technological progress has driven the develop-ment of various types of PV cells, which can be categorised in three different technology generations. The functional analysis of the technological innovation system for PV in China conducted in this paper shows, that the government has indeed strengthened indigenous innovation efforts, which has resulted in a rapid rise of academic publications and to a lesser extent of patents for PV technology. A disaggregated analysis of transnational PV patents demonstrates that techno-logical catching-up of China picked up speed in the period between 2008 and 2010 and takes place in all three technology generations. However. technological catch-up has been most successful in the third generation of PV cells, which is still at an experimental stage and predominantly conducted at public research entities. Overall, China's PV sector seems to be still quite far from attaining global innovation leadership, which is mainly due to the relatively low engagement of the corporate sector. However, as the first generation of PV currently dominates the world market and is technologically mature, this will probably not threaten industrial leadership in the short to medium term.
    Keywords: Economic Catch-Up,Photovoltaics,Technological Innovation System,China
    Date: 2018
  6. By: Giorgio Fagiolo (Laboratory of Economics and Management (LEM)); Daniele Giachini (Scuola Superiore Sant'Anna); Andrea Roventini (Laboratory of Economics and Management (LEM))
    Abstract: This paper extends the endogenous-growth agent-based model in Fagiolo and Dosi (2003) to study the financegrowth nexus. We explore industries where firms produce a homogeneous good using existing technologies, perform R&D activities to introduce new techniques, and imitate the most productive practices. Unlike the original model, we assume that both exploration and imitation require resources provided by banks, which pool agent savings and finance new projects via loans. We find that banking activity has a positive impact on growth. However, excessive financialization can hamper growth. In- deed, we find a significant and robust inverted-U shaped relation between financial depth and growth. Overall, our results stress the fundamental (and still poorly understood) role played by innovation in the finance-growth nexu
    Keywords: Agent based model; Innovation; Exploration vs exploitation; Endogenous Growth; Banking sector; Finance Growth Nexus
    JEL: C63 G21 O30 O31
    Date: 2017–11
  7. By: Antonelli, Cristiano; Colombelli, Alessandra (University of Turin)
    Abstract: This paper provides an extended CDM approach to analyse jointly the simultaneous effects of knowledge spillovers in the knowledge generation function and in the technology production function. It introduces the distinction between imitation and knowledge externalities and articulates the hypothesis that spillovers yield their effects via three well distinct mechanisms: i) knowledge externalities that exert positive and direct effects on the knowledge production function, and ii) indirect effects on the technology production function via their effects on the cost of knowledge; iii) imitation externalities exert direct and positive effects on productivity in the technology production function. We test our hypotheses on a large panel of Italian companies distributed in the NUTS2 regions for the period 2005 – 2009. The econometric analysis consists in a model comprising a system of equations that test the simultaneous role of spillovers in the knowledge generation function and the technology production function with the inclusion of endogenous knowledge costs. The results confirm that the access to external knowledge – as an input in the knowledge generation function – plays a key role in increasing the knowledge output and – as an input in the technology production function – has positive indirect and direct effects on the productivity of firms.
    Date: 2017–06
  8. By: Claudius Graebner (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria); Philipp Heimberger (Vienna Institute for International Economic Studies); Jakob Kapeller (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria); Bernhard Schuetz (Department of Economics, Johannes Kepler University Linz)
    Abstract: This paper analyzes the dynamics of structural polarization and macroeconomic conver- gence vs. divergence in the context of European integration, where the latter is understood primarily as an increase in economic and financial openness. In the process of estimating the dynamic effects of openness shocks on 26 EU countries, we develop a taxonomy of Euro- pean economies that consists of core, periphery, financialized and Eastern European catch-up economies. As these four country groups have responded in a distinct way to the openness shocks imposed by European integration, we argue that the latter should be seen as an evolutionary process that has given rise to different path-dependent developmental trajectories. These trajectories relate to the sectoral development of European economies and the evolution of their technological capabilities. We propose a set of interrelated policy measures to counteract structural polarization and to promote macroeconomic convergence in Europe.
    Keywords: structural change, economic integration, european union
    Date: 2018–02
  9. By: Stefan Leknes; Jørgen Modalsli (Statistics Norway)
    Abstract: This paper studies the impact of the construction of hydropower facilities on labor market outcomes in Norway at the turn of the twentieth century (1891-1920). The sudden breakthrough in hydropower technology provides a quasi-experimental setting, as not all municipalities had suitable natural endowments and the possible production sites where often located in remote areas. We find that hydropower municipalities experienced faster structural transformation and displayed higher occupational mobility. Unskilled workers and workers from low-status families did to a greater extent obtain skilled jobs in hydropower municipalities. We interpret this as evidence that this early twentieth-century technology was skill-biased, and that workers in the new skilled jobs were recruited from a broad segment of the population. However, areas affected by the new technology also experienced occupational polarization, with an increase in high- and low-skilled manual jobs at the expense of intermediate-skilled jobs.
    Keywords: industrial revolution; hydropower production; structural transformation; occupational mobility; intergenerational mobility
    JEL: J62 N7 N9 R1 R12
    Date: 2018–05
  10. By: Anne Marie Knott; Carl Vieregger
    Abstract: There is a prevailing view in both the academic literature and the popular press that firms need to behave more entrepreneurially. This view is reinforced by a stylized fact in the innovation literature that R&D productivity decreases with size. However, there is a second stylized fact in the innovation literature that R&D investment increases with size. Taken together, these stylized facts create a puzzle of seemingly irrational behavior by large firms—they are increasing spending despite decreasing returns. This paper is an effort to resolve that puzzle. We propose and test two alternative resolutions: 1) that it arises from mismeasurement of R&D productivity, and 2) that firm size endogenously drives R&D strategy, and that the returns to R&D strategies depend on scale. We are able to resolve the puzzle under the first tack--using a recent measure of R&D productivity, RQ, we find that both R&D spending and R&D productivity increase with scale. We had less success with the second tack--while firm size affects R&D strategy in the manners expected by theory, there is no strategy whose returns decrease in scale. Taken together, our results are consistent with the Schumpeter view that large firms are the major engine of growth, they both spend more in aggregate than small firms, and are more productive with that spending. Moreover the prescription that firms should behave more entrepreneurially, should be treated with caution--one small firm strategy has lower returns to scale than its large firm counterpart.
    Date: 2018–04
  11. By: Ufuk Akcigit; Sina T. Ates; Giammario Impullitti
    Abstract: How do import tariffs and R&D subsidies help domestic firms compete globally? How do these policies affect aggregate growth and economic welfare? To answer these questions, we build a dynamic general equilibrium growth model where firm innovation endogenously determines the dynamics of technology, and, therefore, market leadership and trade flows, in a world with two large open economies at different stages of development. Firms’ R&D decisions are driven by (i) the defensive innovation motive, (ii) the expansionary innovation motive, and (iii) technology spillovers. The theoretical investigation illustrates that, statically, globalization (defined as reduced trade barriers) has ambiguous effects on welfare, while, dynamically, intensified globalization boosts domestic innovation through induced international competition. Accounting for transitional dynamics, we use our model for policy evaluation and compute optimal policies over different time horizons. The model suggests that the introduction of the Research and Experimentation Tax Credit in 1981 proves to be an effective policy response to foreign competition, generating substantial welfare gains in the long run. A counterfactual exercise shows that increasing tariffs as an alternative policy response improves domestic welfare only when the policymaker cares about the very short run, and only when introduced unilaterally. Tariffs generate large welfare losses in the medium and long run, or when there is retaliation by the foreign economy. Protectionist measures generate large dynamic losses by distorting the impact of openness on innovation incentives and productivity growth. Finally, our model predicts that a more globalized world entails less government intervention, thanks to innovation-stimulating effects of intensified international competition.
    JEL: F13 O4
    Date: 2018–04

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