nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2018‒06‒25
eleven papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. The Compositional Nature of Productivity and Innovation Slowdown By Uwe Cantner; Holger Graf; Ekaterina Prytkova; Simone Vannuccini
  2. Have R&D Spillovers Changed? By Brian Lucking; Nicholas Bloom; John Van Reenen
  3. Public R&D Support and Firms’ Performance. A Panel Data Study By Arvid Raknerud; Diana-Cristina Iancu; Øivind A. Nilsen
  4. The Sources of Growth in a Technologically Progressive Economy By Bakker, Gerben; Crafts, Nicholas; Woltjer, Pieter
  5. Long-run patterns of labour market polarisation: Evidence from German micro data By Bachmann, Ronald; Cim, Merve; Green, Colin
  6. Disclosure and Subsequent Innovation: Evidence from the Patent Depository Library Program By Jeffrey L. Furman; Markus Nagler; Martin Watzinger
  7. Does Proximity to Foreign Invested Firms Stimulate Productivity Growth of Domestic Firms? Firmlevel Evidence from Vietnam By Stephan Kyburz, Huong Quynh Nguyen
  8. Innovation and Trade Policy in a Globalized World By Ufuk Akcigit; Sina T. Ates; Giammario Impullitti
  9. Technological Links and Predictable Returns By Lee, Charles M. C. Lee; Sun, Stephen Teng; Wang, Rongfei; Zhang, Ran
  10. Structural change and convergence across European regions By Tullio Buccellato; Giancarlo Corò
  11. The determinants of cleaner energy innovations of the world’s largest firms: the impact of firm learning and knowledge capital By Patricia Laurens; Christian Le Bas; Stéphane Lhuillery; Antoine Schoen

  1. By: Uwe Cantner (FSU Jena); Holger Graf (FSU Jena); Ekaterina Prytkova (FSU Jena); Simone Vannuccini (FSU Jena)
    Abstract: A growing number of studies identify a generalized slowdown in labor productivity growth. The very existence of the slowdown ignited a series of academic debates suggesting that secular stagnation or 'mismeasurement' problems are at the root of the observed trends. We posit that the composition of aggregate productivity matters. In a nutshell, we make the analysis of productivity growth slowdown more fine-grained by shifting the focus to the industry level, considering that the downward trend identified at the macroeconomic level emerges from the aggregation of diverse industry-level productivity trends. We perform an analysis of the structural dynamics of labor productivity by conducting a non-parametric dynamic decomposition exercise that separates within (improvement) and between (structural change) effects for 10 OECD countries. By pooling industries in groups identified according to two different taxonomies - one related to R&D intensities rankings, and the other built upon the Pavitt taxonomy of sources of technological change -, this study assess the industry-level contributions to the slowdown and the trends over time of the within and between components. We interpret our findings highlighting common patterns and suggest two related technological explanations for the productivity slowdown: one based on a Baumol-disease-like effect driven by structural change and another based on implementation lags and/or on an exhaustion of technological opportunities - that is, on decreasing returns in innovative activities. To investigate that, we complement our productivity analysis with evidence on innovation slowdown trends, looking at aggregate and compositional trends. We explore the innovation slowdown using an array of indicators based on the notion of 'idea- TFP' and show that there is a generalized evidence for its occurrence. Eventually, we relate productivity and innovation slowdowns deriving tables of trends co-movements, weighted by input-output matrices coefficients, and clustered by Pavitt industry group. We interpret these relationships and highlight patterns and clusters of significant correlations.
    Keywords: productivity slowdown, decomposition, industrial dynamics, innovation
    JEL: L16 O30 O47
    Date: 2018–06–18
  2. By: Brian Lucking; Nicholas Bloom; John Van Reenen
    Abstract: This paper revisits the results of Bloom, Schankerman, and Van Reenen (2013) examining the impact of R&D on the performance of US firms, especially through spillovers. We extend their analysis to include an additional 15 years of data through 2015, and update the measures of firms' interactions in technology space and product market space. We show that the magnitude of R&D spillovers appears to have been broadly similar in the second decade of the 21st Century as it was in the mid-1980s. However, there does seem to have been some increase in the wedge between marginal social returns to R&D and marginal private returns with the ratio of marginal social to private returns increasing to a factor of 4 from 3. There is certainly no evidence that the divergence between public and private return has narrowed. Positive spillovers appeared to increase in the 1995-2004 boom.
    JEL: E22
    Date: 2018–05
  3. By: Arvid Raknerud; Diana-Cristina Iancu (Statistics Norway); Øivind A. Nilsen
    Abstract: We analyse all the major sources of direct and indirect R&D subsidies in Norway in the period 2002- 2013 and compare their effects on individual firms’ performance. Firms that received support are matched with a control group of firms that did not receive support using a combination of stratification and propensity score matching. Changes in performance indicators before and after support in the treatment group are compared with contemporaneous changes in the control group. We find that the average effects of R&D support among those who obtained grants and/or subsidies are positive and significant in terms of performance indicators related to economic growth: value added, sales revenue and number of employees. The estimated effects are larger for start-up firms than incumbent firms when the effects are measured as relative effects (in percentage points), but smaller when these effects are translated into level effects. Finally, we do not find positive effects on return to total assets or productivity for firms who received support compared with the control group.
    Keywords: Public policy; Firm performance; Treatment effects; Stratification; Propensity score matching; Productivity
    JEL: C33 C52 D24 O38
    Date: 2018–06
  4. By: Bakker, Gerben; Crafts, Nicholas; Woltjer, Pieter (Groningen University)
    Abstract: We develop new aggregate and sectoral Total Factor Productivity (TFP) estimates for the United States between 1899 and 1941 through better coverage of sectors and better-measured labor quality, and find TFP-growth was lower than previously thought, broadly based across sectors, and strongly variant intertemporally. We then test and reject three prominent claims. First, the 1930s did not have the highest TFP-growth of the twentieth century. Second, TFP-growth was not predominantly caused by four `great inventions?. Third, TFP-growth was not driven indirectly by spillovers from great inventions such as electricity. Instead, the creative-destruction-friendly American innovation system was the main productivity driver.
    Date: 2017
  5. By: Bachmann, Ronald; Cim, Merve; Green, Colin
    Abstract: The past four decades have witnessed dramatic changes in the structure of employment. In particular, the rapid increase in computational power has led to large-scale reductions in employment in jobs that can be described as intensive in routine tasks. These jobs have been shown to be concentrated in middle skill occupations. A large literature on labour market polarisation characterises and measures these processes at an aggregate level. However to date there is little information regarding the individual worker adjustment processes related to routine-biased technological change. Using an administrative panel data set for Germany, we follow workers over an extended period of time and provide evidence of both the short-term adjustment process and medium-run effects of routine task intensive job loss at an individual level. We initially demonstrate a marked, and steady, shift in employment away from routine, middle-skill, occupations. In subsequent analysis, we demonstrate how exposure to jobs with higher routine task content is associated with a reduced likelihood of being in employment in both the short term (after one year) and medium term (five years). This employment penalty to routineness of work has increased over the past four decades. More generally, we demonstrate that routine task work is associated with reduced job stability and more likelihood of experiencing periods of unemployment. However, these negative effects of routine work appear to be concentrated in increased employment to employment, and employment to unemployment transitions rather than longer periods of unemployment.
    Keywords: polarization,occupational mobility,worker flows,tasks
    JEL: J23 J24 J62 E24
    Date: 2018
  6. By: Jeffrey L. Furman; Markus Nagler; Martin Watzinger
    Abstract: How important is information disclosure through patents for subsequent innovation? Although disclosure is regarded as essential to the functioning of the patent system, legal scholars have expressed considerable skepticism about its value in practice. To adjudicate this issue, we examine the expansion of the USPTO Patent and Trademark Depository Library system between 1975 to 1997. Whereas the exclusion rights associated with patents are national in scope, the opening of these patent libraries during the pre-Internet era yielded regional variation in the costs to access the technical information (prior art) disclosed in patent documents. We find that after a patent library opens, local patenting increases by 17% relative to control regions that have Federal Depository Libraries. A number of additional analyses suggest that the disclosure of technical information in the patent documents is the mechanism underlying this boost in patenting: the response to patent libraries is significant and of important magnitude among young companies, library opening induces local inventors to cite more geographically distant and more technologically diverse prior art, and the library boost ceases to be present after the introduction of the Internet. We find that library opening is also associated with an increase in local business formation and job creation, which suggests that the impact of libraries is not limited to patenting outcomes. Taken together, our analyses provide evidence that the information disclosed in patent prior art plays an important role in supporting cumulative innovation.
    JEL: H4 L3 O3 O34 O38 R1
    Date: 2018–05
  7. By: Stephan Kyburz, Huong Quynh Nguyen
    Abstract: Inward foreign direct investment (FDI) is regarded as a key engine of industrial growth and technological progress, especially in emerging markets. Regarding the relevance of geographic proximity between foreign and domestic firms for FDI spillover effects, there is yet little clear evidence, owing to a lack of precise location specific firm-level data. This paper presents the so far spatially most detailed analysis of FDI spillover effects by geo-referencing the census of Vietnamese enterprises for the period 2005 to 2010, allowing us to measure the changing presence of foreign invested firms around each domestic firm. We apply a first-differenced two-stageleast- squares estimator to identify spillover effects from proximate FDI exposure on TFP growth of domestic manufacturing firms. We find positive and significant within-industry (horizontal) spillover effects within radii of 2 to 10 km, that decay beyond. Importantly, in particular small and medium enterprises (SMEs) gain from foreign firms in their vicinity. Furthermore, vertical spillovers through forward and backward linkages to other manufacturing firms are localized, while vertical spillovers from foreign firms in the service sector are less geographically restricted.
    Keywords: foreign direct investment, spillover effects, geographic proximity, horizontal and vertical linkages
    JEL: D22 D24 F23 O12 O14 O33 R11 R32
    Date: 2017–10
  8. 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, 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.
    Keywords: Economic growth ; Short- and long-run gains from globalization ; Foreign technological catching-up ; Innovation policy ; Trade policy ; Competition
    JEL: F13 F43 O40
    Date: 2018–06–15
  9. By: Lee, Charles M. C. Lee (Stanford University); Sun, Stephen Teng (Peking University); Wang, Rongfei (Peking University); Zhang, Ran (Peking University)
    Abstract: This paper finds evidence of return predictability across technology-linked firms. Employing a classic measure of technological closeness between firms, we show that the returns of technology-linked firms have strong predictive power for focal firms' returns. A long-short strategy based on this effect yields monthly alpha of 117 basis points. This effect is distinct from industry momentum, and is more pronounced for more innovative firms, firms with higher investor inattention, and firms with higher costs of arbitrage. We find a similar lead-lag relation between the earnings surprises, analyst revisions, and innovation-related activities (such as patent and citation counts) of technology-linked firms. Our results are broadly consistent with sluggish price adjustment to more nuanced technological news.
    JEL: G10 G11 G14 O30
    Date: 2017–10
  10. By: Tullio Buccellato (Economic Research Department, Confindustria); Giancarlo Corò (Department of Economics, University Of Venice Cà Foscari)
    Abstract: The aim of our paper is to analyze the structural diversity of the European regions assuming the complexity of production spaces approach (Hidalgo C.A., B. Klinger, A.L. Barabási, R. Hausmann 2007). This stream of economic literature is the natural companion of the evolutionary theory of economics, where development is seen as the endogenous learning process led by the initial knowledge basis, which tends to expand in its proximity (Boschma 2005). The first step of our analysis is to map the EU regions according to their economic structure. We exploit information conveyed by Eurostat data, which are available for a balanced panel of 241 regions and 86 economic branches in 2010 and 2015. In this way we are able to construct a space characterized by technological proximity of regions. The underlying assumption is that territories with similar production structures display similar production knowledge. The second step is the construction of the network space based on the correlation matrix. In order to obtain the clusters of regions based on the similarity of their economic structure, we apply a modularity algorithm to the network. Such measures define groups based on the degree of connectedness of the observations between them and allows to measure how such groups explain the network connections using as benchmark a case in which edges where assigned randomly. Our findings suggest that regions, which are more dynamic in terms of structural change, are those with manufacturing capabilities located in Eastern European countries. Such regions were able to upgrade their competences towards more complex productions and this resulted also in a fast catch-up of their GDP per capita level with respect to other mid income regions in Western Europe. Most prosperous regions are found to be urban areas with developed creative service activities and in regions with advanced manufactures (machinery, automotive, electronics, etc.); whereas backwardness is detected in regions with a cumbersome weight of tourism related activities.
    Keywords: Regional Disparities, Growth, Structural Changes, relatedness
    JEL: O10 O25 P25 R10 L16
    Date: 2018
  11. By: Patricia Laurens (LISIS - Laboratoire Interdisciplinaire Sciences, Innovations, Sociétés - INRA - Institut National de la Recherche Agronomique - UPEM - Université Paris-Est Marne-la-Vallée - ESIEE Paris - CNRS - Centre National de la Recherche Scientifique); Christian Le Bas (ESDES - ESDES - École de management de Lyon - Université Catholique de Lyon); Stéphane Lhuillery (ICN Business School); Antoine Schoen (LISIS - Laboratoire Interdisciplinaire Sciences, Innovations, Sociétés - INRA - Institut National de la Recherche Agronomique - UPEM - Université Paris-Est Marne-la-Vallée - ESIEE Paris - CNRS - Centre National de la Recherche Scientifique)
    Abstract: In this paper, we address the determinants of clean energy inventions by 946 large firms. We use a new set of large firms' patent portfolios and we broaden and deepen existing literature on this issue in two main ways: first, we conduct our study directly at the firm level and not at the industry or national levels and second, we do not focus on a single industry but encompass all industrial sectors. Drawing on firm (internal and external) knowledge and knowledge accumulation, we show there is a robust positive association between the (past) knowledge accumulated capital related to clean technologies and the number of inventions produced in that field, even after controlling for industry and nation fixed effects and other factors. The same relation works for (past) knowledge-accumulated capital in other (non-clean) technologies. However, the relation's impact on the number of clean inventions produced is much lower. The magnitudes of our coefficient are in line with that obtained previously on firms in the auto-industry or at the sectoral level.
    Keywords: knowledge capital,dirty invention,Clean invention,learning,firms
    Date: 2017

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