nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2018‒12‒10
ten papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. The nexus between climate negotiations and low-carbon innovation: a geopolitics of renewable energy patents By Clément Bonnet; Samuel Carcanague; Emmanuel Hache; Gondia Sokhna Seck; Marine Simoën
  2. Decomposition analysis of sustainable green technology inventions in China By Fujii, Hidemichi; Managi, Shunsuke
  3. The Economic Geography of Innovation By Egger, Peter; Loumeau, Nicole
  4. International productivity gaps: Are labour input measures comparable? By Ashley Ward; María Belén Zinni; Pascal Marianna
  5. Asian Experiences with Global and Regional Value Chain Integration and Structural Change By Roman Stöllinger
  6. Product Innovation of an Incumbent Firm : A Dynamic Analysis By Hagspiel, V.; Huisman, Kuno; Kort, Peter; Nunes, Claudia; Pimentel, Rita
  7. Entrepreneurial Human Capital and Firm Dynamics By Francisco Queiró
  8. Financial Dependence and Growth: the Role of Input-Output Linkages By Alessia Lo Turco; Daniela Maggioni; Alberto Zazzaro
  9. Leverage over the Life Cycle and Implications for Firm Growth and Shock Responsiveness By Kalemli-Ozcan, Sebnem
  10. Techies, Trade, and Skill-Biased Productivity By James Harrigan; Ariell Reshef; Farid Toubal

  1. By: Clément Bonnet; Samuel Carcanague; Emmanuel Hache; Gondia Sokhna Seck; Marine Simoën
    Abstract: Intellectual property is a central issue in the climate negotiations. On the one hand, it shapes and encourages innovation in low-carbon technologies. On the other hand, it reduces access to these technologies by giving patent holders market power. We analyze the interactions between climate negotiations and the acquisition of patents on renewable energy technologies. First, we recall the geopolitical nature of intellectual property and explain how it is modified by the particularities of low-carbon innovation. The second part of this article is devoted to an inventory of the production of inventions in renewable energy technologies (RETs). In particular, we focus on the relative technological advantages of countries and the value of patented inventions. Major changes are observed in the geographical distribution of low-carbon innovation during the 2000s and they foreshadow a reorganization of the geopolitical balances of innovation in renewable energies.
    Keywords: Patent data, energy transition, renewable energy technology, innovation, international relations
    JEL: Q42 Q55 O31 O38
    Date: 2018
  2. By: Fujii, Hidemichi; Managi, Shunsuke
    Abstract: Sustainable green technology is an important contributor to creating a sustainable society by simultaneously promoting environmental conservation and economic development. This study examines the determinants of sustainable green technology invention in China, with a focus on the differences in green technology development priorities in each five-year plan period. This study uses patent publication data in a patent decomposition analysis framework. We find that sustainable green patent publications increased due to efficiency improvements, the prioritization of sustainable green patents, an increased R&D expenditure share and economic growth, especially during periods of gradual economic development in China. Additionally, we find that the relative priority of R&D shifted from renewable energy technology to pollution abatement and other sustainable green technology in the 12th five-year plan. The different R&D priority trends for sustainable green technologies among the five-year plans can be used to formulate effective policies that promote sustainable green technology invention.
    Keywords: sustainable green technology; patent data; decomposition analysis; China; priority change
    JEL: O32 O44 Q55 Q56
    Date: 2018–11
  3. By: Egger, Peter; Loumeau, Nicole
    Abstract: This paper outlines a quantitative global multi-region model to assess the importance of country-level investment incentives towards innovation at the level of 5,633 regions of heterogeneous size. While incentives vary across countries (and time), the responses are largely heterogeneous across regions within as well as across countries. The reason for this heterogeneity roots in average technology differences -- in terms of the production of both output and innovation -- as well as in the geography (location) and amenities across regions. The model and quantitative analysis take the tradability of output as well as the mobility of people across regions into account. In the counterfactual equilibrium analysis we focus on the effects of R&D-investment incentives on three key variables -- place-specific employment, productivity, and welfare -- in a scenario where investment incentives towards innovation are abandoned. We find that the use of policy instruments which are designed to stimulate private R&D are globally beneficial in terms of productivity and welfare. In particular, low-amenity, peripheral places, and ones where patenting is relatively less common than elsewhere benefit more strongly than others, which implies that the studied nation-wide investment incentives also work as place-based policies. According to the quantification, about one-tenth of the long-run growth rate of real GDP on the globe can be attributed to the use of R&D investment incentives as used in the year 2005 alone.
    Keywords: Economic Geography; Innovation; labor mobility; Quantitative general equilibrium; structural estimation; Trade
    JEL: C68 F13 F14 O31 R11
    Date: 2018–11
  4. By: Ashley Ward (OECD); María Belén Zinni (OECD); Pascal Marianna (OECD)
    Abstract: Cross-country differences in the measurement of labour input contribute to observed productivity gaps across countries. In most countries, labour force surveys (LFS) form a primary source of information for employment related statistics, such as persons employed, employees and hours worked. However, because the coverage of LFS does not fully align with the coverage of activities used to estimate GDP, additional adjustments relying on complementary sources, such as administrative or business statistics, are often applied to bridge conceptual differences, and in many countries, the use of these sources is often preferred to LFS data. Evidence from the 2018 OECD/Eurostat national accounts labour input survey shows that the adjustments made to align measures of labour input with the corresponding measures of production according to the domestic concept, vary considerably across countries, with many countries making no adjustments, in particular, for the measurement of hours worked. This paper demonstrates that countries making no adjustments to average hours worked measures extracted from the original source, such as self-reported hours actually worked in the LFS, appear to systematically over-estimate labour input and, so, under-estimate labour productivity levels. To illustrate the size of this bias, for this group of countries, the paper adopts a simplified component method that introduces a series of explicit adjustments on working time using information available in LFS and complementary sources. The results point to a reduction in relative productivity gaps of around 10 percentage points in many countries compared to current estimates. Although future releases of OECD productivity (levels) statistics will incorporate these changes, it is important to stress that these estimates will only be used as a stop-gap while countries making no, or minimal adjustments, work to leverage all available data sources to produce average hours worked estimates that align with the national accounts domestic concept and that address self-reporting bias; which is the paper’s principal recommendation for those countries that currently make no or only partial adjustments. Indeed, many EU member states, coordinated by Eurostat, are already moving in this direction, with ESA 2010 derogations set to expire by 2020.
    Keywords: employment, hours worked, labour input, labour productivity, mismeasurement
    JEL: E1 E24 E26
    Date: 2018–12–10
  5. By: Roman Stöllinger (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: This research report investigates the relationship between the growing integration into global and regional value chains (VCs) and structural change in the South and South East Asian (SEA) region. The analysis includes a sample of 60 developed and developing countries covered in the OECD’s Inter-Country Input-Output Tables. Focusing on the SEA region, we find the usual inverted U-shaped relationship between the manufacturing share and per capita income. With regards to the impact of growing VC integration, the econometric results suggest a small positive effect of the overall VC integration on the change in the manufacturing share at the global level. Very similar patterns are found for the South and South East Asian region, however, with a large degree of country heterogeneity. The main beneficiaries from VC integration in the region in terms of the relative importance of manufacturing in the economy include for example Korea and Thailand. Unexpectedly, no significant differences in the (manufacturing-related) structural impacts of regional and global VCs could be identified.
    Keywords: global value chains, structural change, competitiveness, economic development
    JEL: F15 O19 O25
    Date: 2018–12
  6. By: Hagspiel, V. (Tilburg University, Center For Economic Research); Huisman, Kuno (Tilburg University, Center For Economic Research); Kort, Peter (Tilburg University, Center For Economic Research); Nunes, Claudia; Pimentel, Rita
    Abstract: In case of a product innovation firms start producing a new product. While doing so, such a firm should decide what to do with its existing product after the firm has innovated. Essentially it can choose between replacing the established product by the new one, or keep on producing the established product so that it produces two products at the same time. The aim of this paper is to design a theoretical framework to analyze this problem. Due to technological progress the quality of the newest available technology, and thus the quality of the innovative product that can be produced by this technology, increases over time. The implication is that a later innovation enables the firm to produce a better innovative product. So, typically the firm faces the tradeoff between innovating fast, which boosts its profits soon but only by a small amount, or innovating later, which leads to a larger payoff increase. The drawback here is that the firm is stuck with producing the established product for a longer time. We fund that a highly uncertain economic environment makes the firm delay abolishing the old product market. But if the innovative market is more volatile, the firm enters the market sooner, provided it will be active on the old market, at least for some time. Moreover, the smaller the initial demand for the innovative product market, the better the quality of the innovative product needs to be for the product innovation to be optimal.
    Keywords: product innovation; technology adoption; Dynamic Programming
    JEL: C61 D81 O33
    Date: 2018
  7. By: Francisco Queiró (Nova School of Business and Economics)
    Abstract: This paper shows that entrepreneurial human capital is a key driver of firm dynamics using administrative panel data on the universe of firms and workers in Portugal. Firms started by more educated entrepreneurs are larger at entry and exhibit higher growth throughout the life cycle. The differences are driven by productivity, are particularly strong in the upper tail of the distribution, and do not hold for more educated workers in general. In addition, they do not appear to be driven by omitted ability or selection. Combining these findings with cross-country data to calibrate a simple model of heterogeneous firms, I find that accounting for the effect of entrepreneurial human capital on firm-level productivity increases the fraction of cross-country income differences explained by human and physical capital from 40% to 65%-76%.
    Keywords: Entrepreneurship; Human Capital; Firm Dynamics; Productivity
    JEL: I2 L2 O4
    Date: 2018–12
  8. By: Alessia Lo Turco (Università Politecnica delle Marche); Daniela Maggioni (Università Ca’ Foscari Venezia.); Alberto Zazzaro (University of Naples Federico II, CSEF and MoFiR.)
    Abstract: We widen the understanding of the finance-growth nexus by accounting for the indirect effect of financial development through input-output (IO) linkages in determining the growth of industries across countries. If financial development is expected to promote disproportionately more the growth of industrial sectors that are more in need of external finance, it also favours more the industries that are linked by IO relations to more financially dependent industries. We explore this new channel in a sample of countries at different development stages over the period 1995-2007. Our results highlight that financial development, besides easing the growth of industries highly dependent on external finance, also fosters the growth of industries strongly linked to highly financially dependent upstream industries. Moreover, the indirect effect - propagated through IO linkages - of finance has a higher and non-negligible role compared to the direct effect and its omission leads to a biased and underestimated perception of the role of finance for industries growth.
    Keywords: manufacturing growth; financial development; upstream and downstream linkages
    JEL: O1 G1 D57
    Date: 2018–12–03
  9. By: Kalemli-Ozcan, Sebnem
    Abstract: We study the leverage of U.S. firms over their life-cycle and implications for firm growth and responses to shocks. We use a new dataset that matches private firms' balance sheets to U.S. Census Bureau's Longitudinal Business Database (LBD) for the period 2005-2012. A number of stylized facts emerge. First, firm size and leverage are strongly positively correlated for private firms, both in the cross section of firms and over time for a given firm. For public firms, there is a weak negative relation between leverage and size. Second, young private firms borrow more, but firm age has no relation to public firms' leverage. Third, while private firms switch from debt to equity financing as they age, public firms slightly reduce equity financing as they age. Building on this "normal times" benchmark and using the "Great Recession" as a shock to financial conditions, we show that, for private firms, firm size can serve as a good predictor of financial constraints. During the Great Recession, leverage declines for private firms, but not for public firms. We also provide evidence that private firms' growth is positively related to leverage, as they finance their growth during normal times with short-term borrowing, whereas the relationship between leverage and firm growth is negative for public firms. These results suggest that public firms are not financially constrained during normal times or during crisis, but private firms are.
    Keywords: age; census data; Financial constraints; firm life-cycle; leverage; Short-term debt
    JEL: E0
    Date: 2018–11
  10. By: James Harrigan; Ariell Reshef; Farid Toubal
    Abstract: We study the impact of firm level choices of ICT, R&D, exporting and importing on the evolution of productivity and its bias towards skilled occupations. We use a novel measure of the propensity of a firm to engage in technology investment and adoption: its employment of workers with STEM (science, technology, engineering and math) skills and experience who we call “techies”. We develop a methodology for estimating firm level productivity that allows us to measure both Hicks-neutral and skill-augmenting technology differences, and apply this to administrative data on French firms in the entire private sector from 2009 to 2013. We find that techies and importing of intermediate inputs raise skill-biased productivity, while imports also raise Hicks-neutral productivity. We also find that higher firm-level skill biased productivity raises low-skill employment even as it raises the ratio of skilled to unskilled workers. This is because of the cost-reducing effect of higher productivity. The techie and trade effects are large, and can account for much of the aggregate increase in skilled employment from 2009 to 2013.
    JEL: D2 D24 F1 F16 J2 J23 J24 O52
    Date: 2018–11

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