nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2019‒03‒25
twelve papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Economic complexity and environmental performance: Evidence from a world sample By Lapatinas, Athanasios; Garas, Antonios; Boleti, Eirini; Kyriakou, Alexandra
  2. Asymmetric additionalities between R&D outsourcing locations By María García-Vega; Elena Huergo
  3. Determinants of Locational Patenting Behavior of Canadian Firms By Eckert, Andrew; Langinier, Corinne; Zhao, Long
  4. Technological catch-up to the national and regional frontier: Firm-level evidence for India By Shubin Yang; Sandra Lancheros; Chris Milner
  5. Export destinations and skill premium: Evidence from chinese manufacturing industries By Feicheng Wang; Chris Milner; Juliane Scheffel
  6. Offshoring of services functions and labour market adjustments By Hildegunn Kyvik Nordås
  7. Immigrant Entrepreneurs and Innovation in the U.S. High-Tech Sector By Brown, J. David; Earle, John S.; Kim, Mee Jung; Lee, Kyung Min
  8. Determinants and impact of automation: An analysis of robots' adoption in OECD countries By OECD
  9. Sectoral and Skill Contributions to Labor Productivity in Asia By Helble, Matthias; Long, Trinh; Le, Trang
  10. Who Creates and Destroys Jobs over the Business Cycle? By Andrea Colciago; Volker Lindenthal; Antonella Trigari
  11. Distribution of Industrial Research & Innovation Activities: An Application of Technology Readiness Levels By Mafini Dosso; Lesley Potters; Alexander Tübke
  12. Democracy and the Labor Share of Income: A Cross-Country Analysis By Guerriero, Marta

  1. By: Lapatinas, Athanasios; Garas, Antonios; Boleti, Eirini; Kyriakou, Alexandra
    Abstract: This paper analyzes the relationship between economic complexity and environmental performance using annual data on 88 developed and developing countries for the period of 2002-2012. We use the Economic Complexity Index, highlighting that a country’s productive structure is associated with the amount of knowledge and know-how embodied in the goods it produces. Measuring environmental performance through the Environmental Performance Index, we show that moving to higher levels of economic complexity leads to better environmental performance and therefore, that product sophistication does not induce environmental degradation. Nevertheless, the effect of economic complexity on air quality is negative, i.e., exposure to PM2.5 and CO2 emissions increases. These findings remain robust across alternative econometric specifications. Furthermore, we highlight the link between the complexity of products and environmental performance at the micro-level. We build two product-level indexes that link a product to the average level of (a) environmental performance and (b) air pollution (CO2 emissions) in the countries that export it. With these indexes, we illustrate how the development of more sophisticated products is associated with changes in environmental quality and show that the complexity of an economy captures information about the country’s level of pollution.
    Keywords: economic complexity; environmental performance; pollution; CO2 emissions
    JEL: C0 F1 F14 O1 Q5
    Date: 2019–03–18
  2. By: María García-Vega; Elena Huergo
    Abstract: This paper empirically examines the additionalities or crowding-out effects of international and national outsourcing of R&D to generate innovation. Using a panel database of about 10,000 Spanish firms for the period 2005-2014, we show that there is asymmetry in the effectiveness of the combined adoption of R&D outsourcing locations. International R&D outsourcing re-inforces the effect of domestic R&D outsourcing. However, national outsourcing does not re-inforce international R&D outsourcing. We next explore sources of additionality. Property Right Theory (PRT) suggests that additionality is high when holdup problems are low. We therefore analyze two important situations where holdup problems are likely to be low: with public foreign providers and in sectors with low technological complexity. Consistent with PRT, our results suggest that additionality is stronger when R&D is acquired from public providers rather than from private providers. Moreover, we find additionality in sectors with medium or low R&D complexity. In sectors with high R&D complexity, domestic and international outsourcing are largely independent. These results also suggest that international R&D outsourcing does not undermine domestic R&D.
    Keywords: Imports of technology; International and national R&D outsourcing; Innovation; Additionality or crowding-out effects. JEL classification: L25; O31; O32
    Date: 2019
  3. By: Eckert, Andrew (University of Alberta, Department of Economics); Langinier, Corinne (University of Alberta, Department of Economics); Zhao, Long (University of Alberta, Department of Economics)
    Abstract: Using a unique data set combining Canadian and U.S patent data with firm level data, we analyze Canadian firms' locational patenting decisions during the period 2000-2008. We f ind first that Canadian firms' propensity to patent increases in rm size and research and development intensity, but decreases in firm age and profitability. Second, the likelihood of patenting in both the U.S. and Canada is associated with past patenting experience, firm size, profitability and patent scope. While manufacturing firms in export intensive industries are more likely to patent in both countries, firms in Foreign Direct Investment intensive industries are more likely to patent domestically. Finally, Canadian Intellectual Property Office's role as an International Search Authority under the Patent Cooperation Treaty (PCT) is associated with an increase in the use of PCT by Canadian firms.
    Keywords: Canadian firms; locational patenting behavior
    JEL: O12 O34
    Date: 2019–03–18
  4. By: Shubin Yang; Sandra Lancheros; Chris Milner
    Abstract: This paper studies productivity convergence to the regional and national frontiers among manufacturing firms in India, using panel data over the period 1999 to 2010. We find evidence of convergence by lagging firms to both their national and regional frontiers, with faster convergence to the national frontier than to their regional frontier. We examine the effects of export behaviour on this process of convergence, and the results demonstrate that exporting promotes productivity growth but slows down the convergence process since export firms tend to be nearer to frontiers. We also investigate the effect of outward FDI (OFDI) on firms’ productivity growth and convergence. Likewise, the results show that OFDI facilitates firms’ productivity growth but decelerates the speed of convergence.
    Keywords: Productivity convergence, technology frontiers, globalisation
    Date: 2019
  5. By: Feicheng Wang; Chris Milner; Juliane Scheffel
    Abstract: This paper examines the relationship between average income of export destinations and skill premium using data of Chinese manufacturing industries from 1995 to 2008. To do so, we construct weighted average GDP per capita across destinations employing within-industry export share to each destination as weight, and then link it with industry-level wages and skill premium. We find that industries that export more to high-income destinations tend to pay a higher skill premium, suggesting that on average, skilled workers benefit more from high-income exports than unskilled workers. Our IV estimates confirm a causal relationship and the results are robust to various specifications. Our paper contributes to the understanding of the influence of export destinations on the uneven distributional effects of globalisation for different types of workers.
    Keywords: Export destinations; Skill premium; Manufacturing industries; China JEL Classification: F14; F16; F66; J24; J31
    Date: 2019
  6. By: Hildegunn Kyvik Nordås (OECD)
    Abstract: About 40% of employment in manufacturing is in services functions. This paper develops a measure of narrow outsourcing, matching services functions performed by workers inside manufacturing firms to the same services functions provided by outside suppliers. The measure allows us to analyse the competition that, say, workers at the IT services desk in manufacturing firms face from outside IT suppliers. Narrow outsourcing is entered into labour demand functions where labour is broken down on business functions using OECD data combined with the 2016 releases of the World Input Output Database (WIOD). On average, a one percentage point increase in narrow local outsourcing of services reduces manufacturing employment in the same services function by between 1.5% (R&D) and 3% (transport). The impact of offshoring on manufacturing labour demand is small on average, but depends strongly on the complexity of the value chain, the policy environment and technology. Manufacturing employment is more services intensive the longer the value chain. In-house IT functions complement and support offshored IT functions, while offshored R&D functions tend to replace in-house R&D. Tentatively, technology as measured by IT maturity and the length of the value chain is more important for employment in services functions in manufacturing than is offshoring.
    Keywords: labour demand, offshoring, outsourcing, regulation, structural changes, technology
    JEL: F16
    Date: 2019–03–20
  7. By: Brown, J. David (U.S. Census Bureau); Earle, John S. (George Mason University); Kim, Mee Jung (George Mason University); Lee, Kyung Min (George Mason University)
    Abstract: We estimate differences in innovation behavior between foreign versus U.S.-born entrepreneurs in high-tech industries. Our data come from the Annual Survey of Entrepreneurs, a random sample of firms with detailed information on owner characteristics and innovation activities. We find uniformly higher rates of innovation in immigrant-owned firms for 15 of 16 different innovation measures; the only exception is for copyright/trademark. The immigrant advantage holds for older firms as well as for recent start-ups and for every level of the entrepreneur's education. The size of the estimated immigrant-native differences in product and process innovation activities rises with detailed controls for demographic and human capital characteristics but falls for R&D and patenting. Controlling for finance, motivations, and industry reduces all coefficients, but for most measures and specifications immigrants are estimated to have a sizable advantage in innovation.
    Keywords: immigration, entrepreneur, innovation, high-tech, patent
    JEL: F22 J15 J60 J61 L26 O15 O30 O31 O32
    Date: 2019–02
  8. By: OECD
    Abstract: This report analyses automation trends and its effect on employment in OECD countries. On average, robots are found to be associated with a reduction in employment in elementary occupations – those requiring the lowest levels of skills – and an increase in employment in high-skill occupation such as professionals and technicians. For occupations in the middle of the skills distribution the correlation is strong and negative. In general, therefore, these estimates do not support the hypothesis of labour market polarisation, i.e.: an increase in both high-skill and low-skill employment. However, in a few countries - notably the United States - this report finds evidence of labour market polarisation.
    Date: 2019–02–22
  9. By: Helble, Matthias (Asian Development Bank Institute); Long, Trinh (Asian Development Bank Institute); Le, Trang (Asian Development Bank Institute)
    Abstract: Using a decomposition approach on data collected by the Asian Productivity Organization (APO) as well as World Input-Output data, we show that in most Asian economies the services sector makes the largest contribution to labor productivity. Furthermore, we find evidence of a major reallocation of labor from agriculture directly to services, bypassing the manufacturing sector. This finding challenges the traditional view that countries in their economic development need to have their workforce employed first in manufacturing before switching to services. Lastly, the paper studies how different skill levels contribute to labor productivity growth. We find that high-skilled workers have contributed most to overall labor productivity growth in developing Asia. In services, high-skilled workers have mainly driven labor productivity, indicating that upskilling and training are instrumental in services-led development.
    Keywords: labor productivity; manufacturing; services; skills
    JEL: J21 O11
    Date: 2019–03–07
  10. By: Andrea Colciago; Volker Lindenthal; Antonella Trigari
    Abstract: Using US annual data spanning four decades and several business cycles, we show that that job flow rates of young firms are more cyclical than those of mature firms and detect no difference between the cyclicality of job flow rates of small and large firms. Further, we find that job flow rates due to contractions and expansions of continuing establishments are more cyclical than those due to entry and exit. At the same time the job flow rates of mature firms provide a larger contribution to the overall variability of aggregate job flow rates with respect to those of young firms. The reason is that mature firms employ the vast majority of US workers, and the fraction of aggregate variability of aggregate job flows explained by the job flow of firms belonging to a specific category is proportional to the category's employment share. On the contrary, there is no relevant difference in the contribution to aggregate fluctuations between the job flow rates of firms of different sizes. Our findings hold independently of whether we focus simply on the Great Recession period or on the full sample.
    Keywords: Job Creation; Job Destruction; Business Cycle; Small Firms; Large Firms; Young Firms; Mature Firms
    JEL: D22 E23 E32 J23 L25
    Date: 2019–03
  11. By: Mafini Dosso (European Commission - JRC); Lesley Potters (European Commission - JRC); Alexander Tübke (European Commission - JRC)
    Abstract: The Technology Readiness Levels (TRLs) approach is relevant to map the functional decomposition of companies' R&D value chains. TRLs matter for corporate location choices. Knowing what distinct types of R&D&I activities (or TRLs) stay, go and come back in EU territories – and why – is central for policies supporting local industrial and innovation ecosystems and clusters, and the identification and integration into strategic value chains. Fast-developing local strengths of Asian countries such as China, Japan and South Korea, in Automotive, and in Electronics and related fields are shaping companies' geographical decomposition of R&D&I activities. While the EU has strong value chains in e.g. automotive (network of combustion engine) and pharma (highly skilled labour force and strong research institutions), corporate R&D&I investments are finding their way to novel applications in emerging technologies in Asia.
    Keywords: R&D, Innovation; Industrial Innovation Policy; Global Value Chains; Technology Readiness Levels; Regional Innovation Policy
    JEL: O25 O30 R12 R58
    Date: 2019–03
  12. By: Guerriero, Marta (Asian Development Bank Institute)
    Abstract: Summary statistics on the labor share of income show that between-country variation is much greater than within-country variation: functional income distribution is determined by factors which change substantially across countries but are persistent over time. We attempt to shed some light on the long-run and political economy determinants of the labor income share. We revisit and extend previous empirical research on democratic political institutions and the labor share using a dataset of 112 countries over 1970–2015. Our empirical analysis shows that democracy allows workers to appropriate a higher share of national income. The evidence is robust to different indices of democracy and different periods of time, and after performing instrumental variable estimation. These results are particularly relevant today, in light of the recent global decline in the labor income share and current crisis of democracy.
    Keywords: labor share; factor income distribution; democracy; political economy; institutions
    JEL: E25 O15 P16
    Date: 2019–01–25

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