nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2019‒04‒29
eleven papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Innovation, Productivity, and Spillovers Effects: Evidence from Chile By Crespi, Gustavo; Figal Garone, Lucas; Maffioli, Alessandro; Stein, Ernesto H.
  2. Tax Policy for Innovation By Bronwyn H. Hall
  3. The Comparative Advantage of Firms By Johannes Boehm; null null; John Morrow
  4. Sectoral productivity Growth and Innovation Policies By Ivanova, Olga; Chatzouz, Moustafa
  5. Micro-Evidence on Corporate Relationships in Global Value Chains: The Role of Trade, FDI and Strategic Partnerships By Andrea Andrenelli; Iza Lejárraga; Sébastien Miroudot; Letizia Montinari
  6. FDI Patterns and Global Value Chains in the Digital Economy By Antonello Zanfei; Andrea Coveri; Mario Pianta
  7. Firm heterogeneity, productivity, and the extensive margins of trade - differences between manufacturing firms in East and West Germany By Krenz, Astrid
  8. Has the Swedish Business Sector Become More Entrepreneurial than the US Business Sector? By Heyman, Fredrik; Norbäck, Pehr-Johan; Persson, Lars
  9. What a firm produces matters: diversification, coherence and performance of Indian manufacturing firms By Giovanni Dosi; Nanditha Mathew; Emanuele Pugliese
  10. Occupational mobility, skills and training needs By Nagui Bechichi; Stéphanie Jamet; Gustave Kenedi; Robert Grundke; Mariagrazia Squicciarini
  11. Smart Specialisation Evaluation: Setting the Scene By Carlo Gianelle; Fabrizio Guzzo; Elisabetta Marinelli

  1. By: Crespi, Gustavo; Figal Garone, Lucas; Maffioli, Alessandro; Stein, Ernesto H.
    Abstract: This paper estimates the direct and spillover effects of two matching grants schemes designed to promote firm-level research and development (R&D) investment in Chile on firm productivity. Because the two programs target different kinds of projects—the National Productivity and Technological Development Fund (FONTEC) subsidizes intramural R&D, while the Science and Technology Development Fund (FONDEF) finances extramural R&D carried out in collaboration with research institutes—analyzing their effects can shed light on the process of knowledge creation and diffusion. The paper applies fixed-effects techniques to a novel dataset that merges several waves of Chile’s National Manufacturing Surveys collected by the National Institute of Statistics with register data on the beneficiaries of both programs. The results suggest that while both programs have had a positive impact on participants’ productivity, only FONDEF-funded projects have generated positive spillovers on firms’ productivity. The analysis reveals that the spillover effects on productivity display an inverted-U relationship with the intensity of public support. Spillover effects were found to occur only if firms were both geographically and technologically close.
    Keywords: Chile, impact evaluation, innovation, matching grants programs productivity, spillover effects
    Date: 2019–02
  2. By: Bronwyn H. Hall
    Abstract: A large number of countries around the world now provide some kind of tax incentive to encourage firms to undertake innovative activity. This paper presents the policy rationale for these incentives, discusses their design and potential effectiveness, and reviews the empirical evidence on their actual effectiveness. The focus is on the two most important and most studied incentives: R&D tax credits and super deductions, and IP boxes (reduced corporate taxes in income from patents and other intellectual property).
    JEL: H25 O32 O38
    Date: 2019–04
  3. By: Johannes Boehm (Département d'économie); null null (Centre for Economic Performance); John Morrow (King‘s College London [London])
    Abstract: Multiproduct firms dominate production, and their product turnover contributes substantially to aggregate growth. Theories propose that multiproduct firms grow by diversifying into products which need the same know-how or capabilities, but are less clear on what these capabilities are. Input output tables show firms co-produce in industries that share intermediate inputs, suggesting input capabilities drive multiproduct production patterns. We provide evidence for this in Indian manufacturing: the similarity of a firm’s input mix to an industry’s input mix predicts entry into that industry. We identify the direction of causality from the removal of size-based entry barriers in input markets which made firms more likely to enter industries that were similar in input use to their initial input mix. We rationalize this finding with a model of industry choice and economies of scope to estimate the importance of input capabilities in determining comparative advantage. Complementarities driven by input capabilities make a firm on average 5% (and up to 15%) more likely to produce in an industry. Entry barriers in input markets constrained the comparative advantage of firms and were equivalent to a 10.5 percentage point tariff on inputs.
    Keywords: Multiproduct firms; Firm capabilities; Vertical input linkages; Comparative advantage; Economies of scope; Size-based policies
    JEL: F11 L25 M2 O3
    Date: 2019–04
  4. By: Ivanova, Olga; Chatzouz, Moustafa
    Abstract: This papers studies the sectoral differences in the impacts of various innovation policies, human capital and R&D intensity on the productivity growth using econometric panel data techniques. We analyze the development of the sectoral productivity as depending on both knowledge creation and knowledge adoption, where both channels of productivity growth can be influenced by various types of R&D related public policy. We use the combination of the most recent EU-KLEMS database and OECD data for econometric analysis on six aggregated sectors of the economy. In contrast with other existing studies our econometric analysis covers the whole of the economy and includes various traditional, industrial and services sectors. The main contribution of the paper is in highlighting the differences between economic sectors and identifying potential for sector-specific innovation policies.
    Keywords: Endogenous growth, R&D, panel data, R&D policy, industrial sectors
    JEL: O47
    Date: 2019–04–23
  5. By: Andrea Andrenelli; Iza Lejárraga; Sébastien Miroudot; Letizia Montinari
    Abstract: Global value chains (GVCs) have sharpened the interdependencies between trade and foreign direct investment (FDI). Using a novel micro-level dataset covering about 27 000 corporate relationships of 147 multinational enterprises (MNEs) in 13 sectors, new evidence is provided on how firms organise their production globally by combining trade with investment, and on a range of non-equity, contract-based partnerships. The analysis leads to five stylised facts. First, MNE activities are a combination of trade, FDI and strategic partnerships. All firms rely on a mix of these different types of corporate relationships. Second, the configuration of trade, investment and strategic partnerships varies across sectors, firms and markets. The results highlight considerable firm-level heterogeneity within the same industry and across the different modes of entry. Third, investment performs various functions in GVCs. In addition to traditional forms of FDI such as “market-seeking” or “input-seeking”, investment “in capabilities” or “conglomerate” FDI also account for a relevant share of equity-based relationships. Fourth, support business functions emerge as key building blocks in GVCs, which suggests that policy reforms in transversal services sectors that support all GVCs should merit special attention. Fifth, GVCs display a clear geographical organisation. While domestic corporate relationships may lead to higher volumes of activities, in terms of the number of relationships MNEs have more partners abroad. Moreover, the large majority of GVC interactions take place within OECD countries. Overall, the complex and heterogeneous interlinkages observed in modern firm strategies highlight the importance of ensuring a level playing field for both trade and investment.
    Keywords: investment, multinational enterprises, Trade
    JEL: L23 L24 F23
    Date: 2019–04–25
  6. By: Antonello Zanfei (Department of Economics, Society & Politics, Universit? di Urbino Carlo Bo); Andrea Coveri (Department of Economics, Society & Politics, Universit? di Urbino Carlo Bo); Mario Pianta (Scuola Normale Superiore, Florence)
    Abstract: The modern process of digitalization of the world economy entails global flows of investment in technology-based industries and knowledge activities located upstream of value chains. This work exploits the wealth of information offered by the fDi Markets database to provide an overview about the geographical patterns of FDIs and of specialization in digital industries and in technological activities.We showremarkable differences across both advanced and emerging economies in this respect. Europe is both a big attractor and a big investor in digital related business, but relies on emerging economies more to offshore production than to set up R&D labs in these countries. By contrast, North American economies are more prone to engage in knowledge intensive FDIs towards the most dynamic emerging countries than is the case of Europe.Emerging economies also play a large variety of rolesinglobal flows of investment in digital industries.However, with the relevant exceptions of China, India and the Four Asian Tigers, inward and outward FDIsof Emerging economies are predominantlyproduction-oriented, with a lower involvement in R&D, Design and ICT activities. Hence, the observed patterns of FDIs appear to consolidate existing hierarchies in digital related global production networks, creating limited upgrading opportunities in the case of most emerging economies.
    Keywords: Foreign direct investment, globalization, digitalization, global value chains.
    JEL: F12 F21 F23 L23 M21 O30
    Date: 2019
  7. By: Krenz, Astrid
    Abstract: I investigate the relationship between the extensive margins of imports and exports (the number of countries traded with and the number of goods traded) and firm productivity using a newly constructed and rich panel data set of German manufacturing firms for the years 2009-2014. I do for the first time construct a data set based on German trade data and firm data that accounts for the substantial change in the German register of firms statistics after 2012. The extensive margins are significantly and positively associated with firm-level productivity both for West and East German firms in cross-sectional estimations, which is in line with the previous literature. Productivity is higher in firms that import and export more goods and trade with more countries. However, results based on panel analyses reveal that especially for East German firms the relationship becomes insignificant when unobserved firm heterogeneity is controlled for. The results point to a high degree of firm heterogeneity, of factors that are relevant and differ within the firm only, for firms in East Germany.
    Keywords: Extensive margins of trade,Firm Productivity,Germany,Firm Heterogeneity
    JEL: F14 L25 L60
    Date: 2019
  8. By: Heyman, Fredrik; Norbäck, Pehr-Johan; Persson, Lars
    Abstract: Recent studies document a 30-year decline in various measures of entrepreneurship in the U.S. Using detailed Swedish employer-employee data over the period 1990 to 2013, we find young firms to be more prominent in the Swedish business sector than in the U.S. business sector. Young Swedish firms, aged five years or less, account for more than half of all firms during this period. We also observe an increase in Swedish entrepreneurial activity for start-ups. However, increasing job destruction rates for young firms has implied a declining employment share for younger firms from the mid-2000s. Moreover, most of the job creation by young firms occurs in the expanding service sector. We discuss different explanations for why Sweden appears not to have the same strong decline in entrepreneurial activity as the U.S. has had during the last two decades. We argue that one important explanation is economic reforms in Sweden in the 1990s that mitigated several hurdles to entrepreneurship.
    Keywords: entrepreneurship; industrial structure and structural change; job dynamics; Matched employer-employee data
    JEL: J23 K23 L26 L51
    Date: 2019–04
  9. By: Giovanni Dosi; Nanditha Mathew; Emanuele Pugliese
    Abstract: Economic growth and development of a country involves accumulation of knowledge and dynamic capabilities (Cimoli et al., 2009). Past research has begun to investigate the capability accumulation and macro-economic development of countries and sectors (Dosi et al., 1990), also by means of introduction of new products (Hausmann and Rodrik, 2003). In this work, recognizing that firms are the actual domain in which production takes place, we focus on the firm-level process of capability accumulation and diversification in a developing country. We investigate the relationship between diversification (and coherent diversification) and firm performance by employing an extensive database of Indian manufacturing firms with detailed information on product mix of firms. We claim that such an understanding of firmsù incentives to diversify is relevant not only for the corporate management, but also for the diversification of countries and thereby its development. First, we explore the reasons behind firmsù strategy to diversify, i.e, which firms choose a broad product scope and whether the change in the scope of the firm results in improved performance in terms of firm profitability and sales growth. Second, we look at the idiosyncratic characteristics of different products, by emphasizing the synergies of a product line with respect to the overall product basket of the firm. In this line, we develop a measure that captures the synergies and economies of scope between different products, and observe that the firmsù future performance crucially depend on the interactions between the products that comprise its basket. Overall, our results are consistent with an intangible-capabilities model of firm diversification: diversification results in improved firm performance if the firm has underused capabilities and the new production line is able to exploit them.
    Keywords: Diversification; Coherence; Endogenous Switching.
    Date: 2019–04–18
  10. By: Nagui Bechichi; Stéphanie Jamet; Gustave Kenedi; Robert Grundke; Mariagrazia Squicciarini
    Abstract: This work investigates how education and training policies may facilitate occupational transitions. It proposes a methodology to estimate cognitive and task-based skill distances across occupation. It identifies the occupational transitions that can occur upon small (of up to 6 months), moderate (up to 1 year) or important (up to 3 years) (re)training spells. “Possible” transitions, i.e. transitions implying reasonable upskilling needs and similar knowledge areas, are distinguished from “acceptable” occupations, i.e. possible transitions entailing limited loss of human capital and income, if any. Possible and acceptable transitions exist for the quasi-totality of occupations, when up to one year of training is considered. Low-skilled occupations display fewer acceptable transitions and generally require higher cognitive or task-based skills. Transitions for many high-skilled occupations entail important wage decreases or skills excesses. Acceptable transitions for occupations at high-risk of automation are harder to find, and tend to require cognitive and task-based skills-related training.
    Date: 2019–04–26
  11. By: Carlo Gianelle (European Commission - JRC); Fabrizio Guzzo (European Commission - JRC); Elisabetta Marinelli (European Commission - JRC)
    Abstract: This report presents a set of preliminary conceptual and practical considerations on the evaluation of the Smart Specialisation policy. It opens a discussion that aims to set the scene for more articulated and detailed reflections. It is important that evaluation exercises are focused on selected elements of the policy scheme; this facilitates identifying suitable evaluation questions and methodologies. Evaluation is meaningful only in the presence of well-specified evaluation questions, stemming from the specific information needs of the actors involved in Smart Specialisation Strategies. A well-defined intervention logic, linking clear ends with means, is essential for evaluation. Monitoring systems act as early-warning mechanisms signalling critical aspects in the implementation, which call for deeper assessment and understanding through evaluation exercises. To plan useful evaluations and increase the chances of their results being used require an ongoing commitment to develop a learning culture and build evaluation capabilities across institutions and stakeholders.
    Keywords: Regional innovation policy; Smart Specialisation; public policy evaluation; policy monitoring
    JEL: O25 O38 R12 R58
    Date: 2019–04

This nep-tid issue is ©2019 by Fulvio Castellacci. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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