nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2019‒05‒20
nine papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Firm Size and Innovation in the Service Sector By David B. Audretsch; Marian Hafenstein; Alexander S. Kritikos; Alexander Schiersch
  2. What a firm produces matters: diversi cation, coherence and performance of Indian manufacturing By Dosi, Giovanni; Mathew, Nanditha; Pugliese, Emanuele
  3. R&D, innovation and productivity By Mohnen, Pierre
  4. Job automation risk, economic structure and trade: a European perspective By Foster-McGregor, Neil; Nomaler, Önder; Verspagen, Bart
  5. Brazilian exporters and the rise of Global Value Chains: an empirical assessment By Torres Mazzi, Caio
  6. How has globalisation affected the economic growth, structural change and poverty reduction linkages? Insights from international comparisons By Aggarwal, Aradhna
  7. Structural adjustment, mass lay-offs and employment reallocation By Filipe Silva; Carlo Menon; Paolo Falco; Duncan MacDonald
  8. Like it or not? The impact of online platforms on the productivity of incumbent service By Alberto Bailin Rivares; Peter Gal; Valentine Millot; Stéphane Sorbe
  9. How internationalization and competitiveness contribute to get public support to innovation? The Portuguese case By Anabela Santos; Michele Cincera; Paulo Neto; Maria Manuel Serrano

  1. By: David B. Audretsch (Indiana University Bloomington); Marian Hafenstein (German Institute for Economic Research (DIW Berlin)); Alexander S. Kritikos (German Institute for Economic Research (DIW Berlin), University of Potsdam, IZA (Bonn), IAB (Nuremberg)); Alexander Schiersch (German Institute for Economic Research (DIW Berlin))
    Abstract: A rich literature links knowledge inputs with innovative outputs. However, most of what is known is restricted to manufacturing. This paper analyzes whether the three aspects involving innovative activity - R&D; innovative output; and productivity - hold for knowledge intensive services. Combining the models of Crepon et al. (1998) and of Ackerberg et al. (2015), allows for causal interpretation of the relationship between innovation output and labor productivity. We find that knowledge intensive services benefit from innovation activities in the sense that these activities causally increase their labor productivity. Moreover, the firm size advantage found for manufacturing in previous studies nearly disappears for knowledge intensive services.
    Keywords: MSMEs, R&D, Service Sector, Innovation, Productivity, Entrepreneurship
    JEL: L25 L60 L80 O31 O33
    Date: 2019–05
  2. By: Dosi, Giovanni (Institute of Economics, Sant'Anna School of Advanced Studies, Pisa); Mathew, Nanditha (UNU-MERIT, and Institute of Economics, Sant'Anna School of Advanced Studies, Pisa, and IBIMET-CNR, Florence); Pugliese, Emanuele (European Commission, Joint Research Centre (JRC), Seville, Institute of Complex Systems, CNR, Rome)
    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 firms' 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 firms' 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 firms' 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
    JEL: L25 L60 O30
    Date: 2019–04–18
  3. By: Mohnen, Pierre (UNU-MERIT, and SBE, Maastricht University)
    Abstract: This paper reviews various technological indicators from innovation inputs to innovation outputs, pointing out their strengths and weaknesses and the consequent caution that is in order when using these data for economic analysis. It briefly explains the theoretical link between innovation and productivity growth and then compares the estimated magnitudes of that relationship using the different innovation indicators.
    Keywords: innovation, productivity, indicators
    JEL: D24 O31 O33 O47
    Date: 2019–05–06
  4. By: Foster-McGregor, Neil (UNU-MERIT); Nomaler, Önder (UNU-MERIT); Verspagen, Bart (UNU-MERIT)
    Abstract: Recent studies report that technological developments in machine learning and artificial intelligence present a significant risk to jobs in advanced countries. We re-estimate automation risk at the job level, finding sectoral employment structure to be key in determining automation risk at the country level. At the country level, we find a negative relationship between automation risk and labour productivity. We then analyse the role of trade as a factor leading to structural changes and consider the effect of trade on aggregate automation risk by comparing automation risk between a hypothetical autarky and the actual situation. Results indicate that trade increases automation risk in Europe, although moderately so. European countries with high labour productivity see automation risk increase due to trade, with trade between European and non-European nations driving these results. This implies that the high productivity countries do not, on the balance, offshore automation risk, but rather import it.
    Keywords: Automation risk for employment, Industry 4.0, Globalisation, Global Value Chains
    JEL: F16 O33 J24
    Date: 2019–04–08
  5. By: Torres Mazzi, Caio (UNU-MERIT)
    Abstract: This paper studies how production fragmentation has affected the performance of Brazilian exporters in the manufacturing sector. We begin by combining existing classifications of internationally traded products to identify four different categories of goods, of which one ('customised intermediates') we associate more closely with fragmented trade. We then proceed to compare the productivity premium of international traders for these different categories. Our results confirm exporting customised intermediates is associated with a superior performance in comparison to other intermediates; but also highlights a strong influence of sector specificities. We also investigate the existence of learning-by-exporting effects and find no evidence for firms that produce customised intermediates exclusively. However, exports of customised products in general - i.e. both final and intermediate goods - are associated with learning. This result suggests trade in customised intermediates might be associated with learning when firms manage to upgrade their products to other customised goods.
    Keywords: exports, productivity, fragmentation, Global Value Chains
    JEL: F14 F12 O33 O31
    Date: 2019–04–23
  6. By: Aggarwal, Aradhna (Copenhagen Business School)
    Abstract: This paper examines economic growth, structural change and poverty reduction linkages across 147 countries of the world during 1991-2015. It emphasises that under the liberal market growth model structural change-growth linkages are complex, which in turn can complicate the poverty reduction effects of growth. It proposes a conceptual framework to explain how growth and structural dynamics have been influenced by globalisation. It argues that at the core of the conventional growth-structural change relationship lies the assumption that economic activities within and across sectors are strongly connected with each other through forward and backward linkages. Globalisation may distort this connectedness affecting different sectors asymmetrically. As a result, structural change in value added and employment may not commensurate with each other exerting ambiguous effects on cross-sector productivity dispersions. The study hypothesises that the convergence between them is critical for productivity enhancing structural change, and in turn, for poverty reducing effects of growth. The generalised method of moments (GMM) estimator within the framework of a dynamic panel data approach upholds the hypothesis. These findings question the sustainability of the growth and structural change processes taking place in the developing world and call for deeper strategic government interventions for broad based economic development with an emphasis on manufacturing.
    Keywords: Economic Growth, Globalisation, Structural Change, Poverty reduction, Cross country analysis
    JEL: E24 O14 O40
    Date: 2019–04–30
  7. By: Filipe Silva; Carlo Menon; Paolo Falco; Duncan MacDonald
    Abstract: This report investigates the factors associated with the intensity of “mass lay-offs” across countries and industries, controlling for the dynamics of overall employment. The results suggest that some important drivers of structural transformation (e.g. digitalisation and globalisation) are not as clearly linked to mass lay-offs as one might expect, once their impact on overall job destruction is accounted for. The report also investigates the re-employability prospects of workers in sectors at high risk of mass lay-offs. Finally, the paper draws implications for different areas of policymaking, from labour market policy to industrial policy and also trade policy.
    Date: 2019–05–14
  8. By: Alberto Bailin Rivares; Peter Gal; Valentine Millot; Stéphane Sorbe
    Abstract: This paper uses a novel empirical approach to assess if the development of online platforms affects the productivity of service firms. We build a proxy measure of platform use across four industries (hotels, restaurants, taxis and retail trade) and ten OECD countries using internet search data from Google Trends, which we link to firm-level data on productivity in these industries. We find that platform development supports the productivity of the average incumbent service firm and also stimulates labour reallocation towards more productive firms in these industries. This may notably reflect that platforms’ user review and rating systems reduce information asymmetries between consumers and service providers, enhancing competition between providers. The effects depend on platform type. “Aggregator” platforms that connect incumbent service providers to consumers tend to push up the productivity of incumbents, while more disruptive platforms that enable new types of providers to compete with them (e.g. home sharing, ride hailing) have on average no significant effect on it. Consistent with this, we find that different platform types affect differently the profits, mark-ups, employment and wages of incumbent service firms. Finally, the productivity gains from platforms are lower when a platform is persistently dominant on its market, suggesting that the contestability of platform markets should be promoted.
    Keywords: competition, digital, google trends, platforms, productivity, services, user rating
    JEL: D24 L13 L80 O33
    Date: 2019–05–21
  9. By: Anabela Santos; Michele Cincera; Paulo Neto; Maria Manuel Serrano
    Abstract: A wide range of empirical studies have analyzed which firm characteristics influence government evaluators on the decision to select specific firms for participating in Research and Development and Innovation subsidy programs. However, few authors have provided a precise analysis about the selection process of submitted applications for a public support. The aim of the present paper is to assess the effectiveness in the selection process and to understand which kind of projects are selected for being subsidized. The analysis is focused on the case study of applications submitted to the Portuguese Innovation Incentive System (SI Innovation) between 2007 and 2013. Once the selection criterion for accessing to this program is essentially based on competitiveness, namely in terms of internationalization and productivity, special attention was given on assessing the determinants of selection process regarding to these topics. Using a counterfactual analysis and Propensity Score Matching estimators, results show that the selection process to SI Innovation is more focused on expecting an increase of the internationalization and productivity of firms than in the efficiency of public expenditures and firm innovativeness. The conclusions of this paper could be useful for policy makers, once it identifies some failures in selection process, which according to other authors, could explain some disappointing results of public intervention in this field.
    Keywords: Subsidy, Innovation, Internationalization, Competitiveness, Propensity Score Matching
    JEL: O38 O31
    Date: 2019–05

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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