nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2019‒07‒29
nine papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Does the Position in the Inter-sectoral Knowledge Space affect the International Competitiveness of Industries? By Francesco Lamperti; Franco Malerba; Roberto Mavilia; Giorgio Tripodi
  2. Relatedness, economic complexity and convergence across European regions By Tullio Buccellato; Giancarlo Corò
  3. Do political connections matter for firm innovation? Evidence from emerging markets in Central Asia and Eastern Europe By Krammer, Sorin; Jimenez, Alfredo
  4. Dynamic Effects of Minimum Wage on Growth and Innovation in a Schumpeterian Economy By Chu, Angus C.; Kou, Zonglai; Wang, Xilin
  5. The Sources of British Economic Growth since the Industrial Revolution : Not the Same Old Story By Crafts, Nicholas
  6. Roman Transport Network Connectivity and Economic Integration By Matthias Flückiger; Erik Hornung; Mario Larch; Markus Ludwig; Allard Mees
  7. A retrospective study on the regional benefits and spillover effects of high-speed broadband networks: Evidence from German counties By Briglauer, Wolfgang; Dürr, Niklas S.; Gugler, Klaus
  8. Innovation and Economic Growth: Does Internet Matter? By Bakari, Sayef
  9. Digital technologies and ‘value’ capture in global value chains: Empirical evidence from Indian manufacturing firms By Banga Karishma

  1. By: Francesco Lamperti; Franco Malerba; Roberto Mavilia; Giorgio Tripodi
    Abstract: This paper empirically investigates how the inter-sectoral knowledge flows affect the international competitiveness of industries, once controlling for both cost and other technological factors. Using patent data on 14 manufacturing industries in 16 OECD countries over the period 1995-2009, we apply a network-based approach to capture the effect of industries' position in the flows of technological knowledge across industries, which we label inter-sectoral knowledge space. We find that (i) centrality and local clustering in the inter-sectoral knowledge space positively affect the export market shares of an industry, (ii) such two effects are rather redundant and, (iii) national-level knowledge flows' impacts on international competitiveness are way stronger than international ones. Network measures of position in the knowledge space are found to be more relevant than standard technological indicators such as patent counts. Our results point to the importance of industries being well located in the stream of knowledge flows, rather than being innovative per-se, and offers an novel yet robust proxy to measure technological factors affecting trade performances. In addition, we find evidence of geographical boundaries of knowledge flows.
    Keywords: international trade; industry competitiveness; knowledge flows; patent data.
    Date: 2019–07–24
  2. By: Tullio Buccellato (Economic Research Department, Confindustria.); Giancarlo Corò (Department of Economics, University Of Venice Cà Foscari)
    Abstract: The aim of this paper is to analyze how the heterogeneous structure of the European regions has affected their patterns of convergence or divergence. We analyse data collected by Eurostat, from a balanced panel of 191 regions and 55 economic branches over the period 2003-2015. In this way, we are able to describe and capture technological proximity across the regions and analyse how it has evolved over space and time. Limiting the analysis to the manufacturing activities, we are also able to measure the degree of economic complexity of the regional production systems and assess how this affects their patterns of growth. Our findings suggest that there are pushing (enhancing convergence) and pulling (exacerbating economic gaps) forces to economic convergence. Spatial effects tend to push towards convergence, with the Eastern regions that started from relatively low levels of GDP per capita and experienced higher growth rates. Nevertheless, the different level of economic complexity tends to widen the gaps between territories: for example, the German regions, whose economic structures are more complex, have kept on widening the gap between themselves and the other European regions. The two different forces are also interconnected as the Eastern regions combine a relatively low level of GDP per capita with a significant level of economic complexity. During the period considered, the improvement in living standards has corresponded to the upgrade of their manufacturing production structures.
    Keywords: Regional disparities, growth, convergence, structural change, relatedness, economic complexity, spatial effects
    JEL: O10 O25 P25 R10 L16
    Date: 2019
  3. By: Krammer, Sorin; Jimenez, Alfredo
    Abstract: We posit that the investments in political connections made by a firm in an emerging market will impact differently its propensity to introduce radical and incremental innovations. In addition, we argue that this effect will be moderated by alternate non-market firm strategies, such as bribery. Using a dataset of more than 9,000 firms in 30 emerging economies from Eastern Europe and Central Asia we find that political connections increase the probability of radical innovation but have no significant impact on incremental innovation. Moreover, larger bribing reduces the positive impact of political connections on radical innovation. Our results confirm the importance of political connections for firm activities, but also caution firms on their heterogeneous impact on various types of innovations, and their detrimental interplay with other non-market strategies.
    Keywords: Radical innovation; Incremental innovation; Political connections; Bribery; Non-market strategy.
    JEL: D72 L2 O31
    Date: 2019–06–27
  4. By: Chu, Angus C.; Kou, Zonglai; Wang, Xilin
    Abstract: We explore the dynamic effects of minimum wage in a Schumpeterian model with endogenous market structure and obtain the following results. First, raising the minimum wage decreases the employment of low-skill workers and increases the unemployment rate. Second, it decreases the level of output. Third, it decreases the transitional growth rate of output but does not affect the steady-state growth rate. Our quantitative analysis shows that the magnitude of the negative effects of minimum wage is sharply increasing in low-skill labor intensity in production and that employed low-skill workers gain initially but might suffer from slower growth in future wages.
    Keywords: minimum wage; unemployment; innovation; endogenous market structure
    JEL: E24 O3 O4
    Date: 2019–07
  5. By: Crafts, Nicholas (University of Warwick)
    Abstract: This paper updates the classic growth accounting research of the early 1980s taking account of improved data that has subsequently become available. The picture of long-run growth which results from incorporating many revisions is considerably different. The long-run path of productivity growth is now that of a roller-coaster with twin peaks in the third quarters of the 19th and 20th centuries rather than a U-shape. Productivity growth appears to have been very slow to accelerate in the Industrial Revolution, the notion of an Edwardian climacteric is not persuasive and the current productivity slowdown stands out as unprecedented.
    Keywords: Climacteric ; Golden Age ; Growth Accounting ; Industrial Revolution ; Productivity Growth ; Productivity Puzzle
    JEL: N13 N14 O47 O52
    Date: 2019
  6. By: Matthias Flückiger; Erik Hornung; Mario Larch; Markus Ludwig; Allard Mees
    Abstract: We show that the creation of the first integrated pan-European transport network during Roman times influences economic integration over two millennia. Drawing on spatially highly disaggregated data on excavated Roman ceramics, we document that interregional trade was strongly influenced by connectivity within the network. Today, these connectivity differentials continue to influence cross-regional firm investment behaviour. Continuity is largely explained by selective infrastructure routing and cultural integration due to bilateral convergence in preferences and values. Both plausibly arise from network-induced history of repeated socio-economic interaction. We show that our results are Roman-connectivity specific and do not reflect pre-existing patterns of exchange.
    Keywords: economic integration, Roman trade, transport network connectivity, business links, cultural similarity
    JEL: F14 F15 F21 N73 R12 R40 O18
    Date: 2019
  7. By: Briglauer, Wolfgang; Dürr, Niklas S.; Gugler, Klaus
    Abstract: There is still hardly any empirical evidence on how divergent broadband technologies, and, by extension, bandwidth levels, influence GDP growth, or on the extent of spatial externalities at a regional level. Our study aims to assess the economic benefits of high-speed broadband networks within and across neighbouring counties in Germany. Utilizing a balanced panel dataset of 401 German counties with data from 2010-2015 as well as different panel estimation techniques, we find that the availability of high-speed broadband (which enables transfer rates of 50 Mbit/sec and higher) has a small but significant positive effect on regional GDP growth in the average German county, when compared to normal broadband availability. Furthermore, we find that broadband deployment in German counties induces substantial economic benefits in terms of direct effects and regional externalities. According to our main estimation results, an increase in bandwidth coverage of 50 Mbit/sec and higher by one percentage point induces arise in regional GDP of 0.05%. This effect is almost doubled if we also take regional externalities into account and is of particular relevance for urban counties. Furthermore, our cost-benefit analysis suggests substantial efficiency gains, as the total economic benefits of subsidy programs to encourage broadband expansion substantially exceeded their associated costs.
    Keywords: high-speed broadband infrastructure,economic growth,spatial externalities,German counties,panel data
    JEL: H23 H54 L96 L98 R11 R58
    Date: 2019
  8. By: Bakari, Sayef
    Abstract: We analyze the relationship between economic growth and innovation taking into consideration the importance of the internet. To do so, we use a panel ARDL model, with data on a sample of 76 developed and developing countries in different geographic regions for the 1995–2016 period. Our findings provide empirical evidence of the positive role of innovation and internet in economic growth and the positive role of economic growth and internet in innovation. From these results, we derive several basic policy conclusions.
    Keywords: Innovation, Economic Growth, Internet
    JEL: O31 O32 O38 O47 O50
    Date: 2019–06
  9. By: Banga Karishma
    Abstract: This paper examines whether digitalization can be a driver of ‘upgrading’ in global value chains and help developing countries move into higher value-added activities. In particular, the paper provides empirical evidence on the impact of digital capabilities on product upgrading in Indian manufacturing firms participating in global value chains.Empirical analysis is undertaken on a panel of global value chain manufacturing firms in the period 2001–15, using the methodology of system generalized method-of-moments. Product upgrading is captured through a novel sales-weighted average product sophistication indicator at the firm level, while principal component analysis is used to construct a digital capability index that draws information on both ‘hard’ and ‘soft’ digital assets of the firm. Empirical results suggest that an increase in digital capability of the firm has a significant and positive impact on its product sophistication, other things being constant.Firms with both high levels of digital capability and share of skilled labour are observed to have roughly 4–5 per cent higher product sophistication than firms with low levels of digital capability and skills. In addition, lagged product sophistication, size, industry concentration, and to some extent R&D, are also found to have a positive and significant impact on product sophistication of Indian global value chain firms.The paper further attempts to tie these empirical results to the global value chain governance literature, and advances the nexus of governance and digitalization as a key area of global value chain research.
    Date: 2019

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