nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2019‒08‒12
twelve papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Knowledge sources and impacts on subsequent inventions: Do green technologies differ from non-green ones? By Nicolò Barbieri; Alberto Marzucchi; Ugo Rizzo
  2. Horizontal and Vertical Polarization: Task-Specific Technological Change in a Multi-Sector Economy By Sang Yoon (Tim) Lee; Yongseok Shin
  3. Trade Specialisation and Performance in Global Value Chains By Filippo Bontadini
  4. Innovation Union: Costs and Benefits of Innovation Policy Coordination By Teodora Borota; Fabrice Defever; Giammario Impullitti
  5. On Average Establishment Size across Sectors and Countries By Pedro Bento; Diego Restuccia
  6. Impact of innovation on employment in quantitative terms: review of empirical literature based on microdata By Heijs, Joost; Arenas Díaz, Guillermo; Vergara Reyes, Delia Margarita
  7. Patents, Data Exclusivity, and the Development of New Drugs By Gaessler, Fabian; Wagner, Stefan
  8. Of Trees and Monkeys. The evolution of technological specialization of European regions By Mario A. Maggioni; Emanuela Marrocu; Teodora Erika Uberti; Stefano Usai
  9. Technological regimes and the geography of innovation: a long-run perspective on US inventions By Dario Diodato; Ahmad Andrea Morrison
  10. Exuberant Proclivity Towards Non-Standard Employment:Evidence from Linked Employer-Employee Data By Alessandro Arrighetti; Eleonora Bartoloni; Fabio Landini; Chiara Pollio
  11. Some stylized facts about deindustrialization in Europe By José Pedro Pontes
  12. Trends in Financial Innovation: Evidence from Fintech Firms By Omer Unsal; Blake Rayfield

  1. By: Nicolò Barbieri (University of Ferrara; SEEDS, Italy); Alberto Marzucchi (SPRU, Science Policy Research Unit, University of Sussex (UK)); Ugo Rizzo (University of Ferrara, and SEEDS, Italy)
    Abstract: The paper investigates the nature and impact of green technological change. We focus on the search and impact spaces of green inventions: we explore the knowledge recombination processes leading to the generation of inventions and their impact on subsequent technological developments. Using a large sample of patents, filed during the period 1980-2012, we employ established patent indicators to capture the complexity, novelty and impact of the invention process. Technological heterogeneity is controlled for by comparing green and non-green technologies within narrow technological domains. We find that green technologies are more complex and appear to be more novel than non-green technologies. In addition, they have a larger and more pervasive impact on subsequent inventions. The larger spillovers of green technologies are explained only partially by novelty and complexity.
    Keywords: environmental inventions, patent data, knowledge recombination, knowledge impact
    JEL: O33 O34 Q55
    Date: 2019–08
  2. By: Sang Yoon (Tim) Lee (Queen Mary University of London and CEPR); Yongseok Shin (Washington University in St. Louis, Federal Reserve Bank of St. Louis and NBER)
    Abstract: We construct a multi-layer model of skills, occupations, and sectors. Technological progress among middle-skill occupations raises the employment shares and relative wages of lower- and higher-skill occupations (horizontal polarization), and those of managers over workers (vertical polarization). Polarization is faster within sectors that rely more on middle-skill workers, endogenously boosting their TFP. This shrinks their employment and output shares (structural change) if sector outputs are complementary. We empirically validate our theoretical predictions, and show that task-specific technological progress, which was faster for routine-manual tasks and slower for interpersonal tasks, played a major role in transforming the U.S. economy since 1980.
    Keywords: job polarization, structural change, wage inequality
    JEL: J24 J31 L16 O14 O33
    Date: 2019–07–02
  3. By: Filippo Bontadini (Science Policy Research Unit (SPRU) University of Sussex, UK; OFCE-SciencesPo, Nice)
    Abstract: This paper investigates whether trade specialisation explains economies’ trade performance within a Global Value Chain (GVC) context. We consider trade specialisation in natural resources, high and low tech manufacturing and business services, before and after the financial crisis. The aimed contribution of this paper is to shed light on the effects of trade specialisation as measured in domestic value added embodied in exports rather than gross exports. We add to the literature on GVCs by: (i) studying the role of the domestic productive structure in countries’ trade specialisation and performance, (ii) accounting for the rate of changes in trade specialisation as affecting GVC performance. We employ Balassa indexes based on value added flows in a GMM dynamic panel framework. We find that trade specialisation in low-tech manufacturing and natural resources have a negative impact on value added exported by countries. High-tech manufacturing and knowledge intensive services exhibit a positive effect during the crisis period. We discuss these findings in relation to the recent debates on the role of manufacturing and premature de-industrialisation in developing countries.
    Keywords: Global Value Chains, Trade Specialisation, KIBS, Input-Output.
    JEL: F14
    Date: 2019–06
  4. By: Teodora Borota; Fabrice Defever; Giammario Impullitti
    Abstract: In this paper, we document large heterogeneity in innovation policy and performance between old and new EU member states, and present firm-level evidence on the close link between foreign direct investment (FDI) spillovers and eastern European _firms' innovation. Guided by these facts and motivated by the pressing debate on further EU integration, we build a two-region endogenous growth model to analyse the gains from innovation policy cooperation in an economic union. The two regions, the West (the old members) and the East (the new post-2004 members), feature firms competing in innovation for market leadership, are integrated via free trade and costly technology transfer via FDI and have different innovation performance and policy. Calibrating the model to reproduce key features of the EU economy, we compare the outcomes of an East-West R&D subsidy war with a cooperation scenario with unified subsidy across regions, and obtain three main results. First, we find that the dynamic gains spurring from the impact of cooperation on the economy's growth rate are sizable and substantially larger than the static gains obtained internalising the strategic motive for subsidies. Second, our model suggests that the presence of FDI and multinational production alleviates the strategic motive and increases the gains from cooperation. Third, separating FDI and innovation policy generates larger gains from cooperation, a policy complementarity driven by the knowledge spillovers carried by FDI.
    Keywords: Optimal innovation policy, growth theory, international policy coordination, EU integration, FDI spillovers
    JEL: O41 O31 O38 F12 F42 F43
    Date: 2019–08
  5. By: Pedro Bento; Diego Restuccia
    Abstract: We construct a new dataset for the average employment size of establishments across sectors and countries from hundreds of sources. Establishments are larger in manufacturing than in services, and in each sector they are larger in richer countries. The cross-country income elasticity of establishment size is remarkably similar across sectors, about 0.3. We discuss these facts in light of several prominent theories of development such as entry costs and misallocation. We then quantify the sectoral and aggregate impact of entry costs and misallocation in an otherwise standard two-sector model with endogenous firm entry, firm-level productivity, and sectoral employment shares. We find that observed measures of misallocation account for the entire range of establishment-size differences across sectors and countries and almost 50 percent of the difference in non-agricultural GDP per capita between rich and poor countries.
    Keywords: establishment size, manufacturing, services, distortions, misallocation, productivity.
    JEL: O1 O4 O5 E02 E1
    Date: 2019–08–05
  6. By: Heijs, Joost; Arenas Díaz, Guillermo; Vergara Reyes, Delia Margarita
    Abstract: Because of the alarming discussion about robotisation and the potential loss of jobs, the effect of technological change on employment is back at the center of social debate. This study reviews the empirical evidence of 44 micro-level studies on the quantitative impact of innovation on employment, offering a systematic review of the methodologies used, (control) variables and data sets. It tries to explain their contradictory results and shortcomings and summarize their conclusions, offering a new taxonomy of the studies. Although we analyze all types of studies, the main part of our review is focused on two basic models. The first one is the static input-oriented model of Van Reenen (1997) and Bogliacino et al. (2008 and 2014), which shows a positive effect of R&D expenditures on employment. The second one is the dynamic output-oriented model of Harrison et al. (2008), which shows a positive effect of product innovation on employment and contradictory effects for process innovation. Most studies confirm the expected negative effect of process innovation. However, others (especially those which analyze low-income countries and low- tech sectors) reflect non-significant relationships. Further on, some conclusions, final critical remarks about detected limitations and contradictions and possible future lines of research will be presented.
    Keywords: innovation effects on employment, endogeneity, process and product innovation
    JEL: D2 J23 L10 O31 O33
    Date: 2019–07–25
  7. By: Gaessler, Fabian (MPI-IC Munich); Wagner, Stefan (ESMT Berlin)
    Abstract: Pharmaceutical firms typically enjoy market exclusivity for new drugs from concurrent protection of the underlying invention (through patents) and the clinical trials data submitted for market approval (through data exclusivity). Patent invalidation during drug development renders data exclusivity the sole source of protection and shifts the period of market exclusivity at the project level. In instrumental variables regressions we quantify the effect of a one-year reduction in expected market exclusivity on the likelihood of drug commercialization. The effect is largely driven by patent invalidations early in the drug development process and by the responses of large originators. We hereby provide first estimates of the responsiveness of R&D investments to market exclusivity expectations.
    Keywords: patents; drugs; data exclusivity; clinical trials;
    JEL: K41 L24 L65 O31 O32 O34
    Date: 2019–08–05
  8. By: Mario A. Maggioni; Emanuela Marrocu; Teodora Erika Uberti; Stefano Usai
    Abstract: The question about how regions develop and evolve along their productive and technological path is central in many scientific fields from international economics, to economic geography, from industrial economics to regional science. Within an evolutionary perspective, we believe that a region is most likely to develop new industries or new technologies, which are closer to its pre-existing specialization. Our research builds on an empirical stream of literature, started by Hausmann and Klinger (2007) and Hidalgo et al. (2007), aimed at tracing the evolution of industrial specialisation at the country level following the evolution of export portfolios. We refocus this line of analysis on the regional European technology/knowledge space along the research avenue started by Kogler et al. (2017). We aim at investigating the pattern and the evolution of regional specialisation in the EU in terms of the interaction of (i) endogenous processes of knowledge recombination and localised technological change, (ii) exogenous technological paradigm shifts and (iii) trans-regional spatial and technological spillovers and networking dynamics. More specifically, our paper maps the technological trajectories of 198 EU regions over the period 1986-2010 by using data on 121 patent sectors in the NUTS2 regions of the 11 most innovative EU countries, plus Switzerland and Norway. We map the knowledge space following two approaches: a micro level one, based on co-classification information contained in patent documents (Engelsman and Van Raan, 1992; Kogler et al., 2017), and a macro level, based on conditional co-specialisations of regions in the same patent classes (Hidalgo et al., 2007). These two representations of the knowledge space serve as a basis for understanding the evolution of regional technological specialization, measured in terms of the sector-region relative technological advantage (RTA), and for modelling its dynamics as a function of spatial, technological and socio-cognitive proximity. Preliminary results show that regional technological paths display a significant level of path dependence in, which the technological specialization is significantly shaped by both localised technological change and recombinant innovation. We also find evidence of local spillover spillovers induced by both geographic and technological proximity.
    JEL: O14 O31 O33 O52 R11 R12 C21
    Date: 2019
  9. By: Dario Diodato; Ahmad Andrea Morrison
    Abstract: The geographical distribution of innovative activities is an emerging subject, but still poorly understood. While previous efforts highlighted that different technologies exhibit different spatial patterns, in this paper we analyse the geography of innovation in the very long run. Using a US patent dataset geocoded for the years 1836-2010, we observe that ? while it is true that differences in technologies are strong determinant of spatial patterns ? changes within a technology over time is at least as important. In particular, we find that regional entry follows the technology life cycle. Subsequently, innovation becomes less geographical concentrated in the first half of the life cycle, to then re-concentrate in the second half.
    Keywords: technological regime, spatial patterns of innovation, life cycle, patents, US Economic Geography
    JEL: R11 O11
    Date: 2019–07
  10. By: Alessandro Arrighetti (University of Parma); Eleonora Bartoloni (ISTAT, Regional Office for Lombardy in Milan, University of Parma); Fabio Landini (University of Parma, Bocconi University, ICRIO); Chiara Pollio (University of Ferrara, EmiliaLab – Network of Departments of Economics of the Emilia-Romagna Region)
    Abstract: In most industrialized countries temporary andnon-standard forms of employment (NSFE)have become a pervasive featureof the labor market. However, at the firm level, the diffusion of NSFE is less uniform than expected: while some firms exhibit high propensity to use NSFE, others make no use of it.Most conventional explanationsof NSFE use (market uncertainty, production regimes, competitive pressure)fail to account for such heterogeneity. In this article the authors develop an alternative explanationthat links the use of NSFE to firm-specific availability of managerial resources: whenever the latter are relatively scarce, firms make larger use of NSFE to reduce coordination and operating costs. Using a linked employer-employeepanel of manufacturing firms from the Emilia-Romagna region (Italy), the authors provide empirical support for this hypothesis. The result is robust to different estimation strategies and controlling for alternative drivers of NSFE use. This novel finding suggests that, the use of NSFE has strong managerial roots: it allows firms to compensate for firm-specific managerial weaknesses.
    Keywords: non-standard employment, managerial resources, span of control, firm heterogeneity.
    JEL: D22 L23 M51 M52 J41 J23
    Date: 2019
  11. By: José Pedro Pontes
    Abstract: This paper highlights three main trends concerning the evoulution of the proportion of manufacturing in overall productive activity across European countries. Firstly, we are able to detect a non monotonic spatial pattern with deindustrialization prevailing both close to the European core and in remote areas. Secondly, industrialization appears to be faster in countries newly admitted to the European Union, whose trade costs with the European core are falling sharply. Finally, a specialization in high-tech, value added intensive sectors seems to prevent deindustrialization of core European countries but it has not the same effect on those which joined the European Union more recently.
    Keywords: Manufacturing, Deindustrialization, Location
    JEL: L6 O3 R3
    Date: 2019–07
  12. By: Omer Unsal; Blake Rayfield
    Abstract: In 1971, the patent for the Automated Teller Machine (ATM) was awarded to David Wetzel. While possibly not the first application of financial technology, since 1971 time, the innovation in the financial industry has grown beyond expectations. However, most studies in innovation ignore the financial sector altogether. In this study, we investigate financial technology firms and innovation. After identifying firms that are considered financial technology, we collect innovation outcomes such as patents and data breaches associated with those firms. We show that patent activity has enjoyed modest growth year over year, however firms still have challenges to overcome such as market risk and data security. This study serves as a perspective on financial technology. This paper is also forthcoming in the International Finance Review.
    Keywords: Financial Technology; Financial Innovation; Patents; Data Breach
    JEL: O33 O16
    Date: 2019–07

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