nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2019‒11‒11
thirteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Applying a New Methodology to Measure Investment in R&D and Science and Technology Activities: The Case of Colombia By Alexander Cotte Poveda; Clara Inés Pardo; Jorge Andrade Parra
  2. The survival of start-ups in time of crisis. A machine learning approach to measure innovation By Marco Guerzoni; Consuelo R. Nava; Massimiliano Nuccio
  3. A note on the estimation of competition-productivity nexus: A panel quantile approach By Polemis, Michael
  4. Skilled Tradable Services: The Transformation of U.S. High-Skill Labor Markets By Eckert, Fabian; Ganapati, Sharat; Walsh, Conor
  5. Do digital skills foster green diversification? A study of European regions By Artur Santoalha; Davide Consoli; Fulvio Castellacci
  6. Migrant Inventors and the Technological Advantage of Nations By Dany Bahar; Prithwiraj Choudhury; Hillel Rapoport
  7. Effects of subsidies on growth and welfare in a quality-ladder model with elastic labor By Hu, Ruiyang; Yang, Yibai; Zheng, Zhijie
  8. Effects of Expenditures in Science, Technology and R&D on Technical Change in Countries in Latin America and the Caribbean By Alexander Cotte Poveda; Carolina Jimenez
  9. Pay, Employment, and Dynamics of Young Firms By Babina, Tania; Ma, Wenting; Moser, Christian; Ouimet, Paige P.; Zarutskie, Rebecca
  10. Disruptive Innovation by Heterogeneous Incumbents and Economic Growth: When do incumbents switch to new technology? By Ohki, Kazuyoshi
  11. From variety to economic complexity: empirical evidence from Italian regions By Roberto Antonietti; Chiara Burlina
  12. Measuring Fifty Years of Trade Globalization By Nicole Palan; Nadia Simoes; Nuno Crespo
  13. Growth Gains from Trade By Sugata Marjit; Anwesha Basu; C. Veeramani

  1. By: Alexander Cotte Poveda; Clara Inés Pardo; Jorge Andrade Parra
    Abstract: Research and development (R&D), especially in industry and technology, is a crucial component of innovation, productivity and effectiveness, as well as the generation of new competitive advantages that are reflected in the whole economy of a country. In this context and with the aim of improving the measurement of R&D, the Organization for Economic Cooperation and Development updated the Frascati Manual in 2015 to provide the main, globally applicable guidelines for national statistical offices and policy-makers to analyze trends and allow for international comparisons of science, technology and innovation. In developing countries, it is particularly important to determine different strategies to guarantee adequate R&D to inform the creation of policies and instruments to effectively promote knowledge and generate technological solutions to local problems. This chapter describes the development and application of the Frascati Manual (2015) in Colombia to measure investments in R&D and other scientific, technological and innovation activities in Colombia from the perspective of the requirements of the manual for government, higher education, business enterprises, the health sector and private non-profit institutions with an update for the entire 2000–2017 period. The results indicate that the new guidelines for quantifying investments in R&D guarantee greater reliability through the use of mixed methods involving administrative registers or surveys and control mechanisms with budget analysis. Moreover, it is important to analyze differences among sectors to adequately determine the specific factors related to scientific, technological and innovation activities with the aim of establishing the investments and expenditures in science, technology and innovation. During the period of study, Colombia maintained constant investment with a slight increase in the last year that was mainly due to found royalties. The resulting indicators of expenditure in R&D and other scientific, technological and innovation activities can be used to monitor and evaluate relevant policies that have been implemented, as well as to make international comparisons.
    JEL: O3 O31 O34 O38
    Date: 2019–06–20
  2. By: Marco Guerzoni; Consuelo R. Nava; Massimiliano Nuccio
    Abstract: This paper shows how data science can contribute to improving empirical research in economics by leveraging on large datasets and extracting information otherwise unsuitable for a traditional econometric approach. As a test-bed for our framework, machine learning algorithms allow us to create a new holistic measure of innovation built on a 2012 Italian Law aimed at boosting new high-tech firms. We adopt this measure to analyse the impact of innovativeness on a large population of Italian firms which entered the market at the beginning of the 2008 global crisis. The methodological contribution is organised in different steps. First, we train seven supervised learning algorithms to recognise innovative firms on 2013 firmographics data and select a combination of those with best predicting power. Second, we apply the former on the 2008 dataset and predict which firms would have been labelled as innovative according to the definition of the law. Finally, we adopt this new indicator as regressor in a survival model to explain firms' ability to remain in the market after 2008. Results suggest that the group of innovative firms are more likely to survive than the rest of the sample, but the survival premium is likely to depend on location.
    Date: 2019–11
  3. By: Polemis, Michael
    Abstract: We study the impact of product market competition on productivity in 462 US manufacturing sectors for the period 1958-2009 through the lens of a panel quantile regression analysis. We confirm that there is a nonmonotonic inverse-U relationship between competition and total factor productivity. We argue that the turning point increases substantially as we move to the higher quantiles of the productivity distribution function. Our findings survive robustness checks under alternative competition measure and quantile estimator.
    Keywords: Quantile regression; Competition; Nonlinearities; Manufacturing; US
    JEL: C21 C23 L11
    Date: 2019–10–01
  4. By: Eckert, Fabian (Federal Reserve Bank of Minneapolis); Ganapati, Sharat (Georgetown University); Walsh, Conor (Yale University)
    Abstract: We study a group of service industries that are skill-intensive, widely traded, and have recently seen explosive wage growth. Between 1980 and 2015, these “Skilled Tradable Services” accounted for a sharply increasing share of employment among the highest earning Americans. Unlike any other sector, their wage growth was strongly biased toward the densest local labor markets and the highest paying firms. These services alone explain 30% of the increase in inequality between the 50th and 90th percentiles of the wage distribution. We offer an explanation for these patterns that highlights the complementarity between the non-rivalry of knowledge and changes in communication costs.
    Keywords: Wage inequality; Skill biased; Technological change; Urban growth; Trade and geography
    JEL: J31 O33 R11 R12
    Date: 2019–09–13
  5. By: Artur Santoalha (TIK Centre, University of Oslo, Norway); Davide Consoli (INGENIO (CSIC-Universitat Politècnica de València), Spain); Fulvio Castellacci (TIK Centre, University of Oslo, Norway)
    Abstract: Within the debate on smart specialisation, there is growing attention towards the features that favour or thwart regions’ ability to pursue sustainable development through eco-innovation. Against this backdrop, the present paper proposes an empirical analysis of the role of local capabilities, of related diversification and of their interaction in a panel of 225 European regions (NUTS 2) between 2002 and 2013. The main novelty is the explicit consideration of digital skills, workforce capabilities associated with the use and development of digital technologies. We find that the e-skills endowment is positively correlated with the probability that regions specialise in new green technological domains. Moreover, digital competences positively moderate the effect of technological relatedness on green diversification. Our results highlight the potential of complementarities between two emerging general-purpose technologies, ICTs and eco-innovations, in the transition towards a greener economy.
    Date: 2019–10
  6. By: Dany Bahar; Prithwiraj Choudhury; Hillel Rapoport
    Abstract: We investigate the relationship between the presence of migrant inventors and the dynamics of innovation in the migrants’ receiving countries. We find that countries are 25 to 50 percent more likely to gain advantage in patenting in certain technologies given a twofold increase in the number of foreign inventors from other nations that specialize in those same technologies. For the average country in our sample this number corresponds to only 25 inventors and a standard deviation of 135. We deal with endogeneity concerns by using historical migration networks to instrument for stocks of migrant inventors. Our results generalize the evidence of previous studies that show how migrant inventors "import" knowledge from their home countries which translate into higher patenting. We complement our results with micro-evidence showing that migrant inventors are more prevalent in the first bulk of patents of a country in a given technology, as compared to patents filed at later stages. We interpret these results as tangible evidence of migrants facilitating the technology-specific diffusion of knowledge across nations.
    Keywords: Innovation;Migration;Patent;Technology;Knowledge
    JEL: O31 O33 F22
    Date: 2019–10
  7. By: Hu, Ruiyang; Yang, Yibai; Zheng, Zhijie
    Abstract: This paper develops a quality-ladder growth model with elastic labor supply and distortionary taxes to analyze the effects of different subsidy instruments: subsidies to the production of final goods, subsidies to the purchase of intermediate goods, and subsidies to research and development (R&D). The model is calibrated to the US data to compare the growth and welfare implications of these subsidies. The main results are as follows. First, a coordination of all instruments attains the social optimum. Second, as for the use of a single instrument, the R&D subsidy is less growth-enhancing and welfare-improving than the other subsidies. Finally, as for the use of a mix of any two instruments, subsidizing the production of final goods and the purchase of intermediate goods is most effective in promoting growth but least effective in raising welfare.
    Keywords: Economic Growth; R&D; Quality Ladder; Subsidies
    JEL: D61 E62 O31 O38
    Date: 2019–11–04
  8. By: Alexander Cotte Poveda; Carolina Jimenez
    Abstract: This research analyzes the effects of expenditures in science, technology and research and development (R&D) on technical change in countries with a high human development index in Latin America. We argue that with higher investments in science, technology and R&D, the productivity of Latin American countries should increase, thereby offering several advantages for the population. Moreover, we investigated the factors that determine the relationship between economic growth and development and technical change. In this study, we use a technological change model to determine the factors that influence the productivity conditions of every Latin American country analyzed. The findings show that the expenditures in science, technology, R&D and patents have a positive influence on the technological change of those countries.
    JEL: O3 O31 O34 O38
    Date: 2019–06–20
  9. By: Babina, Tania (Columbia University); Ma, Wenting (University of Massachusetts Amherst); Moser, Christian (Federal Reserve Bank of Minneapolis); Ouimet, Paige P. (University of North Carolina at Chapel Hill); Zarutskie, Rebecca (Board of Governors of the Federal Reserve System)
    Abstract: Why do young firms pay less? Using confidential microdata from the US Census Bureau, we find lower earnings among workers at young firms. However, we argue that such measurement is likely subject to worker and firm selection. Exploiting the two-sided panel nature of the data to control for relevant dimensions of worker and firm heterogeneity, we uncover a positive and significant young-firm pay premium. Furthermore, we show that worker selection at firm birth is related to future firm dynamics, including survival and growth. We tie our empirical findings to a simple model of pay, employment, and dynamics of young firms.
    Keywords: Young-firm pay premium; Selection; Worker and firm heterogeneity; Firm dynamics; Startups
    JEL: D22 E24 J30 J31 M13
    Date: 2019–08–05
  10. By: Ohki, Kazuyoshi
    Abstract: In this paper, we construct a tractable endogenous growth model to examine heterogeneous incumbents' current technology-switching behavior. Then, we examine the effects of policies such as a subsidy for innovation by incumbents, a subsidy for innovation by entrants, and the extension of patent length. Our setting suggests interesting and counterintuitive results. High quality incumbents tend to be less likely to conduct innovation, which is inconsistent with Schumpeter's hypothesis. A subsidy for innovation by entrants decreases the average quality of differentiated goods. Moreover, it may decrease the growth rate of the economy if the positive spillover of innovation from average quality production is adequately large. Aggregate innovation can be small even when the population size is large if the barriers to entry are extremely high.
    Keywords: Economic Growth, R&D, Firm-Heterogeneity, Innovation by Incumbents, IPR Policy
    JEL: O31 O32 O33 O34 O41
    Date: 2019–10–31
  11. By: Roberto Antonietti; Chiara Burlina
    Abstract: Taking an evolutionary economic geography approach, we test whether the level of industry variety in a region affects its economic complexity. With reference to Italy, we measure variety using a Theil index of information entropy, and complexity with the Hidalgo and Hausmann index. Our results show that regions where variety grows faster also have a higher rate of growth in economic complexity. This relationship only holds in regions with low initial levels of variety and/or complexity, however, which are mainly located in the South of Italy. We suggest that product diversification, by increasing regional specialization in high-tech industries, can explain regional development and Italian North-South disparities.
    Keywords: economic complexity, entropy, industry variety, unit root
    JEL: O33 R11 R12
    Date: 2019–10
  12. By: Nicole Palan (Graz Schumpeter Center, University of Graz, Austria); Nadia Simoes (Instituto Universitário de Lisboa (ISCTE - IUL), ISCTE Business School Economics Department; BRU - IUL (Business Research Unit), Lisboa, Portugal); Nuno Crespo (Instituto Universitário de Lisboa (ISCTE - IUL), ISCTE Business School Economics Department; BRU - IUL (Business Research Unit), Lisboa, Portugal)
    Abstract: Although trade globalization is a multi-faceted phenomenon, researchers often capture its magnitude by trade volume alone. In order to gain a deeper understanding of the phenomenon we propose measures that also account for the interconnectedness of countries, for geographical distance, and for the role of individual sectors in bilateral trade. We also improve upon existing indices by moving from a country-level analysis (internationalization) to a truly global perspective (globalization). We measure trade globalization using data from CHELEM (CEPII) over a period of 50 years, covering 72 countries for the sub-period 1967–1990 and 84 countries for 1994-2016. The results show substantial increases in all dimensions of globalization, despite substantial differences between the measures, highlighting the need to analyze globalization with a comprehensive set of indicators. Regarding the number of positive bilateral trade flows, globalization was almost completed by 2016. The importance of distance also diminished throughout the period analyzed, but neighboring countries still share stronger trade relations. Results indicate that trade globalization for high-tech sectors varies significantly from the evolution seen in other sectors, especially large, low-tech sectors. The latter tend to show the highest level of trade globalization over the whole period, but the former group could catch up considerably.
    Keywords: Globalization; trade interdependencies; multidimensional; measures; distance; sectors
    JEL: F10 F14
    Date: 2019–11
  13. By: Sugata Marjit; Anwesha Basu; C. Veeramani
    Abstract: This paper revisits the relationship between international trade and economic growth. We measure trade openness indices separately with respect to intermediate inputs and final goods and find that it is the former which turns out to be significant in explaining growth gains from trade. Using sectoral level data from WORLD KLEMS Database on industrial productivity and output and global input output tables to construct the measures of trade openness, our empirical analysis covering 21 countries, 30 industries and 15 years reveals that trade openness in terms of intermediate and capital goods lead to economic growth. Openness in terms of final consumer goods turns out to be insignificant in most specifications. We also estimate traditional cross country growth regressions where we use trade data to construct the two trade openness indices for 174 countries. Here again, we find that it is import of intermediate and capital goods that results in real per-capita income growth. Our empirical results are in line with our theoretical model, where we show, without imposing any transplanted structure in our model that trade in intermediate goods directly leads to higher growth relative to autarky as opposed to trade in final goods.
    Keywords: trade, openness, growth, gains from trade, per capital income
    JEL: C10 F10 O40
    Date: 2019

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