nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2020‒01‒20
eight papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Environmental Innovation in European Transition Countries By Raul Caruso; Antonella Biscione; Annunziata de Felice
  2. Technology, Intangible Assets and the Decline of the Labor Share By Mary O'Mahony; Michela Vecchi; Francesco Venturini
  3. Evaluating State and Local Business Tax Incentives By Cailin R. Slattery; Owen M. Zidar
  4. Defining and Measuring the Innovativeness of Firms By Giuliana Battisti; Paul Stoneman
  5. The mining global value chain By Jane Korinek
  6. Innovate to Lead or Innovate to Prevail: When do Monopolistic Rents Induce Growth? By Roberto Piazza; Yu Zheng
  7. Competitive strategies, heterogeneous demand sources and firms' growth trajectories By Serenella Caravella; Francesco Crespi; Dario Guarascio; Matteo Tubiana
  8. Innovation and Inequality from Stagnation to Growth By Angus C. Chu; Pietro Peretto

  1. By: Raul Caruso (European Center of Peace Science, Integration and Cooperation CESPIC; Catholic University 'Our Lady of Good Counsel'); Antonella Biscione (European Center of Peace Science, Integration and Cooperation CESPIC; Catholic University 'Our Lady of Good Counsel'); Annunziata de Felice (Department of Law, University of Bari Aldo Moro)
    Abstract: This paper explores the demand-pull, technology-push and regulation factors influencing the environmental innovation strategies. We focus on a subset of manufacturing firms of a group of European Transition Countries. The data available to investigate the driving factors that lead to eco-innovate are taken from the Community Innovation Survey data (CIS 2014). The data is a cross-section covering the three-year period between 2012 and 2014. We employ a multivariate probit model to observe the effect of several drivers on eco-innovation, captured by means of different measures. Empirical findings highlight that: (i) some drivers are common to some types of eco-innovation; (ii) regulation does have a positive impact on all drivers. The latter provides a clear-cut implication for policy-making. Broadly speaking, in transition economies public policies and invectives appear to trigger environmental innovation much more than demand-pull factors.
    Keywords: environmental innovation, European Transition countries, demand-pull, technology-push, regulation
    JEL: Q55 Q58 L6
    Date: 2020–01
  2. By: Mary O'Mahony; Michela Vecchi; Francesco Venturini
    Abstract: We investigate the decline of the labor share in a world characterized by rapid technological changes and increasing heterogeneity of capital assets. Our theoretical model allows for these assets to affect the labor share in different directions depending on the capital-labor substitution/complementary relationship and the workers’ skill level. We test the predictions of our model using a large cross-country, cross-industry data set, considering different forms of tangible and intangible capital inputs. Our results show that, over the 1970-2007 period, the decline of the labor share has been mainly driven by technical change and Information and Communication Technology (ICT) assets, mitigated by increasing investments in R&D based knowledge assets. Extending to other forms of intangible capital from 1995 onwards, we find that intangible investments related to innovation increase the labor share while those related to the organisation of firms contribute to its decline, particularly for the low and intermediate skilled workers. Our results are robust to an array of econometric issues, namely heterogeneity, cross sectional dependence, and endogeneity.
    Keywords: labor shares, technological change, ICT capital, intangible capital
    JEL: C23 E24 E25 O33
    Date: 2019–10
  3. By: Cailin R. Slattery; Owen M. Zidar
    Abstract: This essay describes and evaluates state and local business tax incentives in the United States. In 2014, states spent between $5 and $216 per capita on incentives for firms in the form of firm-specific subsidies and general tax credits, which mostly target investment, job creation, and research and development. Collectively, these incentives amounted to nearly 40% of state corporate tax revenues for the typical state, but some states' incentive spending exceeded their corporate tax revenues. States with higher per capita incentives tend to have higher state corporate tax rates. Recipients of firm-specific incentives are usually large establishments in manufacturing, technology, and high-skilled service industries, and the average discretionary subsidy is $178M for 1,500 promised jobs. Firms tend to accept subsidy deals from places that are richer, larger, and more urban than the average county, and poor places provide larger incentives and spend more per job. Comparing “winning” and runner-up locations for each deal in a bigger and more recent sample than in prior work, we find that average employment within the 3-digit industry of the deal increases by roughly 1,500 jobs. While we find some evidence of direct employment gains from attracting a firm, we do not find strong evidence that firm-specific tax incentives increase broader economic growth at the state and local level. Although these incentives are often intended to attract and retain high-spillover firms, the evidence on spillovers and productivity effects of incentives appears mixed. As subsidy-giving has become more prevalent, subsidies are no longer as closely tied to firm investment. If subsidy deals do not lead to high spillovers, justifying these incentives requires substantial equity gains, which are also unclear empirically.
    JEL: H2 H25 H71 R11 R3 R5
    Date: 2020–01
  4. By: Giuliana Battisti; Paul Stoneman
    Abstract: In this paper an encompassing, output orientated, indicator of the innovativeness of firms which defines innovation as the successful exploitation of new ideas, is formalised as the contribution of innovative activity to firm profit growth and measured as the difference between growth in the (endogenously determined) nominal profits of the firm and an appropriately weighted sum of exogenously determined (i) growth in wage rates and (ii) inflation/demand shifts in the market for the firm’s output. The measure can be calculated for any firm using publicly available accounting data. For an unbalanced sample of 16,457 quoted firms over the period 1988-2012, operating in 39 sectors, and in 38 countries, the mean value of the innovativeness measure over the whole panel data set is estimated as 5.15% p.a. Statistically significant differences in innovative performance within and across countries, sectors and time are identified.
    Keywords: Firms, innovativeness, international, measurement
    JEL: O32
    Date: 2019–11
  5. By: Jane Korinek (OECD)
    Abstract: The mining sector accounts for a substantial share of exports and GDP in some countries, but rarely creates many direct jobs. This paper examines the mining sector using a value chain perspective, looking at both direct and indirect inputs and outputs. It finds that inputs from other sectors, in particular services, represent an opportunity for some minerals-rich countries. This paper aims to shed light on what those opportunities might be, and on some of the policies that influence whether or not such sectors emerge and develop.
    Keywords: embodied services, extractive industries, global value chains, GVCs, input-output methodology, mining
    JEL: F1 F13 F60 F63 O33 Q32 Q37 Q38
    Date: 2020–01–14
  6. By: Roberto Piazza; Yu Zheng
    Abstract: This paper extends the Schumpeterian model of creative destruction by allowing followers’ cost of innovation to increase in their technological distance from the leader. This assumption is motivated by the observation the more technologically ad- vanced the leader is, the harder it is for a follower to leapfrog without incurring extra cost for using leader’s patented knowledge. Under this R&D cost structure, leaders innovate to increase their technological advantage so that followers will eventually stop innovating, allowing leadership to prevail. A new steady state then emerges featuring both leaders and followers innovating in few industries with low aggregate growth.
    Date: 2019–12–27
  7. By: Serenella Caravella; Francesco Crespi; Dario Guarascio; Matteo Tubiana
    Abstract: The present paper explores the demand-pull effect of distinct demand sources (i.e. households and retailers, other firms and public sector) on Italian companies' growth patterns. Data relies on the PEC (Indagine sulle Professioni e le Competenze) survey carried out by the Institute for Public Policy Analysis (INAPP), which provides a rich set of information on a representative sample of Italian companies (~32.000) observed during the years 2012, 2014 and 2017. In particular, we investigate if and to what extent firm-level growth profiles are linked to the prevalent source of the demand flows that such firms face. The analysis contextually accounts for the role played by technological and knowledge-related heterogeneities in shaping the growth pattern-demand type relationship. The empirical analysis shows that the demand-pull effect on firms' growth is heterogeneous across different types of demand sources and that the ability to seize the growth-related chances provided by distinct demand conditions is contingent on firms' specific knowledge profiles.
    Keywords: firms; growth; demand-pull; innovation.
    Date: 2020–01–09
  8. By: Angus C. Chu; Pietro Peretto
    Abstract: This study explores the evolution of income inequality in an economy featuring an endogenous transition from stagnation to growth. We incorporate heterogenous households into a Schumpeterian model of endogenous takeoff. In the pre-industrial era, the economy is in stagnation, and income inequlaity is determined by an unequal distribution of land ownership and remains stationary. When takeoff occurs, the economy experiences innovation and economic growth. In this industrial era, income inequality gradually rises until the economy reaches the balanced growth path. Finally, we calibrate the model for quantitative analysis and compare the simulation results to historical data in the UK.
    Keywords: income inequality, innovation, economic growth, endogenous takeoff
    JEL: D30 O30 O40
    Date: 2019–09

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