nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2020‒02‒17
seventeen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Conceptual Aspects of Global Value Chains By Antras,Pol
  2. Intangible capital and productivity: Firm-level evidence from German manufacturing By Kaus, Wolfhard; Slavtchev, Viktor; Zimmermann, Markus
  3. The Decline of the U.S. Labor Share Across Sectors By Ivan Mendieta-Muñoz; Codrina Rada; Rudi von Arnim
  4. How Technology Adoption and Trade Are Shaping Indonesian Labor Markets By Viollaz,Mariana; Darko,Francis Addeah; Mason,Andrew D.
  5. Why Do Turkish Firms Go Abroad to Invest? By Yilmaz Kilicaslan; Yesim Ucdogruk Gurel; Gokhan Onder; Zeynep Karal Onder
  6. Was Kuznets right?: New evidence on the relationship between structural transformation and inequality By Sen Kunal; Baymul Çinar
  7. Examining the level of competition in the energy sector By Halkos, George
  8. Digital Innovation in East Asia : Do Restrictive Data Policies Matter By Ferracane,Martina Francesca; Van Der Marel,Erik Leendert
  9. Structural transformations and the lack of inclusive growth: The case of Chile By Solimano Andrés; Zapata-Román Gabriela
  10. Immigration and Offshoring: Two Forces of Globalisation and Their Impact on Employment and the Bargaining Power of Occupational Groups By Michael Landesmann; Sandra M. Leitner
  11. Investment behavior and firms' financial performance: A comparative analysis using firm-level data from the wine industry By Claudiu Albulescu
  12. Does FDI benefit incumbent SMEs?: FDI spillovers and competition effects at the local level By Alexander C. Lembcke; Lenka Wildnerova
  13. Public Charging Infrastructure and the Market Diffusion of Electric Vehicles By Illmann, Ulrike; Kluge, Jan
  14. On the Basis of Brain: Neural-Network-Inspired Change in General Purpose Chips By Ekaterina Prytkova; Simone Vannuccini
  15. The Dynamics of High-Growth Firms : Evidence from Tunisia By Marcio,Cruz; Baghdadi,Leila; Arouri,Hassen
  16. The role of key regions in spatial development By Becker, Raphael Niklas; Henkel, Marcel
  17. Competition and privacy in online markets: Evidence from the mobile app industry By Kesler, Reinhold; Kummer, Michael E.; Schulte, Patrick

  1. By: Antras,Pol
    Abstract: The paper offers an overview of some key conceptual aspects associated with the rise of global value chains (GVCs). It outlines a series of alternative interpretations and definitions of what the rise of GVCs entails, and it traces the implications of these alternative conceptualizations for the measurement of the phenomenon, as well as for elucidating the key determinants and implications of GVC participation, both at the country level and at the firm level. In the process, the paper offers some speculative thoughts about the future of GVCs in light of the advent of an array of new technologies.
    Keywords: International Trade and Trade Rules,Common Carriers Industry,Food&Beverage Industry,Pulp&Paper Industry,General Manufacturing,Construction Industry,Business Cycles and Stabilization Policies,Plastics&Rubber Industry,Textiles, Apparel&Leather Industry,Industrial and Consumer Services and Products,Transport and Trade Logistics,Trade and Services
    Date: 2020–01–21
  2. By: Kaus, Wolfhard; Slavtchev, Viktor; Zimmermann, Markus
    Abstract: We study the importance of intangible capital (R&D, software, patents) for the measurement of productivity using firm-level panel data from German manufacturing. We first document a number of facts on the evolution of intangible investment over time, and its distribution across firms. Aggregate intangible investment increased over time. However, the distribution of intangible investment, even more so than that of physical investment, is heavily right-skewed, with many firms investing nothing or little, and a few firms having very large intensities. Intangible investment is also lumpy. Firms that invest more intensively in intangibles (per capita or as sales share) also tend to be more productive. In a second step, we estimate production functions with and without intangible capital using recent control function approaches to account for the simultaneity of input choice and unobserved productivity shocks. We find a positive output elasticity for research and development (R&D) and, to a lesser extent, software and patent investment. Moreover, the production function estimates show substantial heterogeneity in the output elasticities across industries and firms. While intangible capital has small effects for firms with low intangible intensity, there are strong positive effects for high-intensity firms. Finally, including intangibles in a gross output production function reduces productivity dispersion (measured by the 90-10 decile range) on average by 3%, in some industries as much as nearly 9%.
    Keywords: intangible capital,productivity,production functions
    JEL: D24 L60 O30
    Date: 2020
  3. By: Ivan Mendieta-Muñoz (University of Utah); Codrina Rada (University of Utah); Rudi von Arnim (University of Utah)
    Abstract: This paper provides novel insights on the changing functional distribution of income in the post–war US economy. We present a Divisia index decomposition of the US labor share (1948–2017) by fourteen sectors. The decomposition method furnishes exact contributions from four components towards aggregate changes of the labor share: sectoral real compensation, sectoral labor productivity, the structure of the economy as measured by employment shares, and the structure of markets as measured by relative prices. Results are presented for the entire period as well as the “golden age” (1948–1979) and a “neoliberal era” (1979–2017), painting a rich and detailed picture of structural changes in the US economy. The manufacturing sector plays a dominant role: despite its continuously falling employment share, growth of real compensation matches that of labor productivity in the early period but falls far behind during the neoliberal era. Further, employment shifts towards stagnant sectors with relatively low real wages and productivity. We discuss these results in the context of Baumol’s and Lewis’s seminal contributions on dual economies. While the cost disease is apparent—employment shifts towards stagnant sectors, their relative prices rise, and the aggregate growth rate (of productivity) decreases—the originally suggested mechanism of upward real wage convergence is muted. The observed changes are instead compatible with a “reverse-Lewis” shift, where stagnant sectors act as a labor surplus sink, and dynamic sector labor experiences slowing real wage growth.
    Keywords: Labor share, sectoral decomposition, stagnation, Baumol, Lewis
    JEL: D33 C43 O41 O5
    Date: 2019–10
  4. By: Viollaz,Mariana; Darko,Francis Addeah; Mason,Andrew D.
    Abstract: This paper analyzes the simultaneous impacts and interplay of exports and technology adoption on the demand for different types of skills and aggregate labor market indicators in Indonesia over a period characterized by a commodity boom (2005-10) and a period of declining exports (2011-15). The results for the 2005-10 sub-period are in line with the evidence available for developed countries, that is, technology is complementary to analytical and soft skills and is labor-saving, while exports are labor increasing. In 2011-15, the relationship between technology and skills, and between technology and labor demand, differs from the evidence available for the developed world. That is, technology increases the demand for analytical and interpersonal skills in high-exporting industries only, and technology and exports are labor increasing for some population subgroups. The findings for the more recent period confirm that differences in economic structures matter for understanding the impacts of technological advances and globalization.
    Date: 2019–12–19
  5. By: Yilmaz Kilicaslan (Anadolu University, Department of Economics); Yesim Ucdogruk Gurel (Dokuz Eylul University, Department of Economics); Gokhan Onder (Anadolu University, Department of Business Administration); Zeynep Karal Onder (Anadolu University, Department of Public Finance)
    Abstract: The aim of this paper is to examine the determinants and localization of outward FDI (oFDI) of Turkish firms that differs from developed country MNEs with respect to firm size, technology, skills and access to information about global markets. This research is the first attempt aimed to explore especially the determinants of country/region selection of Turkish outward FDI at the firm level by using discrete choice models. The findings in this paper are based on the primary data collected by in-depth-interviews with 299 outward-investing Turkish firms operating in manufacturing, wholesale and retail trade, transportation and storage, and information and communication sectors. Our descriptive findings show that 60% of the investments are green-field. We found that 68% of the investments were made in developing countries while the developed countries attracted only 32% of Turkish investments. Our findings show that the main motivation of Turkish firms investing in other counties is willingness to reach to the larger markets (77%). Our econometric findings show that the size of the firm and the parent firm are significant factors in selecting developed countries as the host country for the investment. As the size of the firm increases, the possibility of Turkish investors to choose developed countries is diminishing, while as the size of the parent firm bets bigger, the possibility of locating the investment in developed countries is rising. The high share of foreign ownership in parent firms has a positive impact on choosing developing countries to locate the investment. It seems that foreign firms benefit from the experiences of Turkish firms operating in developing markets. Finally, while willingness to avoid from tariffs has no significant impact on the probability of investing in developed countries (including EU countries), it increases the probability of investment in the member countries of Shanghai Cooperation Organization.
    Keywords: Outward Foreign Direct Investment, outward FDI, Probit, Logit, Turkey
    JEL: F12 G1 E2
    Date: 2019–11
  6. By: Sen Kunal; Baymul Çinar
    Abstract: We examine the Kuznets postulate that structural transformation leads to higher inequality using comparable panel data for a large number of developing and developed countries for 1960–2012. Countries are in different stages of structural transformation, being either structurally under-developed, structurally developing or structurally developed.In contrast to the Kuznets hypothesis, we find that the movement of workers to manufacturing unambiguously decreases income inequality, irrespective of the stage of structural transformation that a particular country is in. We also find that the movement of workers into services has a positive impact on inequality across our set of countries at an early stage of structural transformation and a negative effect at a later stage, suggesting that the Kuznets postulate may apply more for services driven structural transformation than manufacturing driven structural transformation.Overall, our findings confirm the positive development effects that structural transformation relating to manufacturing may have in developing countries, not merely through higher growth but by reducing inequality as well.However, for many low-income countries, where the realistic possibility of structural transformation may be the movement of workers from agriculture to services, our findings suggest that inequality may increase with further structural transformation.
    Keywords: Double dividend,Services,Structural transformation,Manufacturing,Inequality,Kuznets
    Date: 2019
  7. By: Halkos, George
    Abstract: During the last decades energy sector has undergone thoughtful structural changes, getting towards a more competitive environment, a process that it is highly controlled and monitored by regulatory authorities. The differences in the pace and extent of market reforms are mainly related to the starting point of each reform and the problems associated with the internal environment of the market. The applied theoretical and analytical contributions provide guidance to policy-makers and government officials in designing new policy scenarios for the investigation of the role of competition in the energy sectors. The empirical contributions provide evidence to support and inform current policy debates and should be of benefit to policy-makers and researchers worldwide.
    Keywords: Energy sector; competition; liberalization; energy market legislation.
    JEL: D40 Q30 Q40 Q43 Q48 Q50 Q58
    Date: 2020–01
  8. By: Ferracane,Martina Francesca; Van Der Marel,Erik Leendert
    Abstract: Digital technologies encourage companies to innovate with new processes, goods, and services, which ultimately enhance their competitiveness in local and global markets. This paper analyzes whether a wide set of data restrictions are negatively associated with digital innovation of firms. The paper develops an index of data restrictions that measures the level of data policy restrictiveness for 15 East Asian countries over time. Using various firm-level data sets, the analysis shows that data restrictions inhibit firms'ability to innovate. The analysis takes into account that data restrictions are likely to have a greater impact in sectors that are more reliant on software. Regressions show that in countries that have more restrictive data policies, firms are less likely to use foreign technologies through licensing as part of their innovation process. Country-specific cases for which data are available also show that restrictive data policies are negatively associated with firms'likelihood of using intangible assets, such as patents and goodwill, for performing innovation (in Malaysia and China) and developing innovations as a result of research and development that are new to the market (in Vietnam). The paper concludes that open data policies are likely to foster digital innovation.
    Date: 2020–01–27
  9. By: Solimano Andrés; Zapata-Román Gabriela
    Abstract: This paper describes the structural transformations that Chile has experienced in the last 50 years and how they have contributedâ۠or notâ۠to inclusive growth and genuine economic modernization from a historical perspective. The empirical analysis of the paper shows a premature deindustrialization process since the 1970s, continuing to the present.We observe in the transition from the import-substitution industrialization strategy to the outward-oriented neoliberal model of high inequality, a decline in the value-added shares of manufacturing and agriculture and a rise in services (mainly financial services, insurance, and real estate) with ups and downs in mining shares.These trends are more emphasized in employment shares, with the decline in relative employment generation in agriculture and manufacturing going directly to the services sector that now accounts for two-thirds of total employment in the economy.The trend of persistent deindustrialization and high inequality is worrisome and could negatively affect Chile’s ability to achieve structural transformations towards higher and more sophisticated levels of productive development and technological advancement.
    Keywords: Chile,Inclusive growth,inequality of income,Inequality of opportunities,inequality of wealth,deindustrialization,Structural transformation
    Date: 2019
  10. By: Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw); Sandra M. Leitner (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: This paper estimates conditional demand models and, using a joint approach for the period 2008-2017, examines the impact of immigration and different measures of offshoring on the labour demand and demand elasticities of native workers in four different types of occupational groups managers/professionals, clerical workers, craft (skilled) workers and manual workers. The analysis is conducted using data for four EU economies Austria, Belgium, France and Spain. Our results point to important and occupation-specific direct and indirect effects of immigration and offshoring. Both offshoring – particularly services offshoring – and immigration have negative direct employment effects on all occupations, but native clerks and manual workers are affected the most, and native managers/professionals the least. Generally, offshoring exerts a stronger direct negative employment effect than does immigration. Our results also identify an important (labour demand) elasticity-channel of immigration and offshoring and show that some groups of native workers can also actually gain from globalisation through an improvement in their wage-bargaining position. Overall, our results indicate a deterioration in the bargaining power of native manual workers arising from both immigration and offshoring; an improvement in the bargaining position of native craft workers in the case of both immigration and offshoring; and an improvement in the bargaining position of native clerical workers and managers/professionals in the case of offshoring only. Finally, our analysis of the cross-effects of immigration highlights the important role of migrant managers/professionals for the labour demand and demand elasticities (bargaining power) of native clerical workers, craft and manual workers. Disclaimer Funding from the Austrian Federal Ministry of Labour, Social Affairs, Health and Consumer Protection is gratefully acknowledged.
    Keywords: Offshoring, immigration, labour demand elasticity, bargaining power, occupations
    JEL: F16 F22 F66
    Date: 2020–01
  11. By: Claudiu Albulescu (CRIEF - Centre de Recherche sur l'Intégration Economique et Financière - Université de Poitiers)
    Abstract: This paper assesses the role of financial performance in explaining firms' investment dynamics in the wine industry from the three European Union (EU) largest producers. The wine sector deserves special attention to investigate firms' investment behavior given the high competition imposed by the latecomers. More precisely, we investigate how the capitalization, liquidity and profitability influence the investment dynamics using firm-level data from the wine industry from France (331 firms), Italy (335) firms and Spain (442) firms. We use data from 2007 to 2014, drawing a comparison between these countries, and relying on difference-and system-GMM estimators. Specifically, the impact of profitability is positive and significant, while the capitalization has a significant and negative impact on the investment dynamics only in France and Spain. The influence of the liquidity ratio is negative and significant only in the case of Spain. Therefore, we notice different investment strategies for wine companies located in the largest producer countries. It appears that these findings are in general robust to different specifications of liquidity and profitability ratios, and to the different estimators we use.
    Keywords: firm investment,financial performance,wine industry,comparative analysis
    Date: 2020–01–27
  12. By: Alexander C. Lembcke; Lenka Wildnerova
    Abstract: That global networks provide positive externalities to participating firms is a well‑documented fact. Less is known about how the performance of non-participating firms, especially those that are small or medium-sized, changes with exposure to an increase in the presence of globally integrated firms in their vicinity. With global trade being dominated by large firms, the benefits for SMEs are often indirect, e.g. through input relationships with larger companies or through knowledge spillovers that facilitate the adoption of best practices in firms with access to globally integrated peers. This paper combines industry and regional exposure to global links in form of foreign ownership. It uses firm-level microdata for 13 OECD countries, allowing for local spillovers (or crowding out) within the same industry and across industries. Foreign investment in the firm in the same region is associated with increasing productivity of local firms, especially in form of cross-sector externalities. Horizontal (same sector) externalities are negative, especially if they are coming from foreign firms locating in distanced regions. FDI tends to be associated with employment decline in manufacturing firms, but some growth in small firms.
    Keywords: Employment, FDI, Firms, Productivity, SME
    JEL: D22 F14 F23 F21 R12
    Date: 2020–02–12
  13. By: Illmann, Ulrike (TU Dresden, Germany); Kluge, Jan (Institute for Advanced Studies (IHS), Vienna, Austria,)
    Abstract: A comprehensive roll-out of public charging infrastructure will be costly. However, its impact on the diffusion of electric vehicles (EVs) is not clear at all. Our study aims at estimating the extent to which an increasing availability of public charging infrastructure promotes consumers’ decisions to switch to EVs. We make use of a German data set including monthly registrations of new cars at the ZIP-code level between 2012 and 2017 and match it with the official registry of charging stations. We measure charging infrastructure by its visibility, capacity and abundance in order to estimate its impact on EV adoption. A CS-ARDL approach is deployed in order to identify the structural long-run relationship between charging infrastructure and monthly EV registrations. There is evidence of a positive long-run relationship but on a rather low scale. We conclude that consumers do not necessarily react to the mere number of chargers but attach more importance to charging speed.
    Keywords: Electric vehicles, charging infrastructure, CS-ARDL
    JEL: L90 O18 O33 R42
    Date: 2019–11
  14. By: Ekaterina Prytkova (Friedrich Schiller University Jena, Department of Economics and Business Administration); Simone Vannuccini (Science Policy Research Unit, University of Sussex Business School, University of Sussex)
    Abstract: In this paper, we disentangle the changes that the rise of Artificial Intelligence Technologies (AITs) is inducing in the semiconductor industry. The prevailing von Neumann architecture at the core of the established “intensive” technological trajectory of chip production is currently challenged by the rising difficulty to improve product performance over a growing set of computation tasks. In particular, the challenge is exacerbated by the increasing success of Artificial Neural Networks (ANNs) in application to a set of tasks barely tractable for classical programs. The inefficiency of the von Neumann architecture in the execution of ANN-based solutions opens room for competition and pushes for an adequate response from hardware producers in the form of exploration of new chip architectures and designs. Based on an historical overview of the industry and on collected data, we identify three characteristics of a chip — (i) computing power, (ii) heterogeneity of computation, and (iii) energy efficiency — as focal points of demand interest and simultaneously as directions of product improvement for the semiconductor industry players and consolidate them into a techno– economic trilemma. Pooling together the trilemma and an analysis of the economic forces at work, we construct a simple model formalising the mechanism of demand distribution in the semiconductor industry, stressing in particular the role of its supporting services, the software domain. We conclude deriving two possible scenarios for chip evolution: (i) the emergence of a new dominant design in the form of a “platform chip” comprising heterogeneous cores; (ii) the fragmentation of the semiconductor industry into submarkets with dedicated chips. The convergence toward one of the proposed scenarios is conditional on (i) technological progress along the trilemma’s edges, (ii) advances in the software domain and its compatibility with hardware, (iii) the amount of tasks successfully addressed by this software, (iv) market structure and dynamics.
    Keywords: neural network; Artificial Intelligence, technological trajectory; semiconductor industry; hardware; software
    JEL: L63 O31 O33
    Date: 2020–02
  15. By: Marcio,Cruz; Baghdadi,Leila; Arouri,Hassen
    Abstract: This paper examines the dynamics and characteristics of high-growth firms in Tunisia. Further knowledge about the dynamics of these firms can inform the design of business support policies, especially toward small and medium-size firms. The analysis suggests that between 1999 and 2015, about 9 to 10.5 percent of the firms in Tunisia achieved high-growth status per year, on average, depending on the definition used, and these shares have been remarkably stable over time. Although a small share of firms achieves high growth annually, almost one in every three firms that survive for more than a decade has achieved high-growth status at least once. High-growth status is more prevalent among small and young firms, as well as firms that export, import, or receive foreign direct investments.
    Date: 2020–02–10
  16. By: Becker, Raphael Niklas; Henkel, Marcel
    Abstract: We discuss the role of key regions in spatial development. Local productivity shocks can affect the entire economy as they expand via tight connections in the domestic production network and in uence the geographical allocation of labor. In particular, we identify the set of key regions with the highest potential to affect aggregate productivity, output, and welfare. Key regions are central locations with strong spatial linkages in the production network but are not too large and congested so they can still attract additional labor in response to positive productivity shocks without local rents and input costs rising too much. Using a spatial equilibrium model and data from German districts, we find that a relatively modest development of productivity in key regions lowered German output and welfare growth by a factor of two from 2010 to 2015.
    Keywords: Regional trade,Input-output linkages,Labour mobility,Spatial economics,Economicgeography,Regional productivity,Sectoral productivity
    JEL: R10 R12 R15 F10 F1 F16 O4 O51
    Date: 2020
  17. By: Kesler, Reinhold; Kummer, Michael E.; Schulte, Patrick
    Abstract: Policy makers are increasingly concerned about the combination of market power and massive data collection in digital markets. This concern is fueled by the theoretical prediction that more market power causes firms to collect ever more data from their users. We investigate the relationship between market power and data collection empirically. We analyze data about more than 1.5 million mobile applications in several thousand submarkets of Google's Play Store. We observe these data for over two years and combine information on an app's data collection with information about its competitive environment. Our analysis highlights a robust positive relationship between market power and data collection. We find that more data are being collected in concentrated markets, and apps with higher market shares collect more data. This pattern robustly emerges across a series of cross-sectional and panel regressions as well as a series of specifications that exploit exogenous variation.
    Keywords: Competition,Market Power,Privacy,User Data,Apps
    JEL: L17 D4 D85 D29
    Date: 2019

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