nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2020‒02‒24
nine papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Innovation Strategies and Productivity Growth in Developing Countries: Evidence from Pakistan By Wadho, Waqar; Chaudhry, Azam
  2. Effects of cluster policies on regional innovation networks: Evidence from France By Konan Alain N’Ghauran; Corinne Autant-Bernard
  3. Making a Market: Infrastructure, Integration and the Rise of Innovation By Andersson, David; Berger, Thor; Prawitz, Erik
  4. Productivity Growth and Value Chains in Four European Countries By Izabela Karpowicz; Nujin Suphaphiphat
  6. Understanding Regional Branching Knowledge Diversification via Inventor Collaboration Networks By Adam Whittle; Balázs Lengyel; Dieter F. Kogler
  7. Productivity Growth in Romania : A Firm-Level Analysis By Iootty,Mariana; Pena,Jorge O.; De Rosa,Donato
  8. Firm-level employment growth in South Africa: The role of innovation and exports By Naidoo Karmen
  9. Entry Barriers, Idiosyncratic Distortions, and the Firm-Size Distribution By Fattal Jaef,Roberto N.

  1. By: Wadho, Waqar; Chaudhry, Azam
    Abstract: We examine the determinants of product, process, and organizational innovation, and their impact on firm labor productivity using data from a unique innovation survey of firms in Pakistan. We find significant heterogeneity in the impact of different innovations on labor productivity: Organizational innovation has the largest effect followed by process innovation. But unlike much of the literature, we found a negative impact of product innovation suggesting a disruption effect of new products; however, this is mitigated if new products are paired with process or organizational innovations. We find a strong impact of engaging in knowledge creation on product and process innovation. We found that external knowledge networks and innovation cooperation play no significant role in firms’ decision to perform R&D and its intensity, though vertical linkages with suppliers (clients) promote product (process) innovations. Foreign competition has a negative effect on product innovation and a positive effect on organizational innovation.
    Keywords: Technological Innovation,organizational innovation,labor productivity,developing countries,Labor intensive industries
    JEL: O31 O32 L25 L67 C31 C24 D22
    Date: 2020
  2. By: Konan Alain N’Ghauran (Univ Lyon, UJM Saint-Etienne, CNRS, GATE L-SE UMR 5824, F-42023 Saint-Etienne, France); Corinne Autant-Bernard (Univ Lyon, UJM Saint-Etienne, CNRS, GATE L-SE UMR 5824, F-42023 Saint-Etienne, France)
    Abstract: Despite the growing body of literature evaluating cluster policies, it still remains difficult to establish conclusively their structural effects on regional innovation networks. Focusing on the French cluster policy during the period 2005-2010, this study aims at evaluating how cluster policies influence the structure of local innovation networks following network topologies that may be beneficial for regional innovation. Based on a panel data of four periods and 94 NUTS3 French regions, we estimate spatial Durbin models, allowing us to identify direct, indirect and total effects of cluster policies. The results suggest that cluster policies can result in both positive and negative total effects on the structure of local innovation networks depending on regions’ technological specialisation. Beyond the heterogeneous effects, the results also highlight that cluster policies may lead to a regional competition for the strengthening of innovation networks. This finding echoed previous research pointing out the possible "beggar-thy-neighbour" effects of cluster policies.
    Keywords: Cluster, Regional innovation, Innovation network, Policy evaluation
    JEL: L52 O33 R58
    Date: 2020
  3. By: Andersson, David (Uppsala University); Berger, Thor (Research Institute of Industrial Economics (IFN)); Prawitz, Erik (Research Institute of Industrial Economics (IFN))
    Abstract: We exploit exogenous variation arising from the historical rollout of the Swedish railroad network across municipalities to identify the impacts of lowered interaction costs on innovative activity. A network connection led to a surge in local innovation due to an increased entry, productivity, and specialization of independent inventors. As the railroad network expanded, it further led to the emergence of a national market for ideas: inventors in connected areas began to develop ideas with applications outside the local economy, which were subsequently sold to firms along the network. Our findings suggest that the reduced interaction cost between firms, intermediaries, and inventors was a key driver of the historical emergence of a market for ideas.
    Keywords: Technological Change; Infrastructure; Innovation
    JEL: N70 O30 O33
    Date: 2020–02–18
  4. By: Izabela Karpowicz; Nujin Suphaphiphat
    Abstract: Advanced economies have been witnessing a pronounced slowdown of productivity growth since the global financial crisis that is accompanied in recent years by a withdrawal from trade integration processes. We study the determinants of productivity slowdown over the past two decades in four closely integrated European countries, Austria, Denmark, Germany and the Netherlands, based on firm-level data. Participation in global value chains appears to have affected productivity positively, including through its effect on TFP when facilitated by higher investment in intangible assets, a proxy for firm innovation. Other contributors to productivity growth in firms are workforce aging, access to finance, and skills mismatches.
    Date: 2020–01–31
  5. By: Sabina Szymczak (Gdansk University of Technology, Gdansk, Poland); Joanna Wolszczak-Derlacz (Gdansk University of Technology, Gdansk, Poland)
    Abstract: This article examines the overall effect of global value chains (GVCs) on labour market outcomes, namely wages and labour demand. The analysis exploits the World Input-Output Database (WIOD, 2016 release) covering 43 countries and 54 sectors from 2000 to 2014. GVC involvement is measured by the recently developed GVC participation indexes (based on both backward and forward linkages) and relative GVC position (Wang et al., 2017a, 2017b). The estimates employ the three-least-squares method. The results indicate that GVC position is negatively correlated both with wages and with employment, while the effect of GVC participation as such depends on whether backward or forward linkages are considered. We find some heterogeneity between countries (middle- versus high-income) and sectors (manufacturing versus services). Importantly, the labour market effect of involvement in GVCs is different from the channel of traditional trade in which the production process does not cross national borders. The R codes for calculation of input-output measures of GVC are provided.
    Keywords: global value chains, input-output, employment, wages
    JEL: F14 F16 J31 J21
    Date: 2019–11
  6. By: Adam Whittle; Balázs Lengyel; Dieter F. Kogler
    Abstract: The diversification of regions into new technologies is driven by the degree of relatedness to existing capabilities in the region. However, in such case where the necessary skills for diversification are missing, the importation of external knowledge from neighbouring regions or from further away is necessary. Despite the importance of interregional knowledge flows through collaborative work, we still have a very limited understanding of how collaboration networks across regions facilitate diversification processes. The present study investigates the diversification patterns of European NUTS2 regions into new knowledge domains via CPC technology classes reported in patent applications to the European Patent Office. The findings indicate that externally oriented inventor collaboration networks increase the likelihood that a new technology enters a region. The influence of interregional ties is higher if the external knowledge sourcing is based on a diverse set of regions and if collaboration is intense within entities located in distinct regions. Further, the results demonstrate that interregional collaboration networks in general provides the final push into related diversification activities. At the same time, internal collaboration promotes entry into knowledge domains that are weakly related to already present technologies in the region. Finally, evidence shows that diverse external connections and intense collaboration within companies across distant sites compensate for missing related skills in the region.
    Keywords: Economic Diversification, Regional Knowledge Networks, Inventor Collaboration Networks, Firm Linkages, Knowledge Sourcing, Specialisation, Patent Data Analysis
    JEL: O33 O52 R11
    Date: 2020–02
  7. By: Iootty,Mariana; Pena,Jorge O.; De Rosa,Donato
    Abstract: This paper examines productivity growth in Romania using balance sheet data for a census of Romanian firms in 2011-17. Three measures of productivity are estimated: labor productivity, revenue total factor productivity, and revenue total factor productivity adjusted for markups. Drawing from these measures, the paper follows a two-step approach to answer two fundamental questions: (i) who are the firms -- and what are their key characteristics -- driving and dragging productivity growth in Romania? and (ii) what are the drivers behind productivity expansion? A first step of the analysis characterizes productivity leaders and laggards, finding that companies at the domestic productivity frontier are older and larger, have higher capital intensity, and pay higher wages. Domestic market leaders charge higher markups, especially in manufacturing, but are not becoming more efficient. A second step of the analysis decomposes aggregate productivity growth and finds that reallocation of market shares to more efficient players has been the main driver in manufacturing but not in services, which are typically more sheltered from competition. At the same time, individual firms are becoming less productive, suggesting that there is scope to improve firm capabilities, particularly in services. These findings suggest a policy agenda for Romania centered on removing distortions to competition and boosting human capital.
    Date: 2019–10–15
  8. By: Naidoo Karmen
    Abstract: This paper investigates the effect of innovation on employment growth at the firm level in South Africa. Innovation is typically associated with better export performance at the firm level due to productivity enhancements and new products.However, the link between innovation and employment is more ambiguous. R&D targeted towards product innovation has been typically associated with employment growth. Process innovations may have a positive effect, but also have the potential to reduce the demand for labour.This paper aims to isolate the impact of innovation on export performance to understand the direct and indirect channels through which innovation can influence employment growth. The analysis makes use of a novel administrative dataset of all registered firms in South Africa for the 2010–16 period.The study finds that, overall, direct innovation is positively associated with employment growth; however, the indirect innovation channel is negative and points to the idea that the productivity enhancements necessary for South African exporters to compete internationally might promote labour-saving innovations.ÂÂ
    Keywords: Firm growth,R&D,Employment,Exports
    Date: 2019
  9. By: Fattal Jaef,Roberto N.
    Abstract: This paper studies the interaction between entry barriers and idiosyncratic distortions in the context of a standard model of firm dynamics. It derives a strategy to infer entry barriers based on the combination of cross-country data on average firm size, cross-country estimates of idiosyncratic distortions, and equilibrium conditions of the theory. It finds sizable entry barriers that correlate positively with income per-capita. The TFP gains from complete reversals of distortions range between 20 and 50 percent. Idiosyncratic distortions are most distortive in low income countries whereas entry barriers are relatively more detrimental in advanced economies. The study also finds that distortions tend to mitigate each other's negative effect on TFP.
    Date: 2019–09–27

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