nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2020‒03‒02
ten papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Migrant Inventors and the Technological Advantage of Nations By Dany Bahar; Hillel Rapoport
  2. Pulled or pushed? The spatial diffusion of wind energy between local demand and supply By Marcel Bednarz; Tom Broekel
  3. Environmental regulation and productivity growth: main policy challenges By Roberta De Santis; Cecilia Jona Lasinio; Piero Esposito
  4. Economic complexity of prefectures in Japan By Abhijit Chakraborty; Hiroyasu Inoue; Yoshi Fujiwara
  6. Structural Change and Global Trade By Logan Lewis; Ryan Monarch; Michael Sposi; Jing Zhang
  7. Is innovation (increasingly) concentrated in large cities? An international comparison By Michael Fritsch; Michael Wyrwich
  8. Between Firm Changes in Earnings Inequality: The Dominant Role of Industry Effects By John Haltiwanger; James R. Spletzer
  9. Essential ingredients for radical innovations? The role of (un-)related variety and external linkages in Germany By Kolja Hesse; Dirk Fornahl
  10. Does Successful Innovation Require Large Urban Areas? Germany as a Counterexample By Michael Fritsch; Michael Wyrwich

  1. By: Dany Bahar (Center for International Development at Harvard University); 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 60 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 translates into higher patenting in the receiving countries. 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: 2020–02
  2. By: Marcel Bednarz; Tom Broekel
    Abstract: This paper contributes to and connects the literature on spatial innovation diffusion, entre-preneurship, and industry life-cycles by disentangling the relevance of local demand and sup-ply in the adoption of wind energy production. More precisely, we evaluate the strength of local supply-push effects with those of local demand-pull over the course of the evolution of an industry and its main product evolution. By using Bayesian survival models with time-dependent data of wind turbine deployment and firm foundation for 402 German regions between the years 1970 and 2015, we show that the spatial evolution of the German wind energy industry was more strongly influenced by local demand-pull than local supply-push processes. New producers are found to emerge in proximity to existing local demand for wind turbines. No evidence was found for producers being able to create local demand for their products by pushing the adoption of the technology in their regions.
    Keywords: supply-push, demand-pull, Bayesian survival analysis, wind energy
    JEL: Q21 R12 O33 O31
    Date: 2020–02
  3. By: Roberta De Santis (ISTAT); Cecilia Jona Lasinio (ISTAT); Piero Esposito (LUISS)
    Abstract: In this paper, we empirically analyse the environmental regulation-productivity nexus for 14 OECD countries in the period 1990-2013. Our findings support the hypothesis that environmental policies have a productivity growth enhancing effect through innovation as suggested by Porter and Van Der Linde (1995). We provide evidence that both market and non-marked based policies foster labour and multifactor productivity growth and that the positive association is better captured by environmental adjusted productivity indicators. Moreover, we find that productivity increases resulting from changes in the environmental regulation pass through a stimulus to capital accumulation and this effect is concentrated in high ICT intensive countries. Overall, the need to speed up the transition towards a “green economy” for environmental protection purposes can be seen also as an opportunity to improve competitiveness generating a virtuous circle between innovation and environmental friendly production techniques.
    Keywords: Inenvironmental regulation, productivity, innovation, Porter hypothesis,
    JEL: D24 Q50 Q55 O47 O31
    Date: 2020
  4. By: Abhijit Chakraborty; Hiroyasu Inoue; Yoshi Fujiwara
    Abstract: Every nation prioritizes the inclusive economic growth and development of all regions. However, we observe that economic activities are clustered in space, which results in a disparity in per-capita income among different regions. A complexity-based method was proposed by Hidalgo and Hausmann [PNAS 106, 10570-10575 (2009)] to explain the large gaps in per-capita income across countries. Although there have been extensive studies on countries' economic complexity using international export data, studies on economic complexity at the regional level are lacking. Here, we study the industrial sector complexity of prefectures in Japan based on the basic information of more than one million firms. We aggregate the data as a bipartite network of prefectures and industrial sectors. We decompose the bipartite network as a prefecture-prefecture network and sector-sector network, which reveals the relationships among them. Similarities among the prefectures and among the sectors are measured using a metric. From these similarity matrices, we cluster the prefectures and sectors using the minimal spanning tree technique. The computed economic complexity index from the structure of the bipartite network shows a high correlation with macroeconomic indicators, such as per-capita gross prefectural product and prefectural income per person. We argue that this index reflects the present economic performance and hidden potential of the prefectures for future growth.
    Date: 2020–02
  5. By: Romain RESTOUT; Olivier CARDI; Romain RESTOUT
    Abstract: Motivated by recent evidence pointing at an increasing contribution of asymmetric shocks across sectors to economic fluctuations, we explore the sectoral composition effects of technology shocks biased toward the traded sector. Using a panel of seventeen OECD countries over the period 1970-2013, our VAR evidence reveals that a permanent increase in traded relative to non-traded TFP lowers the traded hours worked share by shifting labor toward the non-traded sector, and has an expansionary effect on the labor income share in both sectors. Our quantitative analysis shows that the open economy version of the neoclassical model can reproduce the reallocation and redistributive effects we document empirically once we allow for technological change biased toward labor together with additional specific elements. Calibrating the model to country-specific data, the model can account for the cross-country dispersion in the reallocation and redistributive effects we document empirically once we let factor-biased technological change vary across sectors and between countries. Finally, we document evidence which supports our hypothesis of factor-biased technological change as we find empirically that countries where capital-intensive industries contribute more to the increase in traded TFP are those where capital relative to labor efficiency increases.
    Keywords: Sector-biased technology shocks; Factor-augmenting efficiency; Open economy; Labor reallocation; CES production function; Labor income share.
    JEL: E25 E32 F11 F41
    Date: 2019
  6. By: Logan Lewis (Federal Reserve Board); Ryan Monarch (Federal Reserve Board); Michael Sposi (Southern Methodist University); Jing Zhang (Federal Reserve Bank of Chicago)
    Abstract: Services, which are less traded than goods, rose from 58 percent of world expenditure in 1970 to 79 percent in 2015. Using a Ricardian trade model incorporating endogenous structural change, we quantify how this substantial shift in consumption has affected trade. Without structural change, we find that the world trade to GDP ratio would be 15 percentage points higher by 2015, about half the boost delivered from declining trade costs. In addition, this structural change has lowered the global welfare gains from trade integration by almost 40 percent over the past four decades. Absent further reductions in trade costs, ongoing structural change implies that world trade as a share of GDP would eventually decline. Going forward, higher income countries gain relatively more from reducing services trade costs than from reducing goods trade costs.
    Keywords: Globalization, Structural Change, International Trade.
    JEL: F41 L16 O41
    Date: 2020–02
  7. By: Michael Fritsch; Michael Wyrwich
    Abstract: We investigate the geographic concentration of patenting in large cities using a sample of 14 developed countries. There is wide dispersion of the share of patented inventions in large metropolitan areas. South Korea and the US are two extreme outliers where patenting is highly concentrated in large cities. We do not find any general trend that there is a geographic concentration of patents for the period 2000-2014. There is also no general trend that inventors in large cities have more patents than in rural areas (scaling). Hence, while agglomeration economies of large cities may offer advantages for innovation activities, the extent of these advantages is not very large. We conclude that popular theories over-emphasize the importance of large cities for innovation activities.
    Keywords: innovation, patents, cities, urban scaling, creativity
    JEL: O31 R12 O57
    Date: 2020–02
  8. By: John Haltiwanger; James R. Spletzer
    Abstract: We find that most of the rising between firm earnings inequality that dominates the overall increase in inequality in the U.S. is accounted for by industry effects. These industry effects stem from rising inter-industry earnings differentials and not from changing distribution of employment across industries. We also find the rising inter-industry earnings differentials are almost completely accounted for by occupation effects. These results link together the key findings from separate components of the recent literature: one focuses on firm effects and the other on occupation effects. The link via industry effects challenges conventional wisdom.
    Date: 2020–02
  9. By: Kolja Hesse; Dirk Fornahl
    Abstract: The role of radical innovations for the economy has received increasing attention by German policy makers. This paper investigates how (un-)related variety and external linkages influence these innovations in German labour market regions. Evidence is found that related and unrelated knowledge capabilities both support the emergence of radical innovations, although strong related capabilities are especially important. External linkages have an inverted u-shape relation to radically new ideas and can act as substitute for missing unrelated competences in a region. The results shed new light on the emergence of radical innovations and thus have interesting scientific and practical implications.
    Keywords: Radical innovations, related variety, unrelated variety, external linkages, labour market regions
    JEL: O31 O33 R11
    Date: 2020–02
  10. By: Michael Fritsch; Michael Wyrwich
    Abstract: Popular theories claim that innovation activities should be located in large cities because of more favorable environmental conditions that are absent in smaller cities or remote and rural areas. Germany provides a clear counterexample to such theories. We argue that a main force behind the geography of innovation in Germany is the country’s federal tradition that has shaped the settlement structure, the geographic distribution of universities and public research institutions, as well as local access to finance. Additional factors that may play a role in this respect are the system of education and the tax treatment of inheriting a business. We demonstrate the long-lasting effect of the historical political structure and distribution of knowledge sources on innovation activities today. We conclude that historical factors that shape the settlement structure and location of knowledge sources are of key importance for the geographic location of innovation activities.
    Keywords: innovation, patents, agglomeration economies, cities, Germany
    JEL: O31 R11 L26
    Date: 2020–02

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