nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2020‒07‒13
seventeen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Business Cycle during Structural Change: Arthur Lewis' Theory from a Neoclassical Perspective By Michael D. König; Kjetil Storesletten; Zheng Song; Fabrizio Zilibotti
  2. The causal effects of R&D grants: evidence from a regression discontinuity By Pietro Santoleri; Andrea Mina; Alberto Di Minin; Irene Martelli
  3. Do education updates bring new technologies into jobs? Evidence from linking text-data sources By Tobias Schultheiss; Uschi Backes-Gellner
  4. Innovation and imitation By Jess Benhabib; \'Eric Brunet; Mildred Hager
  5. Robots, Tasks, and Trade By Artuc, Erhan; Bastos, Paulo; Rijkers, Bob
  6. The Effects of R&D Tax Credits and Subsidies on Private R&D in Mexico By Emmanuel Chavez
  7. Hiring New Key Inventors to Improve Firms’ Post-M&A Inventive Output By Marta F. Arroyabe; Katrin Hussinger; John Hagedoorn
  8. Immigrant Inventors and Diversity in the Age of Mass Migration By Campo, Francesco; Mendola, Mariapia; Morrison, Andrea; Ottaviano, Gianmarco
  9. The chicken or the egg: Technology adoption and network infrastructure in the market for electric vehicles By Nathan Delacrétaz; Bruno Lanz; Jeremy van Dijk
  10. The Evolution of Technological Space and Firms’ Workforce Composition in a Manufacturing Region By Giancarlo Corò; Monica Plechero; Francesco Rullani; Mario Volpe
  11. Evaluating the impact of public policies on large firms: a synthetic control approach to science industry transfer policies By Corinne Autant-Bernard; Ruben Fotso; Nadine Massard
  12. Product and Process Innovation, Keynesian Unemployment, and Economic Growth By Sasaki, Hiroaki
  13. Estimating the Number of Patents in the World Using Count Panel Data Models By Youssef, Ahmed H.; Abonazel, Mohamed R.; Ahmed, Elsayed G.
  14. Patent Portfolios and Firms Technological Choices By Stefano Comino; Fabio M. Manenti
  15. Heterogeneous Globalization: Offshoring and Reorganization By Bernard, Andrew B.; Fort, Teresa; Smeets, Valerie; Warzynski, Frederic
  16. Path dependence in regional structural change: implications for the EU cohesion and innovation policy By Tullio Buccellato; Giancarlo Corò
  17. Nexus of Demographic Change, Structural Transformation and Economic Growth in South Asia By Jayasooriya, Sujith

  1. By: Michael D. König (Vrije Universiteit Amsterdam, School of Business and Economics); Kjetil Storesletten (Department of Economics, University of Oslo); Zheng Song (Chinese University of Hong Kong, Department of Economics); Fabrizio Zilibotti (Cowles Foundation, Yale University)
    Abstract: We construct a model of rm dynamics with heterogenous productivity and distortions. The productivity distribution evolves endogenously as the result of the decisions of ï¬ rms seeking to upgrade their productivity over time. Firms can adopt two strategies toward that end: imitation and innovation. The theory bears predictions about the evolution of the productivity distribution. We structurally estimate the stationary state of the dynamic model targeting moments of the empirical distribution of R&D and TFP growth in China during the period 2007-2012. The estimated model ts the Chinese data well. We compare the estimates with those obtained using data for Taiwan and ï¬ nd the results to be robust. We perform counterfactuals to study the effect of alternative policies. We ï¬ nd large effects of R&D misallocation on long-run growth.
    Keywords: China, Imitation, Innovation, Misallocation, Productivity, R&D, Subsidies, Taiwan, TFP Growth, Traveling Wave
    JEL: O31 O33 O47
    Date: 2020–06
  2. By: Pietro Santoleri; Andrea Mina; Alberto Di Minin; Irene Martelli
    Abstract: Direct public support for business R&D is a well-established remedy to market failures, yet empirical evidence on its effectiveness yields conflicting results. The paper investigates the impact of the first European public R&D grant program targeting small and medium enterprises (i.e. the SME Instrument) on a wide range of firm outcomes. We leverage the assignment mechanisms of the policy and employ a sharp regression discontinuity design to provide the broadest quasi-experimental evidence on R&D grants over both geographical and sectoral scopes. Results show that grants trigger sizable impacts. They increase investment, notably in intangibles, and innovation outcomes as measured by cite-weighted patents; they trigger faster growth in assets, employment and revenues; they lead to higher likelihood of receiving follow-on equity financing and lower failure chances. These effects tend to be larger for firms that are smaller and younger, or operating in sectors characterized by higher financial frictions. Furthermore, responses are stronger in countries and regions with lower economic development. The paper provides extensive evidence that the beneficial effects of R&D grants materialize through funding rather than certification effects.
    Keywords: Regression discontinuity design; Research and development; Innovation Policy; SMEs.
    Date: 2020–06–29
  3. By: Tobias Schultheiss; Uschi Backes-Gellner
    Abstract: Staying competitive requires firms and workers to use the latest technology. Updating educational curricula may help with meeting such requirements by bringing new technologies faster into jobs. To estimate the technology diffusion effect of curriculum updates, we combine text data from occupational curricula and from job advertisements. With additional innovation data we control for the natural spread of technologies. We examine whether curriculum updates (introducing a particular technology such as computer-numerical-controlled machinery, computer-aided design software or desktop publishing solutions) led to firms adopting and integrating these technologies earlier into the jobs of updated occupations. We find that, as measured by technology mentions in job advertisements, curriculum updates substantially accelerate technology diffusion into jobs, especially into those of smaller non-innovative firms.
    JEL: O33 I25 J23
    Date: 2020–06
  4. By: Jess Benhabib; \'Eric Brunet; Mildred Hager
    Abstract: We study several models of growth driven by innovation and imitation by a continuum of firms, focusing on the interaction between the two. We first investigate a model on a technology ladder where innovation and imitation combine to generate a balanced growth path (BGP) with compact support, and with productivity distributions for firms that are truncated power-laws. We start with a simple model where firms can adopt technologies of other firms with higher productivities according to exogenous probabilities. We then study the case where the adoption probabilities depend on the probability distribution of productivities at each time. We finally consider models with a finite number of firms, which by construction have firm productivity distributions with bounded support. Stochastic imitation and innovation can make the distance of the productivity frontier to the lowest productivity level fluctuate, and this distance can occasionally become large. Alternatively, if we fix the length of the support of the productivity distribution because firms too far from the frontier cannot survive, the number of firms can fluctuate randomly.
    Date: 2020–06
  5. By: Artuc, Erhan; Bastos, Paulo; Rijkers, Bob
    Abstract: This paper examines the effects of robotization on trade patterns, wages and welfare. It develops a Ricardian model with two-stage production and trade in intermediate and final goods in which robots can take over some tasks previously performed by humans in a subset of industries. An increase in robot adoption in the North reduces the cost of production and thereby impacts trade in final and intermediate goods with the South. The empirical analysis uses ordinary least squares and instrumental-variable regressions exploiting variation in exposure to robots across countries and sectors. Both reveal that greater robot intensity in own production leads to: (i) a rise in imports sourced from less developed countries in the same industry; and (ii) an even stronger increase in exports to those countries. Counterfactual simulations indicate that Northern robotization raises domestic welfare, but initially depresses wages. However, this adverse effect is likely to be reversed by further reductions in robot prices. Northern robotization may lead to higher wages and welfare in the South.
    Keywords: automation; Gains from trade; global value chains; intermediate inputs; jobs; robots; Tasks; Trade; wages
    JEL: F1 J23 J24 O3 O4
    Date: 2020–03
  6. By: Emmanuel Chavez (PSE - Paris School of Economics)
    Abstract: This research studies the effects of a R&D tax credit and a R&D subsidy in Mexico The Mexican tax credit removed the usual market oriented traits that define most tax credits. It essentially acted as a « deferred" subsidy, as firms got a discount on their corporate tax at the end of the fiscal year. Whereas the subsidy granted the funds at the start of the R&D project. My estimates show that both policies had a positive impact on innovation personnel, but the subsidy's impact was larger. As for patents, the impacts are less clear but favor the subsidy over the tax credit. The subsidy appears to have allowed less profitable firms to take on their R&D projects. This might have driven the larger subsidy e_ects. The awarding procedure in both programs is similar. Firms submitted their R&D projects to a non tax collecting institution. The projects were evaluated according to detailed guidelines. The awarded projects were selected based on the evaluations. The guidelines allow to construct a set of conditioning variables in a matching estimation approach. In addition, I use the difference-in-difference matching method to purge time-invariant unobservables.
    Keywords: Impact Evaluation,Public Policy,Research and Development,Innovation,Propensity Score Matching
    Date: 2020–05
  7. By: Marta F. Arroyabe (Essex Business School, UK); Katrin Hussinger (Department of Economics and Management, Université du Luxembourg); John Hagedoorn (UNU-MERIT, United Nations University - Maastricht, NL)
    Abstract: Although merger and acquisitions (M&As) are acknowledged as an important means to access innovative assets and know-how, firms’ inventive output often declines in the post-M&A period. Financial, managerial and organizational constraints related to the M&A event contribute to inventive output declines and inventors’ departure. Prior literature treats the acquiring firm as a passive observer of invention declines. This study argues that acquiring firms can take measures by hiring new key inventors. We show that the hiring of new key inventors in the post-M&A period can counteract invention declines in two ways. First, these newly hired inventors are associated with an increase of corporate inventive output after the M&A. Second, they are also associated with an improved inventive output of inventors already working for the acquiring firm. These results suggest that an appropriate hiring policy can counteract declining inventive output of firms in the aftermath of M&As.
    Keywords: M&A, post-M&A inventive output, key inventors, KBV
    JEL: O32 G34 M10
    Date: 2020
  8. By: Campo, Francesco (University of Milan Bicocca); Mendola, Mariapia (University of Milan Bicocca); Morrison, Andrea (Bocconi University); Ottaviano, Gianmarco (Bocconi University)
    Abstract: A possible unintended but damaging consequence of anti-immigrant rhetoric, and the policies it inspires, is that they may put high-skilled immigrants off more than low-skilled ones at times when countries and businesses intensify their competition for global talent. We investigate this argument following the location choices of thousands of immigrant inventors across US counties during the Age of Mass Migration. To do so we combine a unique USPTO historical patent dataset with Census data and exploit exogenous variation in both immigration flows and diversity induced by former settlements, WWI and the 1920s Immigration Acts. We find that co-ethnic networks play an important role in attracting immigrant inventors. However, we also find that immigrant diversity acts as an additional significant pull factor. This is mainly due to externalities that foster immigrant inventors' innovativeness. These findings are relevant for today's advanced economies that have become major receivers of migrant flows and, in a long-term perspective, have started thinking about immigration in terms of not only level but also composition.
    Keywords: international migration, cultural diversity, innovation
    JEL: F22 J61 O31
    Date: 2020–06
  9. By: Nathan Delacrétaz; Bruno Lanz; Jeremy van Dijk
    Abstract: We document non-linear stock effects in the relationship linking emerging technology adoption and network infrastructure increments. We exploit 2010-2017 data covering nascent to mature electric vehicle (EV) markets across 422 Norwegian municipalities together with two complementary identification strategies: control function regressions of EV sales on flexible polynomials in the stock of charging stations and charging points, and synthetic control methods to quantify the impact of initial infrastructure provision in municipalities that previously had none. Our results are consistent with indirect network effects and the behavioral bias called "range anxiety", and support policies targeting early infrastructure provision to incentivize EV adoption.
    Keywords: Technology adoption; network externality; electric vehicles; charging infrastructure; two-sided markets; behavioral bias; range anxiety; environmental policy.
    JEL: L14 D62 L91 O33 Q48 Q55 Q58
    Date: 2020–08
  10. By: Giancarlo Corò (Department of Economics, University Of Venice Cà Foscari); Monica Plechero (Department of Economics, University Of Venice Cà Foscari); Francesco Rullani (Department of Management, University Of Venice Cà Foscari); Mario Volpe (Department of Economics, University Of Venice Cà Foscari)
    Abstract: The development of the technological space of a manufacturing region relates to its human capital. However, the dynamic relation between local firms’ workforce composition and their adoption of Industry 4.0 enabling technologies over time is still under investigated. The paper contributes to filling this gap analysing the relation over 10 years between technology adoption and the occupational choices of 1800 firms from one of the most industrialized regions of Italy: the Veneto Region. The results from descriptive as well as inferential analysis show that such relational dynamics are a multifaceted phenomenon, presenting a series of counterintuitive features.
    Keywords: Digital technologies, Industry 4.0; manufacturing region, workforce, SME
    JEL: R11 O33 E24
    Date: 2020
  11. By: Corinne Autant-Bernard (Univ Lyon, UJM Saint-Etienne, GATE UMR 5824, F-42023 Saint Etienne, France); Ruben Fotso (Univ Lyon, UJM Saint-Etienne, GATE UMR 5824, F-42023 Saint Etienne, France); Nadine Massard (Université Grenoble Alpes, CNRS, INRA, Grenoble INP, GAEL, 38000 Grenoble, France)
    Abstract: Large firms dominate R&D investment in most countries and receive the majority of public R&D funding. Due to methodological difficulties, however, evaluation of the effect of government-sponsored R&D programmes mainly focuses on small- and medium-sized enterprises. The scarcity of large firms and their heterogeneity hampers the ability to find proper counterfactuals for very large companies and makes it difficult to use proper inference methods to measure the impact of a specific policy. In order to address these methodological issues, we propose using the synthetic control method, initially developed by Abadie et al. (2010) to evaluate programmes on a regional scale. We apply this method to evaluate the impact of a new French science-industry transfer initiative and compare the results with the random trend model and more standard counterfactual approaches. Based on data covering a long pre-treatment period (1998–2011) and ongoing treatment period (2012–2015), we reveal a convergence between the results obtained with the synthetic control method and the random trend model, and demonstrate that traditional counterfactual evaluation methods are not appropriate for large firms. Moreover, the synthetic control method has the advantage of providing an individual assessment of the policy impact on each firm. In the specific case of the French science-industry transfer initiative, it reveals that the impact on private R&D is highly heterogenous both on RD inputs and cooperation behaviours. Beyond this specific transfer policy, this study suggests that the synthetic control method opens new research perspectives in policy impact evaluation at the firm level.
    Keywords: impact evaluation, R&D policy, large firms, synthetic control method, Technological Research Institutes (TRIs)
    JEL: C23 D22 O38
    Date: 2020
  12. By: Sasaki, Hiroaki
    Abstract: In economic growth theory, product innovation and process innovation are important factors behind technological progress. This study builds an economic growth model that considers product and process innovation and theoretically investigates how these two types of innovation affect the economic growth rate and unemployment rate. Our model, based on that developed by Zagler (2004), allows us to make the following three main findings. We find that (1) an increase in the efficiency of product innovation increases both the economic growth rate and the unemployment rate; (2) an increase in the efficiency of process innovation increases the economic growth rate and does not affect the unemployment rate; and (3) in the R\&D sector, a decrease in the labor allocation to product innovation and an increase in the labor allocation to process innovation increase the economic growth rate and decrease the unemployment rate depending on the conditions. These findings suggest that to both raise employment and increase economic growth, we need not only a policy for fostering product innovation but also another policy to improve employment.
    Keywords: effective demand; notional demand; unemployment; economic growth; product and process innovation; monopolistic competition
    JEL: E12 O31 O41
    Date: 2020–06–10
  13. By: Youssef, Ahmed H.; Abonazel, Mohamed R.; Ahmed, Elsayed G.
    Abstract: In this paper, we review some estimators of count regression (Poisson and negative binomial) models in panel data modeling. These estimators based on the type of the panel data model (the model with fixed or random effects). Moreover, we study and compare the performance of these estimators based on a real dataset application. In our application, we study the effect of some economic variables on the number of patents for seventeen high-income countries in the world over the period from 2005 to 2016. The results indicate that the negative binomial model with fixed effects is the better and suitable for data, and the important (statistically significant) variables that effect on the number of patents in high-income countries are research and development (R&D) expenditures and gross domestic product (GDP) per capita.
    Keywords: Conditional maximum likelihood estimation; fixed effects model; Hausman test; negative binomial regression; Poisson regression; random effects model.
    JEL: B23 C01 C4 C5
    Date: 2020–03–19
  14. By: Stefano Comino (Department of Economics and Statistics - University of Udine); Fabio M. Manenti (Department of Economics and Management - University of Padova)
    Abstract: In many industrial sectors, firms amass large patents portfolios to reinforce their bargaining position vis a vis competitors. In a context where patents have a pure strategic nature, we discuss how the presence and the effectiveness of a patent system affect firms technological decisions. Specifically, we present a two-stage game where firms first choose whether to agglomerate (i.e. develop technologies for the same technological territory) or to separate (i.e. develop technologies for different territories) and then they take their patenting decisions. We show that strong patents may distort technological choices yielding to firms to follow inefficient technological trajectories in an attempt to reduce competitors’ patenting activity. While an increase in the strength of patent rights − i.e. the extent to which patents can be used to extract value − undoubtedly distorts firms choices, the impact of a larger scope − the degree to which patent protection carries out in the adjacent ares as well − is ambiguous. We also discuss how such distortions change when one firm is prevented from obtaining its optimal number of patents and when firms patenting activities generate additional market value.
    Keywords: patent portfolios, patent strength and scope, technological territory, strategic patenting
    JEL: D43 L13
    Date: 2020–06
  15. By: Bernard, Andrew B.; Fort, Teresa; Smeets, Valerie; Warzynski, Frederic
    Abstract: This paper exploits a unique offshoring survey to show that firms continue domestic production of the same goods they offshore to low-wage countries. This shift towards ``produced-good imports" coincides with a reallocation of labor from physical production to innovation and technology occupations, and an increase in domestically produced varieties' unit values. These responses suggest an additional, firm-level benefit of trade liberalization: the opportunity to offshore production of low-quality varieties, thereby freeing up resources for the development, production, and marketing of higher-quality varieties. Firms' reactions also motivate a new offshoring measure â?? produced-good imports â?? that is readily observed in most firm-level datasets.
    Keywords: import competition; Innovation; offshoring; R&D; Skilled Workers; technology
    JEL: F14 F61 L25
    Date: 2020–03
  16. By: Tullio Buccellato (Economic Research Department, Confindustria); Giancarlo Corò (Department of Economics, University Of Venice Cà Foscari)
    Abstract: The key purpose of this paper is to measure the strength of regional economic fabrics based on their structure. We propose a new mapping of European regions based on structural proximity; the representation takes the shape of a network, which is also useful to define clusters of regions according to the similarity of their economic structures and, hence, in the endowment of productive competences. We show that there is a high persistence in the relative positioning of regions according to their economic structure and that this is markedly associated with patterns of economic growth and convergence. The spectrum of regional performance range from virtuous urban agglomerates characterized by the presence of advanced services, with enhanced institutional quality, endowed with efficient transport infrastructures and highly educated and productive workforce, to regions characterised by scarce service or industrial activity, sometimes with a cumbersome role of tourism-related business, with poor institutions and transport infrastructure and low endowments of human capital and productive workforce. To richer pools of productive competences are associated faster paces of economic growth. The findings of this paper suggest that place-based policies should be implemented to support territorial development in the short/medium term, but these policies can be effective for the long run growth only when they are meant to leverage on the regional pool of competences to trace trajectories of structural change.
    Keywords: Resilience, economic complexity, regional disparities
    JEL: O10 O25 P25 R10 L16
    Date: 2020
  17. By: Jayasooriya, Sujith
    Abstract: The economic growth depends on changes in the demographic profile of a country. However, the demographic change over economic growth has positive and negative relationships in the literature. Further, testing a Kuznets model of economic growth is not adequately estimated in the field of demographic and structural transformation in South Asia. The study uses panel data model for understanding the structural change over the demographic changes of the South Asian economies. A panel unit root test and GMM dynamic panel data model will be evaluated with the use of Kuznets curve approach. The results of GMM dynamic panel data estimation show a strong relationship among CO2 emission, demographic profile and economic growth. It revealed that 1% increase in GDP increases 3.033% of the CO2 emission. However, increase of 1% demographic profile of the South Asia decreases CO2 emission by 0.058%. Thereby, the changes of demographic profile with respect to the changes of economic growth can reduce the environmental degradation and promote sustainability in development policies.
    Keywords: Panel Data, GMM, Kuznets Curve, Demographic Profile, Economic Growth
    JEL: C5 C51 E6 J1 O4 O44
    Date: 2020–06–02

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