nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2020‒09‒07
sixteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Intangible investments and productivity performance By Michele Cincera; Julie Delanote; Pierre Mohnen; Anabela Santos; Christoph Weiss
  2. The Determinants of Total Factor Productivity in the Portuguese Quaternary Sector By Paulo Matos; Pedro Neves
  3. Offshoring: What Consequences for Workers? Evidence from Global Value Chains By Katharina Längle
  4. Skilled Human Capital and High-Growth Entrepreneurship: Evidence from Inventor Inflows By Benjamin Balsmeier; Lee Fleming; Matt Marx; Seungryul Ryan Shin
  5. The Future of Artificial Intelligence in International Healthcare: An Index By Julia M. Puaschunder
  6. Dream Jobs By Luca David Opromolla; Giordano Mion; Gianmarco I.P. Ottaviano
  7. The Human Side of Structural Transformation By Porzio, Tommaso; Rossi, Federico; Santangelo, Gabriella
  8. The effects of R&D tax incentives and their role in the innovation policy mix: Findings from the OECD microBeRD project, 2016-19 By OECD
  9. Market Power and the Incentive to Innovate: A Return to Schumpeter and Arrow By Todorova, Tamara
  10. Does Economic Policy Uncertainty Affect the Export Technological Sophistication of Manufacturing Industries? By Yuanhong, Hu
  11. Portugal in the Global Innovation Index: A panel data analysis By Marcelo P. Duarte; Fernando M. P. O. Carvalho
  12. Rent-Seeking Activities, Misallocation, and Innovation in Argentina By Zaourak,Gabriel Roberto
  13. Technology protectionism and the patent system: Evidence from China By Gaétan de Rassenfosse; Emilio Raiteri
  14. Talents from Abroad. Foreign Managers and Productivity in the United Kingdom By Dimitrios Exadaktylos; Massimo Riccaboni; Armando Rungi
  15. Patterns of Innovation during the Industrial Revolution: a Reappraisal using a Composite Indicator of Patent Quality By Alessandro Nuvolari; Valentina Tartari; Matteo Tranchero
  16. Are Economics and Psychology Complements in Household Technology Diffusion? Evidence from a Natural Field Experiment By Matilde Giaccherini; David Herberich; David Jimenez-Gomez; John List; Giovanni Ponti; Michael Price

  1. By: Michele Cincera; Julie Delanote; Pierre Mohnen; Anabela Santos; Christoph Weiss
    Abstract: Companies in advanced economies are facing new challenges. Investment in intangible assets – such as R&D expenditures, ICT activities, the cost of training employees and spending on improving the organizational process – has gained relevance to overcome market pressure. In the last decade, many studies discussed the impact of intangible investment on firms’ performance. However, comparison of the effect of different types of intangible investments is less well explored. The paper aims to fill this gap by assessing the impact of several intangible investments on productivity using for the first-time data from the EIB Survey on Investment (EIBIS) covering all 28 EU members, in the period 2015-2017. We allow intangible investments to affect productivity through innovation, using an augmented version of the Crépon-Duguet-Mairesse (1998) model. Our results show that all types of intangible investments positively impact labour productivity. However, ICT and acquisition of new skills are more important for explaining productivity gains than R&D investment and organizational improvements. Furthermore, R&D and ICT investments also affect productivity indirectly through their effects on innovation, which itself increases productivity.
    Keywords: R&D; ICT; Intangible investments; Innovation; Productivity
    JEL: O30 O44 O52
    Date: 2020–03
  2. By: Paulo Matos; Pedro Neves
    Abstract: Quaternary activities have been on the rise, as a consequence of the increasing technological developments and work automation, as they are expected to have an impact on both the future of the job market and the overall economy. As such, and considering that Total Factor Productivity (TFP) constitutes a main driver of output growth, we propose to study its determinants for the quaternary sector. First, we establish several criteria to build our own definition of quaternary activities, as they are not acknowledged in national accounts or other statistics. For such purpose, our empirical assessment is based on a firm level panel dataset, comprising Portuguese firms, between 2006 and 2017. Secondly, we employ the Levinsohn and Petrin (2003)’s methodology to estimate TFP at the firm level. Finally, through a second stage estimation, we build a fixed effects model based on several determinants said to impact firms' TFP, and establish a comparison with the remainder sectors of economic activity. Both descriptive statistics of the database and the final regression outputs provide evidence that quaternary activities differ from the remainder in several characteristics. Our results show that innovation, wage premium and international openness rise the level of TFP, while indebtedness presents an opposite correlation. The age and size of the firm show a non linear relationship with TFP.
    Keywords: Total Factor Productivity, LEVPET, Fixed Effects, Quaternary Sector
    JEL: C33 D22 D24 O31 O47
    Date: 2020–04
  3. By: Katharina Längle (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)
    Abstract: This paper investigates the question which aspects of offshoring harm low skilled workers using data from the WIOD for 14 manufacturing industries in 16 countries between 1995 and 2008. By considering the use of foreign production factors in domestic production, the paper shows that low skilled workers are directly and negatively affected by offshoring of low skilled tasks. Importantly, the paper determines a further indirect channel highlighting the role of growing foreign competition in domestic markets for intermediate goods. Accordingly, wage shares of low skilled workers decline when competition in domestic downstream value chains increases. Interpreting this channel in the light of the literature on defensive skill-biased innovation, the shift in wage shares away from low skilled workers might be provoked by skill intensive investments in response to tougher foreign competition in domestic markets for intermediate goods.
    Keywords: Global value chains,Input-Output Tables and Analysis,Organization of Production,Empirical Studies of Trade
    Date: 2020–04
  4. By: Benjamin Balsmeier; Lee Fleming; Matt Marx; Seungryul Ryan Shin
    Abstract: To what extent does high-growth entrepreneurship depend on skilled human capital? We estimate the impact of the inflow of inventors into a region on the founding of high-growth firms, instrumenting mobility with the county-level share of millions of inventor surnames in the 1940 U.S. Census. Inventor immigration increases county-level high-growth entrepreneurship; estimates range from 29-55 immigrating inventors for each new high-growth firm, depending on the region and model. We also find a smaller but significant negative effect of inventor arrival on entrepreneurship in nearby counties.
    JEL: J24 J61 L26
    Date: 2020–07
  5. By: Julia M. Puaschunder (The New School, New York, NY USA)
    Abstract: The currently ongoing COVID-19 crisis has challenged healthcare around the world. The call for global solutions in international healthcare pandemic crisis and risk management has reached unprecedented momentum. Digitalization, Artificial Intelligence and big data-derived inferences are supporting human decision making as essential healthcare enhancements as never before in the history of medicine. In today’s healthcare sector and medical profession, AI, algorithms, robotics and big data are used for monitoring of large-scale medical trends by detecting and measuring individual risks based on big data-driven estimations. This article provides a snapshot of the current state-of-the-art of AI, algorithms, big data-derived inferences and robotics in healthcare but also medical responses to COVID-19 in the international arena. International differences in the approaches to combat global pandemics become apparent serving as interesting case study on how to avert global pandemics successfully with AI in the future. Empirically, the article answers what countries have favourable conditions to provide AI solutions for global healthcare and pandemic crises monitoring and alleviation when compared over the entire world? First, an index based on internet connectivity – as a proxy for digitalization and AI advancement– as well as Gross Domestic Product – as indicator for economic productivity – is calculated to outline global pandemic healthcare solution innovation hubs with economic impetus around the world. The parts of the world that feature internet connectivity and high GDP are likely to lead on AI-driven big data monitoring insights for pandemic prevention. When comparing countries worldwide, AI advancement is found to be positively correlated with anti-corruption. AI thus springs from non-corrupt territories of the world. Second, a novel anti-corruption artificial healthcare index is therefore presented that highlights those countries in the world that have vital AI growth in a non-corrupt environment. These non-corrupt AI centres hold comparative advantages to lead on global artificial healthcare solutions against COVID-19 and serve as pandemic crisis and risk management innovators of the future. Anti-corruption is also positively related with better general healthcare. Therefore, finally, a third index that combines internet connectivity, anti-corruption as well as healthcare access and quality is presented. The countries that score high on AI, anti-corruption and healthcare excellence are presented as ultimate world-leading, innovative global pandemic alleviation centres. The advantages but also potential shortfalls and ethical cliffs in the novel use of monitoring Apps, big data inferences and telemedicine to prevent pandemics are discussed.
    Keywords: Access to healthcare, Advancements, AI-GDP Index, Apps, Artificial Intelligence, Coronavirus, Corruption-free maximization of excellence and precision, Corruption Perception (CPI)-Global Connectivity Index, Corruption Perception-Global Connectivity-Healthcare Index COVID-19, Decentralized grids, Economic growth, Healthcare, Human resemblance, Humanness, Innovation, Market disruption, Market entrance, Pandemic, Rational precision, Social stratification, Supremacy, Targeted aid, Telemedicine
    Date: 2020–06
  6. By: Luca David Opromolla; Giordano Mion; Gianmarco I.P. Ottaviano
    Abstract: Understanding why certain jobs are ‘better’ than others and what implications they have for a worker’s career is clearly an important but still relatively unexplored question. We provide both a theoretical framework and a number of empirical results that help distinguishing ‘good’ from ‘bad’ jobs in terms of their impact on a worker’s lifetime wage income profile through wage jumps occurring upon changing job (‘static effects’) or through increases in the wage growth rate (‘dynamic effects’). We find that the distinction between internationally active firms and domestic firms is a meaningful empirical dividing line between employers providing ‘good’ and ‘bad’ jobs. First, in internationally active firms the experience-wage profile is much steeper than in domestic firms, especially for managers as opposed to blue-collar workers. Second, the higher lifetime wage income for managers in internationally active firms relies on the stronger accumulation of experience that these firms allow for and on the (almost) perfect portability of the accumulated dynamic wage gains to other firms. Static effects are instead much more important for blue-collar workers. Finally, the distinction between internationally active and domestic firms is relevant also at a more aggregate level to explain cross-sectional differences in wages among workers and spatial differences in average wages across regions within a country.
    Keywords: Good Jobs; International Experience; Managers; Sorting; Wage Growth; Wage Premium.
    JEL: J30 M12 J62 F16
    Date: 2020–07
  7. By: Porzio, Tommaso (Columbia Unversity and CEPR); Rossi, Federico (University of Warwick); Santangelo, Gabriella (University of Cambridge)
    Abstract: We show that the global human capital increase during the 20th - century contributed to structural transformation. We document that almost half of the decline in aggregate agricultural employment was driven by new birth cohorts entering the labor market. We use data on educational attainment and compile a comprehensive list of policy reforms to interpret the differences in agricultural employment across cohorts. We find that the increase in schooling led to a sharp reduction in the agricultural labor supply by equipping younger cohorts with skills more valued out of agriculture. Interpreted through a model of frictional labor reallocation, these facts imply that human capital growth accounts for about 20% of the global decline in agricultural employment. JEL codes: J24 ; J43 ; J62 ; L16 ; O11 ; O14 ; O18 ; O41 ; Q11
    Date: 2020
  8. By: OECD
    Abstract: This report presents new evidence on the impact of R&D tax incentives and direct funding of business R&D, drawing on distributed cross-country and firm-level analyses undertaken as part of the first phase of the OECD microBeRD project (2016-19). This “distributed” approach facilitates a harmonised analysis of confidential business R&D and tax relief microdata in 20 OECD countries. microBeRD provides new insights into the effectiveness of R&D tax incentives in encouraging business R&D in the OECD area and the heterogeneity of effects both within and across OECD countries, including the underlying impact mechanisms. The report contributes to the debate on the role of R&D tax incentives in the policy mix by providing additional comparative evidence on the effects of alternative business R&D inducement incentives.
    Keywords: Innovation, Science and technology, Tax
    JEL: O38 H25 L25
    Date: 2020–09–03
  9. By: Todorova, Tamara
    Abstract: Using a simple linear demand and marginal cost function, we demonstrate that both competition and monopoly have incentives to innovate since this increases their profit levels. However, our results show that perfect competition is more motivated to innovate since the increase in the profit is greater with the same cost reduction and the same innovation. We also conclude that a more drastic innovation brings greater rent to the monopolist and reduces the advantages of perfect competition over monopoly. It could be presumed that monopoly firms would be attracted to more substantive inventions rather than non-drastic innovations.
    Keywords: competition,monopoly,innovation,profit
    JEL: D23 D24 D41 D42 L12 O31 O32
    Date: 2020
  10. By: Yuanhong, Hu
    Abstract: Based on data from 19 major countries from 2000-2017, this paper examines the impact of economic policy uncertainty on the export technological sophistication of manufacturing industries. The research shows that in the sample period, the export technological sophistication of manufacturing industries varies among countries, with China and India slowly increasing, Germany and Japan still at a high level, and Canada and Greece in a downward trend. From the empirical results, the expected mechanism of economic policy uncertainty forces the domestic manufacturing industries industry to accelerate R&D innovation by restraining the "technological spillover" effect of imported intermediate goods and the "financing dependence" effect of domestic credit investment, thus promoting the increase of the export technological sophistication in various countries. For countries with high economic growth rate, high degree of development and high degree of economic freedom, the positive impact of economic policy uncertainty on the export technological sophistication of manufacturing industries is more significant. From the perspective of economic policy uncertainty, the paper examines its impact on the export technological sophistication of manufacturing industries with important policy implications. Strengthening bilateral and multilateral consultations among governments and accelerating R&D innovation of domestic enterprises are effective measures to enhance export competitiveness at present.
    Keywords: Economic Policy Uncertainty,Export Technological Sophistication,R&D Innovation,Manufacturing Industry,Reflection Method
    JEL: F14 F41 F43
    Date: 2020
  11. By: Marcelo P. Duarte; Fernando M. P. O. Carvalho
    Abstract: The growing awareness of the importance of national systems of innovation on countries’ development led to an increased availability of instruments designed to measure and compare the innovative capacity of countries. Such instruments provide policymakers with a panoply of relevant information, with which they can stimulate innovation within their territory, thereby increasing national competitiveness. Among the most used innovation indices, the Global Innovation Index stands out by explicitly distinguishing innovation inputs and outputs. Drawing from the Global Innovation Index input-output framework and extant literature on innovation, we intend to answer the question: Which innovation inputs are more strongly related to innovative outputs? Thus, deriving policy implications aimed at improving Portugal’s innovative readiness. Based on a conceptual model, we developed a panel dataset, grounded on the Global Innovation Index framework, composed by 92 countries during the period 2013-2018, and analysed it through a series of multiple regression techniques. Results suggest a strong, positive influence of Business Sophistication on innovation outputs in countries of the Eurozone, derived mainly from the capacity of domestic firms to absorb knowledge. Possible policy implications could be derived from this fact, such as, for instance, an encouragement to inward foreign direct investment. However, further research is needed to analyse the differentiated effects of such encouragement, as well as for other surprising results of our study.
    Keywords: Innovation; Global Innovation Index; innovation inputs, innovation outputs; panel data; Portugal.
    JEL: C33 C43 O30 O38
    Date: 2020–03
  12. By: Zaourak,Gabriel Roberto
    Abstract: What is the efficiency cost of rent-seeking activities in Argentina? This paper quantitatively shows that rent-seeking activities in the form of bribes have aggregate effects through two channels. First, they generate misallocation of resources across firms because they prevent resources from flowing to the most productive firms, reallocating resources instead to those that succeed at rent-seeking. Second, such activities affect the allocation of resources within firms because rent-seeking drives resources away from innovation. These two channels can help in understanding why Argentina has more misallocation across firms and less investment in research and development, compared with developed economies, explaining a sizable portion of Argentina's low productivity.
    Keywords: International Trade and Trade Rules,Employment and Unemployment,Innovation,National Governance,Government Policies,Quality of Life&Leisure,Social Analysis,Youth and Governance,Labor Markets,Rural Labor Markets
    Date: 2020–06–23
  13. By: Gaétan de Rassenfosse (Ecole polytechnique federale de Lausanne); Emilio Raiteri (Eindhoven University of Technology)
    Abstract: Governments have strong incentives to allow their inventors to free ride on foreign technologies. They can achieve this result by discriminating against foreigners in the patent system--by refusing to grant foreigners a patent for their inventions. International patent law treaties forbid this practice, which may lower the global innovation incentives and may hurt international trade. Using data on half a million inventions submitted to the Chinese patent office, we find robust evidence of anti-foreign bias in the issuance of patents in 'strategic' technology areas. Foreigners are about 50 percent more likely to be refused a strategic patent than locals.
    Keywords: industrial policy, national treatment principle, patent, technology protectionism, TRIPS
    JEL: O34 K11 F52
    Date: 2020–09
  14. By: Dimitrios Exadaktylos; Massimo Riccaboni; Armando Rungi
    Abstract: In this paper, we test the contribution of foreign management on firms' competitiveness. We use a novel dataset on the careers of 165,084 managers employed by 13,106 companies in the United Kingdom in the period 2009-2017. We find that domestic manufacturing firms become, on average, between 7% and 12% more productive after hiring the first foreign managers, whereas foreign-owned firms register no significant improvement. In particular, we test that previous industry-specific experience is the primary driver of productivity gains in domestic firms (15.6%), in a way that allows the latter to catch up with foreign-owned firms. Managers from the European Union are highly valuable, as they represent about half of the recruits in our data. Our identification strategy combines matching techniques, difference-in-difference, and pre-recruitment trends to challenge reverse causality. Results are robust to placebo tests and to different estimators of Total Factor Productivity. Eventually, we argue that upcoming limits to the mobility of foreign talents after the Brexit event can hamper the allocation of productive managerial resources.
    Date: 2020–07
  15. By: Alessandro Nuvolari; Valentina Tartari; Matteo Tranchero
    Abstract: The distinction between macro- and microinventions is at the core of recent debates on the Industrial Revolution. Yet, the empirical testing of this notion has remained elusive. We address this issue by introducing a new quality indicator for all patents granted in England in the period 1700-1850. Our findings indicate that macroinventions did not exhibit any specific time-clustering, while microinventions were correlated with the economic cycle. In addition, we also find that macroinventions were characterized by a labor-saving bias and were mostly introduced by professional engineers. These results suggest that Allen's and Mokyr's views of macroinventions, rather than conflicting, should be regarded as complementary.
    Keywords: Industrial Revolution; Patents; Macroinventions; Microinventions
    Date: 2020–09–05
  16. By: Matilde Giaccherini; David Herberich; David Jimenez-Gomez; John List; Giovanni Ponti; Michael Price
    Abstract: This paper uses a field experiment to estimate the effects of prices and social norms on the decision to adopt and efficient technology. We find that prices and social norms influence the adoption and decision along different margins: while prices operate on both the extensive and intensive margins, social norms operate mostly through the extensive margin. This has both positive and normative implications, and suggests that economics and psychology may be strong complements in the diffusion process. To complement the reduced form results, we estimate a structural model that points to important household heterogeneity: whereas some consumers welcome the opportunity to purchase and learn about the new technology, for others the inconvenience and social pressure of the ask results in negative welfare. As a whole, our findings highlight that the design of optimal technological diffusion policies will require multiple instruments and a recognition of household heterogeneity.
    Date: 2020

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