nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2020‒09‒21
twelve papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Heterogeneous Environmental Regulations, R&D Innovation and Manufacturing Enterprises' Export Technological Sophistication By Hu, Yuanhong
  2. In Times of Trouble: Innovative Drivers of External Competitiveness for Small Businesses during the Great Recession By Brancati, Emanuele; Brancati, Raffaele; Guarascio, Dario; Zanfei, Antonello
  3. Supporting Firm Innovation and R&D: What is the Optimal Policy Mix? By İrem Güçeri; Marko Köthenbürger; Martin Simmler
  4. Adopt or innovate: understanding technological responses to cap-and-trade By Calel, Raphael
  5. The impact of supply-chain networks on interactions between the anti-COVID-19 lockdowns in different regions By Hiroyasu Inoue; Yohsuke Murase; Yasuyuki Todo
  6. Heterogeneous Shocks in the Covid-19 Pandemic: Panel Evidence from Italian Firms By Brancati, Emanuele; Brancati, Raffaele
  7. Discrimination against foreigners in the U.S. patent system By Gaetan de Rassenfosse; Reza Hosseini
  8. Investor Tax Credits and Entrepreneurship: Evidence from U.S. States By Matthew R. Denes; Sabrina T. Howell; Filippo Mezzanotti; Xinxin Wang; Ting Xu
  10. Heterogenous Gains from Countercyclical Fiscal Policy: New Evidence from International Industry-level Data By Sangyup Choi; Davide Furceri; João Tovar Jalles
  11. Capital incentive policies in the age of cloud computing: An empirical case study By Andres, Raphaela; DeStefano, Timothy; Niebel, Thomas; Viete, Steffen
  12. Enhancing Information Technology for Value Added Across Economic Sectors in Sub-Saharan Africa By Simplice A. Asongu; Mushfiqur Rahman; Joseph Nnanna; Mohamed Haffar

  1. By: Hu, Yuanhong
    Abstract: Based on the combined data of China Patent Database, China Industrial Firm Database and China Customs Trade Database from 2004-2010, this paper investigates the impact of heterogeneous environment regulation on the export technological sophistication of manufacturing enterprises. The results show that: the impact of control-type environmental regulation on enterprises' export technological sophistication is U-shaped, and has negative effect on mixed trade enterprises, eastern enterprises and foreign-funded enterprises. The impact of incentive-type environmental regulation on the enterprises' export technological sophistication is inverted Ushaped, and has positive effect on processing trade enterprises, mixed trade enterprises, domestic and foreign-funded enterprises. The impact of participative-type environmental regulation on the enterprises' export technological sophistication has an inverted U-shaped characteristic and has a positive effect on all kinds of trade pattern and ownership of enterprises. The result of mechanism analysis shows that control and participative environmental regulation affect enterprises' export technological sophistication through fundamental innovation and practical innovation, while incentive environmental regulation also affects enterprises' export technological sophistication through design innovation. Considering environmental governance issues has clear policy implications for enhancing the R&D innovation of the whole industrial chain and improving the export competitiveness of China's manufacturing enterprises.
    Keywords: Environmental Regulation,R&D Innovation,Export Technological Sophistication,DVA,Manufacturing
    JEL: F14 O44 F18
    Date: 2020
  2. By: Brancati, Emanuele; Brancati, Raffaele; Guarascio, Dario; Zanfei, Antonello
    Abstract: This paper analyzes the main drivers of external competitiveness in times of crisis for small and medium enterprises (SMEs). We focus on the Italian experience in the midst of the financial and sovereign-debt crisis, and present robust evidence based on a comprehensive survey of Italian companies in the manufacturing and production service sectors (the MET dataset). Overall, our results confirm the high degree of heterogeneity of the Italian system and the differences between internationalized and domestic companies in terms of performance as well as structural and behavioral dimensions. In particular, data highlight not only the strict correlation between internationalization and innovative activities but also a positive change of attitude of Italian firms towards these strategies. Our analysis shows that, whilst structural factors play a key role for external competitiveness, other critical firm-level aspects trigger superior performances, especially strategic profiles, technological capabilities, and proactive behaviors such as innovativeness and R&D investment. Importantly, we document disproportionate effects of innovation for smaller and less productive companies. This points at dynamic strategies as a potential tool to fill the gap between larger/more productive companies and the set of less structured firms, a segment representing an ideal target for policy measures.
    Keywords: SME,external competitiveness,Great Recession
    JEL: M20 L23 L25
    Date: 2020
  3. By: İrem Güçeri; Marko Köthenbürger; Martin Simmler
    Abstract: This policy report provides an overview of firm R&D support policies used by European countries, reviews the empirical evidence on the effectiveness of these policies, and discusses implications for policy. Existing literature suggests that firm R&D support policies stimulate private R&D within a country and that in most cases, the positive impact of government support is stronger on smaller firms. Recent evidence also indicates that some of the policy instruments, such as patent box policies, are tools that multinationals use to lower their total tax bill through profit shifting. Despite the data issues that limit the ability to quantify the impact of tax incentives on global R&D, these recent findings together suggest that R&D support policies indeed promote national R&D activities. But governments also use some of these tax instruments to compete for R&D and mobile tax bases, which makes them less cost-effective in stimulating aggregate private sector R&D.
    Date: 2020
  4. By: Calel, Raphael
    Abstract: One important motivation for creating cap-and-trade programs for carbon emissions is the expectation that they will stimulate much-needed low-carbon innovation. I construct a new panel of British firms to investigate this hypothesis, finding that the European carbon market has encouraged greater low-carbon patenting and R&D spending among regulated firms without necessarily driving short-term reductions in carbon intensity of output. This stands in contrast to past cap-and-trade programs, which have primarily spurred adoption of existing pollution control technologies, with little effect on innovation. I discuss how to reconcile these contrasting findings and implications for the future of carbon markets.
    JEL: D21 O32 O34 Q52 Q54 Q58
    Date: 2020–08–03
  5. By: Hiroyasu Inoue; Yohsuke Murase; Yasuyuki Todo
    Abstract: To prevent the spread of COVID-19, many cities, states, and countries have `locked down', restricting economic activities in non-essential sectors. Such lockdowns have substantially shrunk production in most countries. This study examines how the economic effects of lockdowns in different regions interact through supply chains, a network of firms for production, simulating an agent-based model of production on supply-chain data for 1.6 million firms in Japan. We further investigate how the complex network structure affects the interactions of lockdowns, emphasising the role of upstreamness and loops by decomposing supply-chain flows into potential and circular flow components. We find that a region's upstreamness, intensity of loops, and supplier substitutability in supply chains with other regions largely determine the economic effect of the lockdown in the region. In particular, when a region lifts its lockdown, its economic recovery substantially varies depending on whether it lifts lockdown alone or together with another region closely linked through supply chains. These results propose the need for inter-region policy coordination to reduce the economic loss from lockdowns.
    Date: 2020–09
  6. By: Brancati, Emanuele; Brancati, Raffaele
    Abstract: This paper contributes to the policy discussion on Covid-19 by presenting real-time evidence on the magnitude of the shock for Italian firms. We take advantage of unique panel data on 7,800 companies between January 2020 {right before the pandemic{ and March of the same year {in the midst of lockdown policies. We then exploit the revision in expectation within this short time window to capture the impact of firms' idiosyncratic shock. Our analysis shows disproportionate effects for internationalized companies and provide some evidence on supply chain contagion. We also document stronger shocks for truly innovative companies and effects on long-run growth operating through the disruption of preexisting R&D plans.
    Keywords: Covid-19,Firms,Expectations,Internationalization,Innovation,Global Value Chains
    JEL: D84 F00 O3
    Date: 2020
  7. By: Gaetan de Rassenfosse (Ecole polytechnique federale de Lausanne); Reza Hosseini (Ecole polytechnique federale de Lausanne)
    Abstract: Inventions of foreign origin are about ten percentage points less likely to be granted a U.S. patent than domestic inventions. An empirical analysis of 1.5 million U.S. patent applications identifies three systematic differences between foreign and domestic patent applications that partly explain this bias. They include differences in patent agents, the financial resources of the applicants, and the level of effort that applicants put into the prosecution process. We find no evidence of disparate treatment (‘intentional discrimination’) of foreigners. Instead, our evidence points to a disparate impact (‘unintentional discrimination’) of the U.S. patent system on foreign inventors. Our results suggest unequal access to the patent system for foreigners compared to locals (but also for small U.S. firms). Giving examiners the power of (truly) rejecting a patent application may be one solution to level the playing field between foreigners and locals, but also between large and small firms.
    Keywords: foreign bias; discrimination; disparate impact; national treatment principle; patent system
    JEL: O34 K11 F52
    Date: 2020–09
  8. By: Matthew R. Denes; Sabrina T. Howell; Filippo Mezzanotti; Xinxin Wang; Ting Xu
    Abstract: Angel investor tax credits are used globally to spur high-growth entrepreneurship. Exploiting the staggered implementation of these tax credits in 31 U.S. states, we find that while they increase angel investment, they have no significant effect on entrepreneurial activity. Tax credits induce entry by inexperienced, local investors and are often used by insiders. A survey of 1,411 angel investors suggests that a “home run” investing approach alongside coordination and information frictions explain low take-up among experienced investors. The results contrast with evidence that direct subsidies to firms have large positive effects, raising concerns about using investor subsidies to promote entrepreneurship.
    JEL: G0 G14 G28 H0 H25 O3
    Date: 2020–08
  9. By: Emre Özçelik (Economics Program, Middle East Technical University, Northern Cyprus Campus, Northern Vyprus); Erdal Özmen (Department of Economics, Middle East Technical University, Ankara, Turkey)
    Abstract: We investigate patterns and globalisation-related causes of premature deindustrialisation (PD) using a large panel of advanced (AE), emerging (EME) and developing (DE) economies. We find that, PD tends to be the case for all EME and DE, except E. Asian countries. African countries appear to be hit worst by PD. Globalisation-related determinants of PD vary across country groups. Higher trade openness leads to deindustrialisation in DE. Trade openness, however, enhances dependent industrialisation in Latin American countries and the ‘factory economies’ of E. Asia, which have stronger linkages to global value chains. It is our contention that development possibilities can be expanded by aiming at higher technology activities and more intense forward-linkages to global value chains. Our findings suggest that such strategic industrial policies at the levels of EME and DE have the potential to generate growth convergence at international level. It is our contention that development possibilities can be expanded by aiming at more intense linkages to global value chains, but proactive industrial policies at the levels of EME and DE are required to achieve such expansion.
    Keywords: Developing Economies, Emerging Market Economies, Global Value Chains, Growth, Industrial Policy, Premature Deindustrialisation
    JEL: L60 O10 O14
    Date: 2020–01
  10. By: Sangyup Choi (Yonsei University); Davide Furceri (IMF); João Tovar Jalles (IMF)
    Abstract: Empirical evidence to date suggests a positive relationship between fiscal policy countercyclicality and growth. But do all industries gain equally from countercyclical fiscal policy? What are the channels through which countercyclical fiscal policy affects industry-level growth? We answer these questions by applying a difference-in-difference approach to an unbalanced panel of 22 manufacturing industries for 55 countries—including both advanced and developing economies—during the period 1970-2014. Among the nine industry characteristics that we consider based on different theoretical channels, we find that the credit constraint channel—proxied by asset fixity—identifies the best transmission mechanism through which countercyclical fiscal policy enhances growth. This channel becomes stronger during periods of weak economic activity when credit constraints are more likely to bind.
    Keywords: countercyclical fiscal policy; time-varying coefficients; industry growth, technologies of production, credit constraints
    JEL: E62 H50 H60
    Date: 2020–07–03
  11. By: Andres, Raphaela; DeStefano, Timothy; Niebel, Thomas; Viete, Steffen
    Abstract: The following paper assesses whether current policy environments are appropriate for the emergence of cloud computing technology. In particular, this research uses firm-level data for Germany and the UK to examine the impact of capital incentive programmes (a common policy present in most OECD countries) on cloud adoption. The design for many of these policies target investments in physical capital while excluding digital services like the cloud. Firms view digital investments and digital services as substitutes, therefore narrowly define dincentive programmes may actually discourage the use of emerging tools like cloud computing, which are found to enable the growth and performance of young entrants. Overall, the results find that while capital incentive policies encourage firm investments in ICT and other forms of capital, they actually reduce the probability of cloud adoption. Policy makers may therefore need to reconsider the design of capital incentive programmes within their jurisdictions.
    Keywords: Cloud Computing,Investment Scheme,ICT Adoption,Technology Diffusion,Policy Evaluation
    JEL: L22 O33
    Date: 2020
  12. By: Simplice A. Asongu (Yaounde, Cameroon); Mushfiqur Rahman (University of Wales, London, UK); Joseph Nnanna (The Development Bank of Nigeria, Abuja, Nigeria); Mohamed Haffar (University of Bradford, Bradford, UK)
    Abstract: This study investigates how enhancing information and communication technology (ICT) affects value added across sectors in 25 countries in Sub-Saharan Africa using data for the period 1980-2014. The empirical evidence is based on the Generalised Method of Moments. The following findings are established. First, the enhancement of mobile phone and internet penetrations respectively have net negative effects on value added to the agricultural and manufacturing sectors.Second, enhancing ICT (i.e. mobile phone penetration and internet penetration) overwhelmingly has positive net effects on value added to the service sector. From an extended analysis, enhancing ICT in the agricultural and manufacturing sectors should exceed certain thresholds for value added, notably: 114.375 of mobile phone penetration per 100 people for added value in the agricultural sector and 22.625 of internet penetration per 100 people for added value in the manufacturing sector.
    Keywords: Economic Output; Information Technology; Sub-Saharan Africa
    JEL: E23 F21 F30 L96 O55
    Date: 2020–01

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