nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2020‒11‒09
eleven papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. ICT, Collaboration, and Science-Based Innovation: Evidence from BITNET By Kathrin Wernsdorf; Markus Nagler; Martin Watzinger
  2. Attracting Profit Shifting or Fostering Innovation? On Patent Boxes and R&D Subsidies By Andreas Haufler; Dirk Schindler
  3. Input-Output Networks and Misallocation By Jing Hang; Pravin Krishna; Heiwai Tang
  4. Technology network structure conditions the economic resilience of regions By Gergo Toth; Zoltan Elekes; Adam Whittle; Changjun Lee; Dieter F. Kogler
  5. The ESG-Innovation Disconnect: Evidence from Green Patenting By Lauren Cohen; Umit G. Gurun; Quoc H. Nguyen
  6. Does it Pay Off to Learn a New Skill? Revealing the Economic Benefits of Cross-Skilling By Fabian Stephany
  7. Productivity Drivers: Empirical Evidence on the Role of Digital Capital, FDI and Integration By Amat Adarov; David Klenert; Robert Marschinski; Robert Stehrer
  8. Local, Complementarity and Similarity Relatedness in Different Regional and Sectoral Contexts By Galetti, Jefferson Ricardo Bretas; Tessarin, Milene Simone; Morceiro, Paulo César
  9. Patent Policy and Economic Growth: A Survey By Chu, Angus C.
  10. Economic complexity for competitiveness and innovation: A novel bottom-up strategy linking global and regional capacities By PUGLIESE Emanuele; TACCHELLA Andrea
  11. Reliance on Science by Inventors: Hybrid Extraction of In-text Patent-to-Article Citations By Matt Marx; Aaron Fuegi

  1. By: Kathrin Wernsdorf; Markus Nagler; Martin Watzinger
    Abstract: Does access to information and communication technologies (ICT) increase innovation? We examine this question by exploiting the staggered adoption of BITNET across U.S. universities in the 1980s. BITNET, an early version of the Internet, enabled e-mail-based knowledge exchange and collaboration among academics. After the adoption of BITNET, university-connected inventors increase patenting substantially. The effects are driven by collaborative patents by new inventor teams. The patents induced by ICT are exclusively science-related and stem from fields where knowledge can be codified easily. In contrast, we neither find an effect on patents not building on science nor on inventors unconnected to universities.
    Keywords: ICT, communication, knowledge diffusion, science-based innovation, university-patenting
    JEL: H54 L23 L86 O30 O32 O33
    Date: 2020
  2. By: Andreas Haufler; Dirk Schindler
    Abstract: Many countries have introduced patent box regimes in recent years, offering a reduced tax rate to businesses for their IP-related income. Patent boxes are supposed to increase innovative activity, but they are also suspected to aim at attracting inward profit shifting from multinational firms. In this paper, we analyze the effects of patent box regimes when countries can simultaneously use patent boxes and R&D subsidies to promote innovation. We show that when countries set their tax policies unilaterally, innovation is fostered, at the margin, only by the R&D subsidy. The patent box tax rate is instead targeted at attracting international profit shifting, and it is optimally set below the corporate tax rate. With cooperative tax setting, the optimal royalty tax rate is instead equal to, or even above, the statutory corporation tax. Hence, patent box regimes emerge in the decentralized policy equilibrium, but never under policy coordination. Enforcing a nexus principle, as proposed by the OECD, is helpful to mitigate harmful competition for paper profits, but it comes at the price of increased strategic competition in direct R&D subsidies to attract physical R&D units instead of intangible patents.
    Keywords: R&D investment, patent boxes, investment tax credits, profit shifting, tax competition
    JEL: H25 H87 F23
    Date: 2020
  3. By: Jing Hang; Pravin Krishna; Heiwai Tang
    Abstract: This paper develops a framework for studying the macroeconomic costs of resource misallocation. The framework enables the assessment of the conditions under which the existing estimates in the misallocation literature, which are largely based on a value-added production structure and ignore inter-sectoral linkages, provide an unbiased estimate of misallocation costs in relation to a more general setting, in which production of gross output relies upon input-output linkages across sectors. We show that in the absence of intermediate input distortions, the two approaches are isomorphic and will yield the same estimated aggregate productivity loss. When firm-specific intermediate input distortions are present, however, the value-added model produces biased estimates of TFP losses due to both model misspecification and incorrect inferences of firms' productivity and distortions. Using Chinese and Indian enterprise data, we find quantitatively similar TFP losses from resource misallocation for China, regardless of the model used, while for India, we infer significantly larger TFP losses under the gross output model.
    JEL: E1 E23 L16 O11 O4
    Date: 2020–10
  4. By: Gergo Toth; Zoltan Elekes; Adam Whittle; Changjun Lee; Dieter F. Kogler
    Abstract: This paper assesses the network robustness of the technological capability base of 269 European metropolitan areas against the potential elimination of some of their capabilities. By doing so it provides systematic evidence on how network robustness conditioned the economic resilience of these regions in the context of the 2008 economic crisis. The analysis concerns calls in the relevant literature for more in-depth analysis on the link between regional economic network structures and the resilience of regions to economic shocks. By adopting a network science approach that is novel to economic geographic inquiry, the objective is to stress-test the technological resilience of regions by utilizing information on the co-classification of CPC classes listed on European Patent Office patent documents. Findings from a regression analysis indicate that metropolitan regions with a more robust technological knowledge network structure exhibit higher levels of resilience with respect to changes in employment rates. This finding is robust to various random and targeted elimination strategies concerning the most frequently combined technological capabilities. Regions with high levels of employment in industry but with vulnerable technological capability base are particularly challenged by this aspect of regional economic resilience.
    Keywords: regional economic resilience, network robustness, metropolitan regions, technology space
    Date: 2020–09
  5. By: Lauren Cohen; Umit G. Gurun; Quoc H. Nguyen
    Abstract: No firm or sector of the global economy is untouched by innovation. In equilibrium, innovators will flock to (and innovation will occur where) the returns to innovative capital are the highest. In this paper, we document a strong empirical pattern in green patent production. Specifically, we find that oil, gas, and energy producing firms – firms with lower Environmental, Social, and Governance (ESG) scores, and who are often explicitly excluded from ESG funds’ investment universe – are key innovators in the United States’ green patent landscape. These energy producers produce more, and significantly higher quality, green innovation. Our findings raise important questions as to whether the current exclusions of many ESG-focused policies – along with the increasing incidence of explicit divestiture campaigns – are optimal, or whether reward-based incentives would lead to more efficient innovative outcomes.
    JEL: G11 G30 O31 O32
    Date: 2020–10
  6. By: Fabian Stephany
    Abstract: This work examines the economic benefits of learning a new skill from a different domain: cross-skilling. To assess this, a network of skills from the job profiles of 4,810 online freelancers is constructed. Based on this skill network, relationships between 3,525 different skills are revealed and marginal effects of learning a new skill can be calculated via workers' wages. The results indicate that the added economic value of learning a new skill strongly depends on the already existing skill bundle but that acquiring a skill from a different domain is often beneficial. As technological and social transformation is reshuffling jobs' task profiles at a fast pace, the findings of this study help to clarify skill sets required for mastering new technologies and designing individual training pathways. This can help to increase employability and reduce labour market shortages.
    Date: 2020–10
  7. By: Amat Adarov (The Vienna Institute for International Economic Studies (wiiw)); David Klenert (European Commission - JRC); Robert Marschinski (European Commission - JRC); Robert Stehrer (The Vienna Institute for International Economic Studies (wiiw))
    Abstract: There are marked differences in productivity dynamics between countries as well as industries, often leading to substantial performance gaps, such as the gap in labour productivity between the EU and the US. In this article, we use the 2019 release of the EU KLEMS database to look into the drivers of productivity. In particular, we analyse how different types of capital (including intangible capital), foreign direct investment, integration into global value chains and EU integration affect labour productivity. Key findings are that intangible Information and Communication Technology (ICT) capital is a strong driver of productivity both at sectoral and aggregate levels, even more so than tangible ICT capital. Furthermore, backward global value chain integration and EU integration are positively associated with labour productivity. Contrary to expectations, we do not find evidence of a productivity-enhancing effect of foreign direct investment. Finally, we estimate by how much the productivity gap between the EU and the US could be reduced through different ICT investment policies.
    Keywords: productivity, productivity gap, digitalisation, ICT capital, FDI, global value chains, intangible capital
    Date: 2020–10
  8. By: Galetti, Jefferson Ricardo Bretas; Tessarin, Milene Simone; Morceiro, Paulo César
    Abstract: There is little evidence on the relationship between occupational relatedness and regional specialisation in developing countries with high regional inequality and industrial heterogeneity. We compute local synergy, complementarity and similarity relatedness based on 2 514 occupations to estimate their effects on the occupational structure in 558 Brazilian microregions between 2003 and 2018. We find that the three indexes affect the regional specialisation in distinct magnitudes, and they have different effects in different regional and sectoral contexts. Sectoral complementarities affect structural change and strengthen similarity relatedness. The findings shed light on developing countries’ distinct regional contexts rather than ‘one-size-fits-all’ policies.
    Keywords: Occupational relatedness; Related variety; Regional specialisation; Developing country
    JEL: J21 J24 L23 R12
    Date: 2020–10–24
  9. By: Chu, Angus C.
    Abstract: This survey provides a selective review of the literature on patent policy, innovation and economic growth. The patent system is a useful policy tool for stimulating innovation given its importance on technological progress and economic growth. However, the patent system is a multi-dimensional system, which features multiple patent policy instruments. In this survey, we review some of the commonly discussed patent policy instruments, such as patent length, patent breadth and blocking patents, and also use a canonical Schumpeterian growth model to demonstrate their different effects on innovation and the macroeconomy.
    Keywords: patent policy, innovation, economic growth
    JEL: O3 O4
    Date: 2020–10
  10. By: PUGLIESE Emanuele (European Commission - JRC); TACCHELLA Andrea (European Commission - JRC)
    Abstract: Economic Complexity is a data driven empirical approach developed to inform the study of territorial development with quantitative metrics. Techniques inspired by complex systems analysis and network theory allow measuring the intangible capabilities necessary for a country or region to be competitive, both in overall terms and in specific markets. We exemplarily analyse the case of Slovakia's industrial and innovation competitiveness by looking at the overall potential of the country and focusing on its Electronics sector.
    Keywords: Economic Complexity Economic Forecasting Structural Change Regional Innovation System
    Date: 2020–10
  11. By: Matt Marx; Aaron Fuegi
    Abstract: We curate and characterize a complete set of citations from patents to scientific articles, including nearly 16 million from the full text of USPTO and EPO patents. Combining heuristics and machine learning, we achieve 25% higher performance than machine learning alone. At 99.4% accuracy, coverage of 87.6% is achieved, and coverage above 90% with accuracy above 93%. Performance is evaluated with a set of 5,939 randomly-sampled, cross-verified “known good” citations, which the authors have never seen. We compare these “in-text” citations with the “official” citations on the front page of patents. In-text citations are more diverse temporally, geographically, and topically. They are less self-referential and less likely to be recycled from one patent to the next. That said, in-text citations have been overshadowed by front-page in the past few decades, dropping from 80% of all paper-to-patent citations to less than 40%. In replicating two published articles that use only citations on the front page of patents, we show that failing to capture those in the body text leads to understating the relationship between academic science and commercial invention. All patent-to-article citations, as well as the known-good test set, are available at
    JEL: O31 O32 O33 O34
    Date: 2020–10

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