nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2020‒11‒16
fifteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Emissions Trading Schemes and Directed Technological Change: Evidence from China By Tian, Ruijie
  2. Declining business dynamism: Structural and policy determinants By Flavio Calvino; Chiara Criscuolo; Rudy Verlhac
  3. Secular Stagnation and innovation dynamics: an agent-based SFC model. Part I By Andrea Borsato
  4. Merchandise export diversification strategy for Tanzania - promoting inclusive growth, economic complexity and structural change By Christian Estmann; Bjoern Bo Soerensen; Benno Ndulu; John Rand
  5. Business Dynamism in the UK: New Findings Using a Novel Dataset By Silvia Lui; Russell Black; Josefa Lavandero-Mason; Mohammad Shafat
  6. Economic Growth and Structural Change in the Iberian Incomes, 1800-2000 By Luciano Amaral; Concha Betr‡n; Vicente Pinilla
  7. Is the productivity premium of internationalized firms technology-driven? By Michele Battisti; Filippo Belloc; Massimo Del Gatto
  8. Is Industrial Energy Inefficiency Transient or Persistent? Evidence from Swedish Manufacturing By Amjadi, Golnaz
  9. Matching methods for impact evaluation of public subsidies to business R&D: Measuring heterogeneous effects By Heijs, Joost; Guerrero, Alex J.; Huergo, Elena
  10. Economic complexity and structural transformation: the case of Mozambique By Bjørn Bo Sørensen; Christian Estmann; Enilde Francisco Sarmento; John Rand
  11. Multi-Layer Profit Sharing and Innovation By Filippo Belloc
  12. Robots are not always bad for employment and wages By Tiago Miguel Guterres Neves Sequeira; Susana Garrido; Marcelo Serra Santos
  13. Schumpeter and Keynes: Economic growth in a super-multiplier model By Nomaler, Önder; Spinola, Danilo; Verspagen, Bart
  14. Banking barriers to the green economy By Hans Degryse; Tarik Roukny; Joris Tielens
  15. Inflation, Innovation and Growth: A Survey By Chu, Angus C.

  1. By: Tian, Ruijie (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This paper examines the impact of carbon emissions trading schemes (ETS) on technical change proxied by the number of green patents in the context of the pilot ETS in China. I find a small increase of 0.16 patents per firm and year. A 10 percent increase in carbon prices increases green patents by 2 percent. The strongest effects are for the two regions in the upper range of carbon prices and for more productive firms. However, there are contrasting patterns at the extensive and intensive margins of green innovation: the pilot ETS reduces entry into green innovative activities but increases levels of innovating for firms that were innovative before they were regulated by ETS, especially for the more productive firms. This indicates that an important policy challenge is to encourage the firms covered by ETS to start innovation in green technologies; this applies particularly to the larger and more productive firms.
    Keywords: Carbon Pricing; Directed Technological Change; Innovation; Heterogeneous Firms.
    JEL: O33 O44 Q54 Q55
    Date: 2020–11
  2. By: Flavio Calvino (OECD); Chiara Criscuolo (OECD); Rudy Verlhac (OECD)
    Abstract: This paper analyses trends in business dynamism across 18 countries and 22 industries over the last two decades, using highly representative comparable data. It finds that declines in business dynamism, pervasive in many countries, are driven by dynamics occurring at a disaggregated sectoral level, rather than reallocation across sectors. Average trends within sectors point to steady declines in each country over the last two decades, even after accounting for the role of the business cycle, with market structure and firm heterogeneity emerging as prominent determinants. Investments in intangibles and digital technologies, globalisation, and changes in demographics also contribute to these trends. Policy can, however, help boost business dynamism by reducing barriers to entry and to knowledge diffusion, favouring experimentation and creative destruction, and increasing absorptive capacity and firms’ potential to benefit from technological change.
    Keywords: Business dynamism, Employment dynamics, Firm demography, Job reallocation
    Date: 2020–11–10
  3. By: Andrea Borsato
    Abstract: The paper fills a gap in the Secular Stagnation literature and develops an agent-based SFC model to analyse the deep relationship between income distribution and productivity through the channel of innovation. With a steady gaze on US macro-economic data since 1950, we put forth the idea that the continuous shift of income fromwages to profits may have resulted in a smaller incentive to invest in R&D activity, with the decline in productivity performances that characterizes Secular Stagnation in the USA. The paper is the first step toward the growth model that will be developed in Part II.
    Keywords: Secular Stagnation, Innovation dynamics, Incomedistribution, Agentbased SFC models.
    JEL: E10 O31 O38 O43 P16
    Date: 2020–09
  4. By: Christian Estmann (DERG, Department of Economics, University of Copenhagen); Bjoern Bo Soerensen (DERG, Department of Economics, University of Copenhagen); Benno Ndulu (Department of Economics, University of Dar es Salaam, Tanzania); John Rand (DERG, Department of Economics, University of Copenhagen)
    Abstract: In the pursuit of structural transformation and inclusive growth, this paper identifi?es industries in Tanzania which can accumulate new productive knowledge and diversify the economy. The analysis has two main components. First, a Product Space analysis identifi?es niches primarily within the manufacturing sector, which Tanzania should promote in order to move up the complexity scale and stimulate structural change. The identifi?cation process applies a supply-side network method following the literature on Economic Complexity and combines it with a demand-driven gravity model on merchandise export. Hence, we identify industries that are tangible given Tanzania’s current productive knowledge and are most feasible for Tanzania to target given product-specifi?c trade resistance and geographically dispersed demand. Second, as generating jobs for the rapidly growing labour force is a prime political priority in Tanzania, we construct a labour opportunity index in order to display which industries are correlated with a high labour intensity. We fi?nd that there is a larger scope for learning spillovers in the relatively more complex sectors, such as machinery and chemicals, whereas the less complex sectors, such as agro-processing and construction, are correlated with higher employment creation. The paper is, to the best of our knowledge, the ?first comprehensive study of economic complexity and structural change in Tanzania that systematically accounts for both supply and demand-side factors.
    Keywords: inclusive growth, economic complexity, tanzania, product space, structural transformation
    JEL: C53 F14 O14 O25
    Date: 2020–03–11
  5. By: Silvia Lui; Russell Black; Josefa Lavandero-Mason; Mohammad Shafat
    Abstract: We use a novel firm-level dataset to measure employment dynamics of UK businesses from 1999 to 2019, building on microdata from the Inter-Departmental Business Register (IDBR) and administrative data on employment from PAYE records at HMRC. We construct a new quarterly dataset by using consecutive snapshots of the IDBR to deduce signs of activity of firms. We present detailed descriptive analysis showing the quarterly averages for job creation and destruction by size, sector, transition status and age. In addition, we compute the marginal effects of age and size on growth using the Davis, Halitwanger and Schuh (DHS) approach. Our results show that business dynamism has slowed down since the 2008-2009 financial crisis on two levels: firstly, a decline in job destruction and secondly, a decline in job creation due to entry. Age has an important role in UK’s business dynamism – young firms are the most dynamic group of enterprises, independently of size.
    Keywords: business dynamism, employment, administrative data
    JEL: C81 D22 L25
    Date: 2020–10
  6. By: Luciano Amaral (Universidade Nova de Lisboa, Portugal); Concha Betr‡n (Universidad de Valencia, Spain); Vicente Pinilla (Universidad de Zaragoza and Instituto Agroalimentario de Arag—n (IA2), Spain)
    Abstract: This paper analyses the stages of structural change between the three main sectors of the Iberian economies. We also measure the contribution of structural change to economic growth in the long term and we disaggregate within the three sectors to determine the leading industries at each stage of economic transformation. Finally, we also study the contribution of these sectors to economic growth. Our work shows that both Iberian countries were latecomers in industrialisation and also in agricultural success. With a late start in the mid-nineteenth century in relation to the core European countries, they advanced in terms of structural change during the interwar period and experienced post-1950 growth miracles. Major changes took place when technological change and foreign markets were adapted to their factor endowments. The main differences between both countries were the slow path of Portugal in relation to Spain, and the less intense Portuguese structural change, with agriculture having a lower and services a higher share of GDP and employment during the nineteenth century with the opposite being the case in the twentieth century. Within the industrial sector, light industries and industries less intensive in skilled labour and capital had a higher importance in Portugal than in Spain.
    Keywords: Iberian economic history, Structural change, European economic history, Economic growth
    JEL: N14 O47
    Date: 2020–11
  7. By: Michele Battisti; Filippo Belloc; Massimo Del Gatto
    Abstract: We ask whether the productivity advantage of internationalized firms documented by the international trade literature can be interpreted most accurately in terms of proximity to the “technological frontier". We answer in the affermative using a methodology (based on mixture models) of unbundling technology and total factor productivity (TFP) by estimating “technology-specic" production function parameters. Exploiting detailed data provided by the EFIGE database (a sample of firms distributed across Austria, France, Germany, Hungary, Italy, Spain, and the United Kingdom), we nd technology gaps (with respect to the frontier) more than three times larger than the TFP gaps on average. We also nd sizable technology advantages for firms undertaking foreign direct investment and/or exporting to other European Union countries or to China, for importers of materials, and for firms with competitors in China and the United States. Medium and large firms feature a higher technology premium, which is even higher for firms operating in country-sectors that are more exposed to import competition from China. Younger firms use better technologies but less effectively.
    Keywords: heterogenous firm, productivity premium, selection effect, technology, TFP, trade model
    JEL: F12 F14 D24
    Date: 2020–08
  8. By: Amjadi, Golnaz (STATEC Research (National Institute of Statistics and Economic Studies))
    Abstract: Energy inefficiency in production implies that the same level of goods and services could be produced using less energy. The potential energy inefficiency of a firm may be linked to long-term structural rigidities in the production process and/or systematic shortcomings in management (persistent inefficiency), or associated with temporary issues like misallocation of resources (transient inefficiency). Eliminating or mitigating different inefficiencies may require different policy measures. Studies measuring industrial energy inefficiency have mostly focused on overall inefficiencies and have paid little attention to distinctions between the types. The aim of this study was to assess whether energy inefficiency is transient and/or persistent in the Swedish manufacturing industry. I used a firm-level panel dataset covering fourteen industrial sectors from 1997–2008 and estimated a stochastic energy demand frontier model. The model included a four-component error term separating persistent and transient inefficiency from unobserved heterogeneity and random noise. I found that both transient and persistent energy inefficiencies exist in most sectors of the Swedish manufacturing industry. Overall, persistent energy inefficiency was larger than transient, but varied considerably in different manufacturing sectors. The results suggest that, generally, energy inefficiencies in the Swedish manufacturing industry were related to structural rigidities connected to technology and/or management practices.
    Keywords: Stochastic energy demand frontier model; persistent and transient energy inefficiency; energy inefficiency.
    JEL: D22 L60 Q40
    Date: 2020–11–04
  9. By: Heijs, Joost; Guerrero, Alex J.; Huergo, Elena
    Abstract: The objective of this paper is to offer a broad profile of firms with publicly supported R&D projects, which allows us to explain their different degrees of additionality. With this objective, in a first step we use standard Propensity Score Matching techniques to estimate treatment effects at the firm level, and then we explore the determinants of the heterogeneity in these individual effects through the estimation of an equation for their determinants. For our analysis, we use information from a sample of 8,168 Spanish firms for the period 2007-2014. We report three main results. First, firms with multiple program participation show higher additionality. However, individual treatment effects, which are positive for firms with low support intensities, go sharply below the average for firms with very high support intensities. Second, the degree of additionality is positively related to firm characteristics denoting a more innovative nature, while it is negatively associated with features present in firms involved in more market-oriented R&D projects. Third, firm size has a positive relation to the probability of full additionality, but a negative association with the degree of additionality in terms of net R&D intensity. These results can provide public agencies with some tools for adjusting their selection procedures.
    Keywords: R&D support; policy evaluation; heterogeneous treatment effects; propensity score matching
    JEL: L25 O32
    Date: 2020–10–30
  10. By: Bjørn Bo Sørensen; Christian Estmann; Enilde Francisco Sarmento; John Rand
    Abstract: Mozambique is among the world's least complex economies. By systematically accounting for both supply- and demand-side factors, we identify new products and sectors that can help to diversify and upgrade its economy. In a supply-side analysis, we use network methods from the literature on economic complexity to identify a set of target products that are complex, require productive capabilities useful in the export of other products, and are close to Mozambique's existing productive structure.
    Keywords: economic complexity, Trade, Exports, Structural transformation, Mozambique
    Date: 2020
  11. By: Filippo Belloc
    Abstract: In this paper, we measure whether contractual profit sharing (PS) influences firm innovation and, if yes, how. We disentangle PS effects for different and possibly conflicting interest groups within the firm. We exploit the fact that PS schemes rarely cover the workers all together, but more often than not are used at some layer in the corporate hierarchy and not at others. Based on the analysis of a representative sample of Italian rms, the key contribution of the study is to show that the structure of PS plans matters significantly for innovation. While PS for managers is associated with little or no improvement in innovation activity, PS for non-managers spurs the probability of observing innovation by about 5% to 15%. This may reflect different discount factors of employees at different firm layers. We also document how PS effects, particularly for non-managers, change depending on other firm level variables, such as size, unionization, exposure on international markets, the span of managerial control and some characteristics of the workforce. Policy implications are discussed.
    Keywords: profit sharing, innovation, incentive pay, teamwork
    JEL: J33 K31 M52 O31
    Date: 2020–08
  12. By: Tiago Miguel Guterres Neves Sequeira (University of Coimbra, CeBER- Centre for Business and Economics Research, Faculty of Economics); Susana Garrido (University of Coimbra, Centre for Business and Economics,CeBER, Faculty of Economics); Marcelo Serra Santos (CeBER)
    Abstract: We reassess the impact that robotization has on wages and employment, using a database on US commuting zones from 1990 to 2007. Using an argument based on the transitional dynamics we show that the negative displacement effects of robotization can be surpassed by productivity and reallocation effects, leading to positive effects on employment after a certain level of penetration in industry. In fact, we confirm this effect through regressions that are subject to different robustness checks. Previous evidence according to which robotization always decreases employment and wages are thus not confirmed.
    Keywords: Robots, Employment, Fourth Industrial Revolution, Nonlinear effects of robots
    JEL: J23 J24 O33
    Date: 2020–10
  13. By: Nomaler, Önder (UNU-MERIT); Spinola, Danilo (UNU-MERIT, Maastricht University); Verspagen, Bart (UNU-MERIT, Maastricht University)
    Abstract: We present a model of economic growth that is based on Keynesian ideas (the role of autonomous demand in economic growth) as well as Schumpeterian notions (technological change). Our model fits in the Sraffian supermultiplier (SSM) tradition, and we endogenise the growth rate of autonomous demand, and semi-endogenise productivity growth. The basic model has a steady state that is consistent with a stable employment rate. Consumption smoothing (between periods of high and low employment) by workers is the mechanism that keeps the growing economy stable. We also introduce a version of the model where the burden for stabilisation falls upon government fiscal policy. This also yields a stable growth path, although the parameter restrictions for stability are more demanding in this case.
    Keywords: Economic growth model, Sraffian supermultiplier, Research and Development , R&D, Keynesian theory, Technological change
    JEL: O31 O33 O41 E11 E12 E62
    Date: 2020–11–06
  14. By: Hans Degryse (KU Leuven and CEPR); Tarik Roukny (KU Leuven); Joris Tielens (National Bank of Belgium)
    Abstract: In the race against climate change, financial intermediaries hold a key role in rapidly redirecting resources towards greener economic activities. However, this transition entails a dilemma for banks: entry of innovative and green firms in polluting industries risks devaluating legacy positions held with incumbent clients. As a result, banks exposed to such losses may be reluctant to finance innovation aiming to reduce polluting activities such as green house gas emissions. In this paper, we formalize potential banking barriers to investments in green firms that threaten the value of legacy contracts by affecting collateral pledged by incumbent clients to banks as well as probabilities of default. We show that themore homogeneous and concentrated the banking system is in a given industry, the fewer new innovative firms will be granted loanable funds. We further exploit data on credit allocations in Belgium between 2008 and 2018, to investigate the empirical relevancy of such barriers in polluting industries with larger exposures to green technology disruption. The results indicate that the market structure of the banking system may be key to facilitating a green economic transition highlighting the need for policies to address the role of brown legacy positions and heterogeneous bank business models.
    Keywords: Financial Intermediation, innovation, barriers, climate change
    Date: 2020–10
  15. By: Chu, Angus C.
    Abstract: In this survey, we provide a selective review of the literature on inflation, innovation and economic growth. The relationship between inflation and economic growth is a fundamental question in economics. Most studies in this literature explore this relationship in capital-based growth models. This survey reviews a recent branch of this literature on inflation and innovation-driven growth. Specifically, we develop a canonical monetary Schumpeterian growth model to demonstrate the effects of inflation on innovation and the macroeconomy via different channels. We find that the cash-in-advance constraints on consumption and R&D investment have drastically different implications on the macroeconomic effects of inflation.
    Keywords: inflation; innovation;, economic growth
    JEL: E31 O3 O4
    Date: 2020–10

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