nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2020‒11‒23
nine papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Import Competition and Firm Productivity: Evidence from German Manufacturing By Slavtchev, Viktor; Bräuer, Richard; Mertens, Matthias
  2. Corporate Governance, Business Group Governance and Economic Development Traps By Luis Dau; Randall Morck; Bernard Yeung
  3. Robots Worldwide: The Impact of Automation on Employment and Trade By Carbonero, Francesco; Ernst, Ekkehard; Weber, Enzo
  4. Investments in R&D and Innovative Behavior: An Exploratory Cross-Country Study By Link, Albert
  5. What drives the location choice of new manufacturing plants in Germany? By Krenz, Astrid
  6. The Comparative Advantage of Dutch Cities By Steven Brakman; Tijl Hendrich; Charles van Marrewijk; Jennifer Olsen
  7. Automation and the Fate of Young Workers: Evidence from Telephone Operation in the Early 20th Century By James Feigenbaum; Daniel P. Gross
  8. How deep is your love? Innovation, Upgrading and the Depth of Internationalization By Meyer, Birgit
  9. Routine-Biased Technological Change and Hours Worked over the Business Cycle By Sébastien Bock; Idriss Fontaine

  1. By: Slavtchev, Viktor; Bräuer, Richard; Mertens, Matthias
    Abstract: This study analyzes empirically the effects of import competition on firm productivity (TFPQ) using administrative firm-level panel data from German manufacturing. We find that only import competition from high-income countries is associated with positive incentives for firms to invest in productivity improvement, whereas import competition from middle- and low-income countries is not. To rationalize these findings, we further look at the characteristics of imports from the two types of countries and the effects on R&D, employment and sales. We provide evidence that imports from high-income countries are relatively capital-intensive and technologically more sophisticated goods, at which German firms tend to be relatively good. Costly investment in productivity appears feasible reaction to such type of competition and we find no evidence for downscaling. Imports from middle- and low-wage countries are relatively labor-intensive and technologically less sophisticated goods, at which German firms tend to generally be at disadvantage. In this case, there are no incentives to invest in innovation and productivity and firms tend to decline in sales and employment.
    Keywords: productivity,multi-product firms,import competition
    JEL: F14 L25 D22 D24 F61
    Date: 2020
  2. By: Luis Dau; Randall Morck; Bernard Yeung
    Abstract: Every firm in a developed economy relies on the mere existence of countless other firms to keep prices competitive up and down all supply chains. Without this network externality, no firm forms; and without many firms, no network forms; locking in a low-income trap. Business group governance supersedes corporate governance in most developing economies and in the rapid catch-up development phases of most high-income economies by hierarchically coordinating firms in multiple industries, internalizing this network externality. High-income economies grow via creative destruction - creative firms imposing a negative externality upon firms they destroy or disrupt, but a larger positive innovation-related externality upon the whole economy. Business groups avoid creative self-destruction, innovation by one group firm that disrupts another. Corporate governance supersedes business group governance in high-income economies to facilitate productivity growth. If business group governance does not retreat, productivity growth is impaired and a middle-income trap can result.
    JEL: B26 G3 N20 O1 P12
    Date: 2020–11
  3. By: Carbonero, Francesco; Ernst, Ekkehard; Weber, Enzo
    Abstract: The impact of robots on employment and trade is a highly discussed topic in the academic and public debates. Particularly, there are concerns that automation may threat jobs in emerging countries given the erosion of the labour cost advantage. We provide evidence on the effects of robots on worldwide employment, including emerging economies. To instrument the use of robots, we introduce an index of technical progress, defined as the ability of robots to carry out different tasks. Robots turn out to have a significantly negative impact on worldwide employment. While it is small in developed countries, for emerging economies it amounts to -11 per cent between 2005 and 2014. However, here, there appear positive spillovers especially from robotisation in manufacturing on employment outside manufacturing. Furthermore, we assess cross-country effects, finding that robots in developed countries decrease off-shoring just as employment in emerging economies.
    Keywords: robot,technology,employment,off-shoring,re-shoring
    JEL: J23 O33 F16
    Date: 2020
  4. By: Link, Albert (University of North Carolina at Greensboro, Department of Economics)
    Abstract: The relationship between investments in research and development (R&D) and innovative behavior, measured in terms of new products or services being delivered to the market, is well documented in the literature. This paper departs from the extant literature in that the unit of observation is a country rather than a firm. Using World Bank aggregate data, this level of analysis thus allows for a systematic study of cross-country observations on an R&D Innovation relationship.
    Keywords: R&D; Innovation; Developed Economy; Transition Economy; Developing Economy;
    JEL: O31 O32 O57
    Date: 2020–11–09
  5. By: Krenz, Astrid
    Abstract: Almost 30 years after German reunification, a persistent gap in different firm performance measures exists between East and West Germany. In this paper I focus on the differences in new German manufacturing plants' location choices across the German district-free cities and districts and investigate its regional determinants. For that purpose, I construct a novel, rich regional- and plant-level dataset based on the Official Firm Statistics from the German Federal Statistical Office and the Offices of the Laender. The analysis provides first-time evidence regarding how in particular the location decision of plants in the German economy is in uenced by regional road infrastructure as well as regional structural funding. The effects are economically important and significant. The results reveal that a 10 percent increase in plant agglomeration increases the odds of a new plant to locate in the region by 12 percent. A 10 percent decrease of travel time on roads increases the odds of a plant to locate by 4 percent in Germany overall, by 7.6 percent among East German regions and by 26.5 percent in particular for large plants in the East German regions. A 10 percent larger population increases the odds to locate by 8.7 percent. A 10 percent increase in regional structural funding for infrastructure purposes increases the odds to locate in a region in East Germany by 8.3 percent in particular for large plants. Policy implications emerge that address in particular the improvement of infrastructure and support to reap the benefits that arise from agglomeration externalities.
    Keywords: Firm location choice,regional road infrastructure,Germany,agglomeration economies,regional structural funding,East-West gap,conditional logit,nested logit.
    JEL: D22 L25 R11 R12
    Date: 2020
  6. By: Steven Brakman; Tijl Hendrich; Charles van Marrewijk; Jennifer Olsen
    Abstract: The trade literature often treats countries as dimensionless points, which is a strong assumption. Agglomeration or lumpiness of production factors within countries can affect the national pattern of trade. In this paper we analyze comparative advantage patterns for 22 cities and 4 regions for (a selection of) 83 sectors within The Netherlands. Our findings are as follows. First, analysis of the lens condition indicates that the regional concentration of production factors (lumpiness) does not affect the Dutch national trade pattern. This suggests that the mobility of firms and factors of production is consistent with the so-called welfare maximizing integrated equilibrium. Second, despite the fact that the lens condition is verified, comparative advantage patterns across locations differ significantly from each other. We show this by comparing location specific distributions of the Balassa-Index (BI). Third, the differences across locations of comparative advantage patterns is determined by the interaction of local skill-abundance and sector skill-intensity, in line with the predictions of the factor abundance model. Moreover, at the sectoral level, location-specific variables such as market access or density, have limited effects. Fourth, most locations that house sectors that have a strong comparative (dis-) advantage relative to the Netherlands also have a strong comparative (dis-) advantage relative to the world. Only a few locations house sectors that are locally strong, but globally weak, and vice versa. The results indicate that international trade policies and disputes, such as Brexit or the US-China trade war, can have strong local consequences.
    Keywords: comparative advantage, cities, Heckscher-Ohlin, factor abundance
    JEL: F11 F15 R12
    Date: 2020
  7. By: James Feigenbaum; Daniel P. Gross
    Abstract: Telephone operation, one of the most common jobs for young American women in the early 1900s, provided hundreds of thousands of female workers a pathway into the labor force. Between 1920 and 1940, AT&T adopted mechanical switching technology in more than half of the U.S. telephone network, replacing manual operation. We show that although automation eliminated most of these jobs, it did not affect future cohorts' overall employment: the decline in demand for operators was counteracted by growth in both middle-skill jobs like secretarial work and lower-skill service jobs, which absorbed future generations. Using a new genealogy-based census linking method, we show that incumbent telephone operators were most impacted by automation, and a decade later were more likely to be in lower-paying occupations or have left the labor force entirely.
    JEL: J21 J24 J62 J63 M51 M54 N32 O33
    Date: 2020–11
  8. By: Meyer, Birgit
    Abstract: Global Value Chains (GVCs) provide an important opportunity to become member of the global economy. Gaining access to GVCs and the possibility of developing linkages with major suppliers and customers enables the prospect to upgrade products and production processes via knowledge and technological spillovers, learning by doing and the allocation of new task. Adopting new production technologies and realizing synergy effects might allow cost reduction, product innovation and product upgrading. Even if GVCs represent a rich environment for innovation activities, the extent to which knowledge is created and transferred among firms may vary considerably across their mode of participation in the global chain, thus resulting in heterogeneous innovation capacities for the firms involved. Differences in the forms of governance underlying buyer-supplier relationships - for instance linked to dissimilar power asymmetries and firm capability - can strongly affect the knowledge transmission along the chains and are potentially able to explain heterogeneities in firms' innovation propensity. Using a firm-product-level dataset of Indian manufacturing firms including information on business groups, this paper contributes to recent studies on international production and GVCs by testing the effect of different modes of internationalization on firms' upgrading activities, including the extensive and intensive margins of innovation and R&D expenditures. Controlling for the selection bias associated with the chosen mode of internationalization and accounting for potential reverse causality, this paper shows that the deeper firms are integrated internationally, the higher the likelihood that they engage in innovation activities. Firms which have a high mode of internationalization are not only more productive, but also more likely to introduce new products, upgrade existing products and produce more sophisticated products than firms that are less engaged in international markets and, thus, less prone to international competition.
    Keywords: Global value chain,exporting,importing,FDI,innovation,upgrading
    JEL: F23 F61 O31 D22 L23 F14
    Date: 2020
  9. By: Sébastien Bock (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Idriss Fontaine (UR - Université de La Réunion)
    Abstract: Technological change has been biased towards replacing routine labor over the past four decades. We study the implications of those shifts in the task composition of labor demand over the business cycle. We build quarterly time series on hours worked and task premiums from the CPS and assess the e_ects of routine-biased technological change by estimating a VAR model with long-run exclusion and sign restrictions. The decline in total hours worked is driven by routine-biased technology shocks through a decline in routine hours. These shocks appear quantitatively relevant and generate recognizable aggregate uctuations pointing out their relevance to business cycles.
    Keywords: Routine-biased technological change,Job polarization,VAR,Long- run restrictions,Hours worked,Business cycle
    Date: 2020–10

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