nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2020‒12‒14
sixteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Growing like China: Firm performance and global production line position By David Chor; Kalina Manova; Zhihong Yu
  2. Distant but Close in Sight. Firm-level Evidence on French-German Productivity Gaps in Manufacturing By Thomas Grebel; Mauro Napoletano; Lionel Nesta
  3. Industry 4.0 related innovation and firm growth By Behrens, Vanessa; Trunschke, Markus
  4. Skill-biased structural change By Francisco J. Buera; Joseph P. Kaboski; Richard Rogerson; Juan I. Vizcaino
  5. What Are the Labor and Product Market Effects of Automation?: New Evidence from France By Philippe Aghion; Céline Antonin; Simon Bunel; Xavier Jaravel
  6. R&D restructuring during the Great Recession and young firms By María García-Vega
  7. Robot Imports and Firm-Level Outcomes By Alessandra Bonfiglioli; Rosario Crinò; Harald Fadinger; Gino Gancia
  8. The effect of technology transfers from public research institutes and universities on firm innovativeness By María García-Vega; Óscar Vicente-Chirivella
  9. Cloud computing and firm growth By Timothy DeStefano; Richard Kneller; Jonathan Timmis
  10. Energy Network Innovation for Green Transition: Economic Issues and Regulatory Options By Jamasb, Tooraj; Llorca, Manuel; Meeus, Leonardo; Schittekatte, Tim
  11. Interplay between Technological Innovation and Environmental Quality: Formulating the SDG Policies for Next 11 Economies By Sinha, Avik; Sengupta, Tuhin; Alvarado, Rafael
  12. Governance Structure, Technical Change and Industry Competition By Mattia Guerini; Philipp Harting; Mauro Napoletano
  13. Regulatory Experimentation in Energy: Three Pioneer Countries and Lessons for the Green Transition By Schittekatte, Tim; Meeus, Leonardo; Jamasb, Tooraj; Llorca, Manuel
  14. Atypical combination of technologies in regional co-inventor networks By Milad Abbasiharofteh; Dieter F. Kogler; Balazs Lengyel; ;
  15. Sectoral productivity vis-Ã -vis the US and heterogeneity within the EU27: the role of firm size distribution and firm demographics By David Martinez Turegano
  16. ICT and capital biased technical change By Timothy DeStefano; Richard Kneller; Jonathan Timmis

  1. By: David Chor; Kalina Manova; Zhihong Yu
    Abstract: Global value chains have fundamentally transformed international trade and development in recent decades. We use matched firm-level customs and manufacturing survey data, together with Input-Output tables for China, to examine how Chinese firms position themselves in global production lines and how this evolves with productivity and performance over the firm lifecycle. We document a sharp rise in the upstreamness of imports, stable positioning of exports, and rapid expansion in production stages conducted in China over the 1992-2014 period, both in the aggregate and within firms over time. Firms span more stages as they grow more productive, bigger and more experienced. This is accompanied by a rise in input purchases, value added in production, and fixed cost levels and shares. It is also associated with higher profits though not with changing profit margins. We rationalize these patterns with a stylized model of the firm lifecycle with complementarity between the scale of production and the scope of stages performed.
    Keywords: Global value chains, production line position, upstreamness, firm heterogeneity, firm lifecycle, China.
    Date: 2020
  2. By: Thomas Grebel (Technische Universität Ilmenau, Germany); Mauro Napoletano (OFCE Sciences-Po; SKEMA Business School); Lionel Nesta (Université Côte d'Azur, France; GREDEG CNRS; OFCE, SciencesPo; SKEMA Business School)
    Abstract: We study the productivity level distributions of manufacturing firms in France and Germany, and how these distributions evolved across the Great Recession. We show the presence of a systematic productivity advantage of German firms over French ones in the decade 2003-2013, but the gap has narrowed down after the Great Recession. Convergence is explained by the better growth performance of French firms in the post-recession period, especially of those located in the top percentiles of the productivity distribution. We also highlight the role of sectoral growth, firm size and export intensity in explaining the above convergence. In contrast, the contribution of allocative efficiency was small.
    Keywords: International productivity gaps, productivity distributions, firm level comparisons
    JEL: L10 N10 D24
    Date: 2020–11
  3. By: Behrens, Vanessa; Trunschke, Markus
    Abstract: In this paper we explore the relationship between innovative firms that patent technology related to Industry 4.0 and their economic performance. By applying the new patent cartography developed by the EPO that identifies firm's 4.0 patents, this is one of the first large-scale, systematic studies on the impact of 4.0 technologies. Since 4.0 patents are more likely to be general purpose technologies, firms with 4.0 patents should be in a better position to increase their sales as 4.0 technology has on average a wider industrial applicability. Results of our Fixed Effects Least Squares regressions and Dynamic Panel Model suggest that 4.0 patent stock is positively associated to sales and that this effect is significantly larger than the effect of Non-4.0 patent stock. These effects are found to be decreasing with firm size.
    Keywords: Industry 4.0,Patents,Firm Performance,Sales Growth
    JEL: L25 O14 O33
    Date: 2020
  4. By: Francisco J. Buera; Joseph P. Kaboski; Richard Rogerson; Juan I. Vizcaino
    Abstract: Using a broad panel of advanced economies we document that increases in GDP per capita are associated with a systematic shift in the composition of value added to sectors that are intensive in high-skill labor, a process we label as skill-biased structural change. It follows that further development in these economies leads to an increase in the relative demand for skilled labor. We develop a quantitative two-sector model of this process as a laboratory to assess the sources of the rise of the skill premium in the US and a set of ten other advanced economies, over the period 1977 to 2005. For the US, we find that the sector-specific skill neutral component of technical change accounts for 18-24% of the overall increase of the skill premium due to technical change, and that the mechanism through which this component of technical change affects the skill premium is via skill biased structural change.
    Keywords: skill biased structural change, labour economics, skilled labour; GDP
    Date: 2020
  5. By: Philippe Aghion (Harvard University); Céline Antonin (Observatoire français des conjonctures économiques); Simon Bunel; Xavier Jaravel (London School of Economics and Political Science)
    Abstract: What are the effects of automation in the labor and product markets? A host of factors may be at play. Automating the production process may displace certain workers, raising the possibility of technological unemployment, but these displacement effects could be offset by a productivity effect. Automation may induce productivity gains, increase market demand and the scale of production, and in turn increase labor demand. Depending on the extent to which productivity gains are passed through to consumers by producers, consumers could benefit from lower prices or producers could retain higher profits. Finally, because of business-stealing effects from firms that automate and displace their competitors, the industry-level employment and the price and profit effects of automation may differ from their firm-level or plant-level impacts. [First paragraph]
    Keywords: Automation; Employment; Plant-level; Firm-level; Labor market; Product market; Manufacturing
    Date: 2020–07
  6. By: María García-Vega
    Abstract: In this paper, I provide evidence of automation and skill-upgrading of R&D for young firms during the Great Recession of the late 2000s (henceforth abbreviated as GR). Using a difference-in-difference approach and propensity score matching, for a panel of more than 12,000 Spanish firms from 2005 to 2014, I examine if the GR had an effect on the organization of R&D in young versus older firms. I find that young firms adjust their R&D employment during the GR. I show that young firms implemented three key compositional changes in their R&D policies during the GR as compared to older firms: a) they reduced their R&D employment by firing medium-skilled R&D workers; b) they hired high-skilled R&D workers; and c) they increased their capital investments for R&D. These changes in R&D policies suggest that during the GR, young firms substituted medium-skilled R&D workers by high-skilled workers and machines. These effects are mediated by the firms’ financial health.
    Keywords: Young firms; Great Recession; Firm performance; R&D; Innovation; Automation; skillupgrading; Job polarization.
    Date: 2020
  7. By: Alessandra Bonfiglioli; Rosario Crinò; Harald Fadinger; Gino Gancia
    Abstract: We use French data over the 1994-2013 period to study how imports of industrial robots affect fi rm-level outcomes. Compared to other fi rms operating in the same 5- digit sector, robot importers are larger, more productive, and employ a higher share of managers and engineers. Over time, robot import occurs after periods of expansion in fi rm size, and is followed by improvements in effciency and a fall in demand for labor. Guided by a simple model, we develop various empirical strategies to identify the causal effects of robot adoption. Our results suggest that, while demand shocks generate a positive correlation between robot imports and employment, exogenous changes in automation lead to job losses. We also fi nd that robot imports increase productivity and the employment share of high-skill professions, but have a weak effect on total sales. The latter result suggests that productivity gains from automation may not be entirely passed on to consumers in the form of lower prices.
    Keywords: Automation, Displacement, Firms, Robots
    JEL: J23 J24 O33 D22
    Date: 2020–11
  8. By: María García-Vega; Óscar Vicente-Chirivella
    Abstract: Public research institutes and universities receive large amounts of public funds for the generation and transmission of knowledge. In this paper, we assess the differential impact of technology transfers from public research institutes versus technology transfers from universities on firm innovativeness. We use information of R&D acquisitions from a panel dataset of more than 10,000 Spanish firms from 2005 to 2014. Using matching and difference-in-difference estimators, we show that technology transfers from both organizations increase firm innovativeness. Our results suggest that the knowledge generated by public research institutes is particularly beneficial to firms with high levels of absorptive capacity. In contrast, the knowledge transferred by universities is relatively more beneficial to firms with low levels of absorptive capacities. Hence, public funds for public research institutes are especially important for the R&D intensive private sector. Therefore, the degree of absorptive capacities of the participating firms is important to design public programs that maximize the efficiency of public technology transfers.
    Keywords: Public Research Institutes; Universities; Technology Transfers; Firm innovativeness.
    Date: 2020
  9. By: Timothy DeStefano; Richard Kneller; Jonathan Timmis
    Abstract: Cloud computing enables a shift in the costs of ICT adoption from investment in fixed capital to pay-on-demand services allowing firms to scale and reorganize. Using new firm-level data we examine the impact of cloud on firm growth, using zip-code-level instruments of the timing of high-speed fiber availability and speeds. Cloud leads to the growth of employment and revenue for young firms, but they become concentrated in fewer establishments. For incumbents, we find smaller scale effects but dispersed activity through closing establishments and moving employment farther from the headquarters. Moreover, cloud adoption leads to worker relocation across establishments within firms.
    Keywords: firm growth; the cloud; ICT use; employment; productivity
    Date: 2020
  10. By: Jamasb, Tooraj (Department of Economics, Copenhagen Business School); Llorca, Manuel (Department of Economics, Copenhagen Business School); Meeus, Leonardo (Florence School of Regulation (FSR), Robert Schuman Centre for Advanced Studies, European University Institute, Italy and Vlerick Energy Centre, Vlerick Business School, Belgium); Schittekatte, Tim (Florence School of Regulation (FSR), Robert Schuman Centre for Advanced Studies, European University Institute, Italy and Vlerick Energy Centre, Vlerick Business School, Belgium)
    Abstract: In this age of low-cost capital and stimulus packages, is it the best time to heavily invest in tomorrow’s energy networks and research infrastructure? In the academic literature it is widely acknowledged that innovation is key to decarbonise the energy sector and foster sustainable development. However, post liberalisation has been struggling to promote R&D and innovation. Is this the case of business, regulatory, or policy failure, or are there other factors involved? In this paper, we discuss the reasons for slow uptake of new technologies in energy networks and propose some remedies for the European context, where innovation in the area of energy networks is crucial for the implementation of the Green Transition. The solutions to address this shortfall need to be considered in an overarching manner. The specific points raised here are based on incentive regulation, the establishment of competitive funding models like Ofgem’s Low Carbon Network Fund and a large European collaborative research hub.
    Keywords: Energy network infrastructure; European green deal; Innovation; Research and development
    JEL: L50 L90 O30 Q40 Q50
    Date: 2020–11–27
  11. By: Sinha, Avik; Sengupta, Tuhin; Alvarado, Rafael
    Abstract: Since the inception of Sustainable Development Goals (SDGs), the Next 11 (N11) countries are facing difficulties in attaining the SDG objectives, as maintaining the environmental quality has been a challenge for them. In this study, we have revisited the technology policies of these countries, and in doing so, we have tried to address the problem of environmental degradation, while addressing the issues of sustained economic growth, clean and affordable energy, and quality education. In this pursuit, we have designed two indices for environmental degradation and technological advancement, and then analyzed the association between them following the Environmental Kuznets Curve (EKC) hypothesis. The empirical analysis has been done by IPAT framework, and by using bootstrapped quantile regression and rolling window heterogeneous panel casualty tests, over a period of 1990-2017. Following the results obtained from the analysis, we have tried to address the objectives of SDG 13, SDG 4, SDG 8, SDG 9, SDG 7, and SDG 10.
    Keywords: Sustainable Development Goals; Technology policy; R&D, Next 11; Environmental quality
    JEL: Q5 Q53 Q55
    Date: 2020
  12. By: Mattia Guerini (Université Côte d'Azur, CNRS, GREDEG, France; Sant'Anna School of Advanced Studies; Sciences Po., OFCE); Philipp Harting (Bielefeld University); Mauro Napoletano (OFCE Sciences-Po; SKEMA Business School)
    Abstract: We develop a model to study the impact of corporate governance on firm investment decisions and industry competition. In the model, governance structure affects the distribution of shares among short- and long-term oriented investors, the robustness of the management regarding possible stockholder interference, and the managerial remuneration scheme. A bargaining process between firm's stakeholders determines the optimal allocation of financial resources between real investments in R&D and financial investments in shares buybacks. We characterize the relation between corporate governance and firm's optimal investment strategy and we study how different governance structures shape technical progress and the degree of competition over the industrial life cycle. Numerical simulations of a calibrated set-up of the model show that pooling together industries characterized by heterogeneous governance structures generate the well-documented inverted-U shaped relation between competition and innovation.
    Keywords: Governance structure, industry dynamics, competition, technical change
    JEL: G34 L22 M12
    Date: 2020–11
  13. By: Schittekatte, Tim (Florence School of Regulation (FSR), Robert Schuman Centre for Advanced Studies, European University Institute, Italy and Vlerick Energy Centre, Vlerick Business School, Belgium); Meeus, Leonardo (Florence School of Regulation (FSR), Robert Schuman Centre for Advanced Studies, European University Institute, Italy and Vlerick Energy Centre, Vlerick Business School, Belgium); Jamasb, Tooraj (Department of Economics, Copenhagen Business School); Llorca, Manuel (Department of Economics, Copenhagen Business School)
    Abstract: Regulation cannot always move as fast as innovation. Regulatory experiments enable real-life testing of new products, services or business models by allowing derogations from existing rules while maintaining the protection of energy consumers. The outcomes of these experiments inform future regulation. In this chapter, we discuss experiences with regulatory experimentation in the energy sector of three pioneering countries: the Netherlands, Great Britain and Italy. We compare the implementations along six dimensions: eligible project promoters, scope of the derogations, length of the derogations, administration of the experiments, funding, and transparency. We also describe how the early approaches have evolved in these countries. Finally, we look ahead and discuss how learnings can be applied to enable experimentation at the European level involving technologies that are expected to become important to enable the green transition.
    Keywords: Innovation; Research and development; Energy regulation; Energy retail; Green deal
    JEL: L50 L90 O30 Q40 Q50
    Date: 2020–11–27
  14. By: Milad Abbasiharofteh; Dieter F. Kogler; Balazs Lengyel; ;
    Abstract: Novel combinations of technologies are generated from existing knowledge embedded in collaborative work. Albeit inventors tend to develop specialized skills and participate in specialized work, it is their collaboration with peers with varied experience that facilitates the production of radical novelty. While this is of key importance, we lack full understanding on how the evolution of inventor collaborations is related to the nature of technological combination. In this paper, we analyse how the role of technological specialization and variety in evolving co-inventor networks is related to the creation of ‘atypical’ inventions in European NUTS2 regions. By analysing the community structure of co-inventor networks in each region, we find that the share of atypical patents is growing where co-inventor communities are strongly specialized in certain technologies and these communities are also bridged by collaborations. Evidence suggests that linking communities of dissimilar technological profiles favours atypical knowledge production the most. Our work implies that to produce radical innovative outcomes, regions must support knowledge production in specialized inventor communities and sponsor the bridging of collaborations to induce diversity.
    Keywords: patents, novelty, network communities, technological similarity, network of places
    JEL: F23 D85
    Date: 2020–11
  15. By: David Martinez Turegano (European Commission - JRC)
    Abstract: Labour productivity growth in developed economies has slowed down during the last decade relative to the pre-Great Recession period. The EU27 has been no exception to this trend, keeping both a large negative gap relative to the US and strong country heterogeneity following an uneven convergence process between Member States. Based on these stylized facts, in this paper we investigate which are the main explanatory variables accounting for productivity heterogeneity within the EU, both in level and growth terms. From a policy perspective, our findings suggest a number of areas in which action seems to be warranted, improving technological adoption, increasing innovation intensity, boosting the capital triad (human, tangible and intangible assets), and, with respect to the two micro-structural characteristics we put a focus on, eliminating barriers to growth in firm size and facilitating the entry and exit of enterprises. These same recommendations are even more valid in the specific case of business services, for which productivity performance and convergence seem more sensitive to progress in those policy areas.
    Keywords: Productivity, convergence, sectoral heterogeneity, firm structure, business demographics.
    JEL: E24 J24 L11 O47
    Date: 2020–11
  16. By: Timothy DeStefano; Richard Kneller; Jonathan Timmis
    Abstract: Historical analysis of past general purpose technologies suggest that multi-factor productivity gains are realised through both labor and capital saving features from these technologies. In this paper, we explore for the first time whether ICT leads to capital saving, generated by squeezing a greater amount of economic activity into a smaller amount of space. To do so we use new regional data on building capital for the UK and cross-space and time variation in broadband connection speeds over an 18 year period. We find evidence of capital biased technical change, where the long-term effects of ICTs are linked to a reduction of the geographic footprint of businesses and these results are robust to wide-ranging robustness, falsification and endogeneity bias tests. The capital biased technical change effects of ICT provide a new perspective on the recent discussion about the ‘death of the high street’ and, as this type of capital is typically assumed to be constant, likely represents an aspect of TFP missing from estimates constructed at both the micro and macro level
    Keywords: ICT; technical change; general purpose technology
    Date: 2020

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