nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2021‒03‒08
fourteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Intangible Capital and Innovation: An Empirical Analysis of Vietnamese Enterprises By Qing Li; Long Hai Vo
  2. Routine-biased technological change and wages by education level: Occupational downgrading and displacement effects By Elliot Moiteaux; Clément Bosquet; Paul Maarek
  3. R&D in natural resource based industries: Governments should prioritize innovation which reduces environmental hazards By Mads Greaker
  4. The Impact of Regulation on Innovation By Philippe Aghion; Antonin Bergeaud; John Van Reenen
  5. Institutions and the Productivity Challenge for European Regions By Andres Rodriguez-Pose; Roberto Ganau;
  6. Estimating Production Functions in Differentiated-Product Industries with Quantity Information and External Instruments By Nicolás de Roux; Marcela Eslava; Santiago Franco; Eric Verhoogen
  7. A Review of Literature of Global Value Chains By Dutta, Sourish
  8. Non-Standard Work and Innovation: Evidence from European industries By Jelena Relijc; Armanda Cetrulo; Valeria Cirillo; Andrea Coveri
  9. Does urban concentration matter for changes in country economic performance? By Roberto Ganau; Andres Rodriguez-Pose;
  10. An Empirical Investigation of Productivity Spillovers along the Agricultural Supply Chain By Lence, Sergio H.; Plastina, Alejandro
  11. How does the evolution of R&D tax incentives schemes impact their effectiveness? Evidence from a meta-analysis By Blandinieres, Florence; Steinbrenner, Daniela
  12. The New Era of Unconditional Convergence By Dev Patel; Justin Sandefur; Arvind Subramanian
  13. Social capital and economic growth in the regions of Europe By Jonathan Muringani; Rune Dahl Fitjar; Andres Rodriguez-Pose
  14. Genetic Distance, Economic Growth and Top Income Shares: Evidence from OECD Countries By Anjan K. Saha; Vinod Mishra

  1. By: Qing Li (Department of Economics and Finance, SILC Business School, Shanghai University.); Long Hai Vo (Economics Department, Business School, the University of Western Australia; Research Centre in Business, Economics and Resources, Ho Chi Minh City Open University; Faculty of Finance, Banking and Business Administration, Quy Nhon University)
    Abstract: Intangible capital is an important growth driver in the modern knowledge-based and innovation-driven economy. While there seems to be sufficient support for the role of intangible capital from developed economies, evidence from fast-growing developing countries is much more limited. This paper explores the heterogeneous pattern and potential determinants of firm-level intangible capital investment in Vietnam. We found that firm size, human capital, and information and communication technology increase the likelihood to invest in intangible capital. Additionally, an inverted-U shaped relation is identified between market competition and intangible capital investment: Moderate levels of market competition induce firms in Vietnam to invest more in innovative activities, but the effect of stronger competition diminishes.
    Keywords: Intangible capital investment; innovation; Vietnamese firms
    JEL: O34 O12 R11
    Date: 2021
  2. By: Elliot Moiteaux; Clément Bosquet; Paul Maarek (Université de Cergy-Pontoise, THEMA)
    Abstract: Taking advantage of geographic (and time) variation in the proportion of routine occupations in the US, we study the impact of this variation on the wage rate of workers by educational group. Using individual data and a Bartik-type IV strategy, we show that not only non-college-educated workers but also, in the same proportion, workers with fewer than four years of college are negatively impacted by this routine- biased technological change. The latter skill group currently represents 30% of the US population. We show that only 10% to 20% of the impact on both educational groups is related to occupational and industrial downgrading (the composition eect) and that most of the wage impact occurs within industries and occupations, including manual service occupations. This is consistent with the displacement effect described in the theoretical literature on task-biased technological change and automation.
    Keywords: job polarization, routine occupations, wages, education
    JEL: I24 J23 J24 J31 O33
    Date: 2021
  3. By: Mads Greaker (Oslo Business School - OsloMet)
    Abstract: Sustainable yield from a natural resource áuctuates in response to both natural conditions and harvesting practices. On the one hand, research and development (R&D) may reduce the áuctuations through more knowledge of ecosystem functioning. On the other hand, R&D may also increase the fluctuations if it results in more efficient harvesting operations with increased impact on the environment. We analyze the incentives for innovation in a natural resource based industry. The direction of technical change can either be towards profitability enhancing innovations or environmental hazard reducing innovations. We then pose the following research questions: Is the marketís ranking of profitability enhancing and environmental hazard reducing innovation projects in line with the ranking of the social planner? In order to investigate our research question, we develop a theoretical model of innovation in a natural resource based industry, which we also calibrate to the Norwegian aquaculture industry. Two key results emerge; first, the government should subsidize the adoption of environmental hazard reducing technology. Second, the private incentive for profitability enhancing innovation is likely to outperform the private incentives for environmental hazard reducing innovation. In fact, the optimal R&D subsidy to to the former type of R&D is negative, while the optimal R&D subsidy to the latter type of R&D is positive and larger the more serious the environmental hazard.
    Keywords: Renewable natural resources, innovation, environmental policy, aquaculture
    Date: 2020–10–21
  4. By: Philippe Aghion; Antonin Bergeaud; John Van Reenen
    Abstract: Does regulation affect the pace and nature of innovation and if so, by how much? We build a tractable and quantifiable endogenous growth model with size-contingent regulations. We apply this to population administrative firm panel data from France, where many labour regulations apply to firms with 50 or more employees. Nonparametrically, we find that there is a sharp fall in the fraction of innovating firms just to the left of the regulatory threshold. Further, a dynamic analysis shows a sharp reduction in the firm's innovation response to exogenous demand shocks for firms just below the regulatory threshold. We then quantitatively fit the parameters of the model to the data, finding that innovation at the macro level is about 5.4% lower due to the regulation, a 2.2% consumption equivalent welfare loss. Four-fifths of this loss is due to lower innovation intensity per firm rather than just a misallocation towards smaller firms and lower entry. We generalize the theory to allow for changes in the direction of R&D, and find that regulation's negative effects only matter for incremental innovation (as measured by citations and text-based measures of novelty). A more regulated economy may have less innovation, but when firms do innovate they tend to “swing for the fence” with more radical (and labour saving) breakthroughs.
    Keywords: Innovation, regulation, patents, firm size.
    JEL: O31 L11 L51 J8 L25
    Date: 2021
  5. By: Andres Rodriguez-Pose; Roberto Ganau;
    Abstract: Europe has witnessed a considerable labour productivity slowdown in recent decades. Many potential explanations have been proposed to address this productivity ‘puzzle’. However, how the quality of local institutions influences labour productivity has been overlooked by the literature. This paper addresses this gap by evaluating how institutional quality affects labour productivity growth and, particularly, its determinants at the regional level during the period 2003-2015. The results indicate that institutional quality influences regions’ labour productivity growth both directly —as improvements in institutional quality drive productivity growth— and indirectly —as the short- and long-run returns of human capital and innovation on labour productivity growth are affected by regional variations in institutional quality.
    Keywords: Labour productivity; institutional quality; physical capital; human capital; innovation; regions; Europe
    JEL: E24 J24 O47 R11
    Date: 2021–02
  6. By: Nicolás de Roux; Marcela Eslava; Santiago Franco; Eric Verhoogen
    Abstract: This paper develops a new method for estimating production-function parameters that can be applied in differentiated-product industries with endogenous quality and variety choice. We take advantage of data on physical quantities of outputs and inputs from the Colombian manufacturing survey, focusing on producers of rubber and plastic products. Assuming constant elasticities of substitution of outputs and inputs within fi rms, we aggregate from the fi rm-product to the firm level and show how quality and variety choices may bias standard estimators. Using real exchange rates and variation in the "bite" of the national minimum wage, we construct external instruments for materials and labor choices. We implement a simple two-step instrumental-variables method, fi rst estimating a difference equation to recover the materials and labor coeffcients and then estimating a levels equation to recover the capital coeffcient. Under the assumption that the instruments are uncorrelated with fi rms' quality and variety choices, this method yields consistent estimates, free of the quality and variety biases we have identif ed. Our point estimates differ from those of existing methods and changes in our preferred productivity estimator perform relatively well in predicting future export growth.
    Keywords: production-function estimation, quality, variety, external instruments
    JEL: L1 D24 O14 L65
    Date: 2021–01–26
  7. By: Dutta, Sourish
    Abstract: The phenomenon of global value chains (GVCs) indicates a division of labour type production structure in which tasks and business functions are distributed among several companies, globally, or regionally (Grossman and Rossi-Hansberg 2008). The critical features of GVCs are therefore the international dimension of the production process and the "contractualisation" of buyer and seller relationships, often across international borders (Antras 2016). As a result, these international production networks are highly complex regarding geography, technology, and the different types of firms involved (from large retailers and highly large-scale mechanised manufacturers to small home-based production). Sometimes it may be impossible even to identify all the countries that are involved or the extent of their involvement (Gereffi and FernandezStark 2016). However, the recent development of OECD-WTO’s Trade-in Value Added (TiVA) data represents a fundamental step forward in understanding GVC trade. Grossman & RossiHansberg (2008, 2012) rightly point out that the different tasks, rather than sectors, define the specialisation of countries in the value chains.
    Date: 2021–02–15
  8. By: Jelena Relijc; Armanda Cetrulo; Valeria Cirillo; Andrea Coveri
    Abstract: Following a market-oriented approach, policies aimed at increasing labour flexibility by weakening employment protection institutions should enable firms to efficiently allocate resources, improve their capability to compete on international markets and adjust to economic cycle. This work documents the rise of non-standard (i.e. temporary and part-time) work in five European countries (Germany, France, Italy, the Netherlands and the United Kingdom) over the period 1994-2016 and investigate the nexus between the use of non-standard work and innovation performance using data for 18 manufacturing and 23 service industries. Contrary to the objectives that market-oriented policy recommendations promised to achieve, we show that there is a significantly negative association between the share of workers employed under non- standard contractual arrangements and the introduction of both product and process innovation. Furthermore, we show that the harmful consequences of the spread of non-standard work on firms' product innovation propensity are more pronounced in high-tech sectors.
    Keywords: Non-standard work; Knowledge; Product innovation; Process innovation; Industry-level analysis.
    Date: 2021–02–21
  9. By: Roberto Ganau; Andres Rodriguez-Pose;
    Abstract: This paper uses a novel, globally-harmonised city-level dataset —with cities defined at the Functional Urban Area (FUA) level— to revisit the link between urban concentration and country-level economic dynamics. The empirical analysis, involving 108 low- and high-income countries, examines how differences in urban concentration impinge on changes in employment, Gross Domestic Product (GDP) per capita, and labour productivity at country level over the period 2000-2016. The results indicate that urban concentration reduces employment growth but increases GDP per capita and labour productivity growth. The returns of urban concentration are higher for high- than for low-income countries and are mainly driven by the ‘core’ of FUAs, rather than by sub-urban areas.
    Keywords: Urban concentration; Long-run economic dynamics; Employment growth; GDP per capita growth; Labour productivity growth; Cross-country analysis
    JEL: E24 O47 O57 R12
    Date: 2021–02
  10. By: Lence, Sergio H.; Plastina, Alejandro
    Abstract: Total factor productivity (TFP) has long been recognized as a major engine of growth for U.S. agriculture in the post-war period, despite the methodological differences in the approaches used to calculate it.1 Furthermore, TFP growth in the farm sector compares very favorably to similar measures of productivity growth in other sectors of the U.S. economy (Kendrick and Grossman 1980; Jorgenson, Gollop, and Fraumeni 1987; Jorgenson and Schreyer 2013; Jorgenson, Ho, and Samuels 2014; Garner and others 2019). In particular, Jorgenson, Ho, and Samuels (2014) find that although the farm sector ranked 15th out of 65 industries in its contribution to national value-added from 1947 to 2010, it ranked fifth in its contribution to national productivity growth, accounting for 7.5 percent of total U.S. TFP growth over the same period. Using a different data set, Garner and others (2019) find that the farm sector ranked fourth in TFP growth across 63 industries in the United States from 1987 to 2016.
    Date: 2020–01–01
  11. By: Blandinieres, Florence; Steinbrenner, Daniela
    Abstract: A growing interest in R&D tax incentive policies has given rise to a large number of evaluations, which provide contrasting results about their effectiveness. Our meta- analysis aims to explain the heterogeneity found in the R&D tax incentive evaluations by the features of tax incentives. We document that on average R&D tax incentives stimulate R&D expenditures across two streams of empirical studies. However, this averaged effect is moderated by the underpinning features of tax incentives. Our samples evidence that the estimations linked to incremental bases and related to targeted rules towards SMEs drive the positive results found in the literature. Introducing a cap or a pre-approval process does not decrease the effectiveness of R&D tax incentives, allowing governments to monitor the indirect support needed to stimulate private R&D expenditures. Our results highlight the importance of setting up a clear and stable tax incentives framework. Sources of uncertainty regarding the timespan, the amount of the financial returns from tax claims but also the main criteria to apply are likely to decrease their effectiveness in the short run.
    Keywords: Meta-analysis,R&D tax incentives incentives
    JEL: O32 H25 O38
    Date: 2021
  12. By: Dev Patel (Harvard University); Justin Sandefur (Centre for Global Development); Arvind Subramanian (Ashoka University)
    Abstract: The central fact that has motivated the empirics of economic growth—namely unconditional divergence—is no longer true and has not been so for decades. Across a range of data sources, poorer countries have in fact been catching up with richer ones, albeit slowly, since the mid-1990s. This new era of convergence does not stem primarily from growth moderation in the rich world but rather from accelerating growth in the developing world, which has simultaneously become remarkably less volatile and more persistent. Debates about a “middle-income trap†also appear anachronistic: middle-income countries have exhibited higher growth rates than all others since the mid-1980s.
    Keywords: JEL codes: F43; N10; O47 Keywords: Unconditional convergence, economic growth, middle-income trap
    Date: 2021–02
  13. By: Jonathan Muringani; Rune Dahl Fitjar; Andres Rodriguez-Pose
    Abstract: Social capital is an important factor explaining differences in economic growth among regions. However, the key distinction between bonding social capital, which can lead to lock-in and myopia, and bridging social capital, which promotes knowledge flows across diverse groups, has been overlooked in growth research. In this paper, we address this shortcoming by examining how bonding and bridging social capital affect regional economic growth, using data for 190 regions in 21 EU countries, covering eight waves of the European Social Survey between 2002 and 2016. The findings confirm that bridging social capital is linked to higher levels of regional economic growth. Bonding social capital is highly correlated with bridging social capital and associated with lower growth when this is controlled for. We do not find significantly different effects of bonding social capital in regions with more or less bridging social capital, or vice versa. We examine the interaction between social and human capital, finding that bridging social capital is fundamental for stimulating economic growth, especially in low-skilled regions. Human capital also moderates the relationship between bonding social capital and growth, reducing the negative externalities imposed by excessive bonding.
    Keywords: social capital, bonding, bridging, regions, economic growth, EU
    Date: 2021–02
  14. By: Anjan K. Saha; Vinod Mishra
    Abstract: The relationship between economic growth and income inequality remains a puzzle in the literature. The main problem has been finding a way to account for the endogeneity of growth. Using century-long data of 14 OECD countries, this study disentangles the growth–inequality relationship. In doing so, our main contribution is employing genetic and geographical distances as instruments for economic growth. The instruments are constructed on the premise that the growth of one country spills over to the others if they are connected through trade and other forms of exchange; however, the genetic and geographical distances between countries represent barriers to such spill overs. Using alternative specifications and measures, we find that growth reduces the inequality measured by top income shares. Another important finding is that the effect of growth on top income shares is more significant among the highest income groups. We also find that growth, by reducing inequality, neutralises the inequality-enhancing nature of capital, hence confirming the prediction of Thomas Piketty regarding the pervasive nature of capital.
    Keywords: Genetic distance, top income shares, income inequality, economic growth.
    JEL: D31 O11 O15 N10
    Date: 2020–12

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