nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2021‒03‒22
fifteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. The innovative impact of public research institutes: evidence from Italy By Robbiano, Simone
  2. The Rise and Fall of German Innovation By Naudé, Wim; Nagler, Paula
  3. The Impact of Business Environment Reforms on Firms’ Performance in Transition Economies By Berulava, George; Gogokhia, Teimuraz
  4. Capital (Mis)allocation and Incentive Misalignment By Alexander Schramm; Alexander Schwemmer; Jan Schymik
  5. Does Robots´Reach Exceed Their Grasp? Differential Impacts of Robot Adoption and Spillover Effects on Workers in the Czech Republic By Matej Belin
  6. The role of innovation and human capital for the productivity of industries By Emile Cammeraat; Lea Samek; Mariagrazia Squicciarini
  7. Big Push in Distorted Economies By Francisco J. Buera; Hugo Hopenhayn; Yongseok Shin; Nicholas Trachter
  8. The Future of Labor: Automation and the Labor Share in the Second Machine Age By Hong Cheng; Lukasz A. Drozd; Rahul Giri; Mathieu Taschereau-Dumouchel; Junjie Xia
  9. The Productivity Puzzle – A Critical Assessment and an Outlook on the COVID-19 Crisis By Roth, Felix
  10. Licensing Life-Saving Drugs for Developing Countries: Evidence from the Medicines Patent Pool By Alberto Galasso; Mark Schankerman
  11. Performance and structures of the German science system 2021 By Stephen, Dimity; Stahlschmidt, Stephan
  12. Firms’ imports and quality upgrading: evidence from Chinese firms By Min Zhu; Chiara Tomasi
  13. Employee characteristics, absorptive capacity and innovation By Rho, Yeirae; Fabrizi, Simona; Lippert, Steffen
  14. Cross-Economy Dynamics in Energy Productivity: Evidence from 47 Economies over the Period 2000–2015 By Liu, Yang; Zhong, Sheng
  15. Extending A Regional Innovation Network: A Technology Intelligence Approach By Johannes van der Pol; Jean-Paul Rameshkoumar; Sarah Teulière; Thierry Bazerque

  1. By: Robbiano, Simone
    Abstract: This paper empirically analyzes whether a prominent place-based innovation policy, the institution of the Italian Institute of Technology (IIT), has affected the treated region innovative capacity. By relying on the Synthetic Control Method (SCM) approach and Italian NUTS-3 regional panel data, the innovative development of the latter, proxied by (per-capita) fractional count of patents, is compared with a set of Italian NUTS-3 control ones. Results suggest that the establishment of IIT has impacted on the regional innovative output, on average, by about 22.5 more patents for million inhabitants per year in the post-intervention period. The paper also provides evidence of knowledge spillovers from IIT in the hosting region. In addition, positive effects on the regional endowment of high-skilled human capital as well as regional growth are also documented. Finally, these results are robust to a variety of placebo permutation tests as well as several sensitivity checks, or when considering a Difference-in-Differences (DiD) approach. Finally, the paper may provide useful insights to inform policy makers about the marginal benefits of additional research funding by highlighting the stream of private and social returns, against which the opportunity cost of the intervention must be compared.
    Keywords: Public Research Institutes; Regional Development; Growth; Innovation; Human Capital; Knowledge Spillovers; Knowledge Accumulation; Synthetic Control Method.
    JEL: I23 I25 J24 O10 O15 O18 O30 O31 R10 R11 R58
    Date: 2021
  2. By: Naudé, Wim (University College Cork); Nagler, Paula (Erasmus University Rotterdam)
    Abstract: In this paper, we describe the historical co-evolution of innovation and economic growth in Germany since 1871. The country's rise as an industrial power in the late 19th century, through its innovation and entrepreneurial performance, is contrasted with the post-World War II period. This latter period, although it contained the German economic miracle, was nevertheless a period during which innovation went into relative decline. We document this decline and offer four broad, interrelated explanations: (i) an innovation system locked into incremental innovation, (ii) a slowdown in the diffusion of technology, (iii) weaknesses in the education system, and (iv) entrepreneurial stagnation. Implications for policy are noted. Our paper contributes to the growing literature attempting to understand the decline in business dynamism that characterises many advanced economies.
    Keywords: entrepreneurship, inequality, innovation, productivity, technology
    JEL: D31 L26 O33 O38 O52
    Date: 2021–03
  3. By: Berulava, George; Gogokhia, Teimuraz
    Abstract: The study investigates the impact of business environment on export performance of individual firms in transition economies. For these goals, the study utilizes the firm-level data from the Business Environment and Enterprise Performance Survey (BEEPS V round) across 28 transition economies. Applying the modified CDM model the paper examines the structural link between the business environment reforms, firm R&D, innovation, labor productivity, and export performance. The model was estimated sequentially, step-by-step. The estimates of the structural model, generally, proved our hypothesis about the impact of business environment reforms on the relationships between R&D investments, innovation, labor productivity and export performance. This study also supports the early findings that R&D is an important determinant of innovation, that innovation is a driver of labor productivity and that labor productivity, in turn, substantially increases the probability of firm’s participation at export markets.
    Keywords: Business environment reforms, R&D, Innovation, Productivity, Export, Transition economies
    JEL: D22 O12 O31 O38 P31
    Date: 2021
  4. By: Alexander Schramm; Alexander Schwemmer; Jan Schymik
    Abstract: We study how managerial incentives affect the allocation of capital inside firms. To identify the effect of incentives on investment decisions we use a within-firm estimator that exploits variation across capital goods and a US accounting reform as an exogenous shock to managers' short-termist incentives. Our evidence shows that capital (mis)allocation within firms can be amplified by short-termist incentives. More short-term incentives cause a shift in investment expenditures away from durables towards more short-lived capital goods, effectively shortening the durability of firms' capital stocks. To study the economic implications of this within-firm misallocation channel, we then build a model of firm investments with incentive frictions that we calibrate to the US economy. We show that even moderate increases in short-termist incentives, such as those around the accounting reform, may cause substantial inefficiencies. These inefficiencies lead to large within-firm spreads in the marginal products of capital goods, causing long-run declines in output and real wages.
    Keywords: Corporate investment; Firm dynamics; Capital reallocation; Short-term incentives
    JEL: E22 G31 D24 D25 L23
    Date: 2021–01
  5. By: Matej Belin
    Abstract: This paper uses a quasi-differences-in-differences approach to identify impacts of robotisation and exposure to robots owned by foreign competitors on labour market outcomes of Czech workers. Utilising employee-level data allows for identification of differential impacts on workers of different skill levels. We find that while robot adoption substantially increases demand for college-educated labour, demand for employees with an elementary and/or high school diploma decreases slightly. Exposure to robots owned by foreign competitors also seems to drive up the demand for college graduates and to suppress the demand for workers with lower qualifications.
    Keywords: automation; differences-in-differences;
    JEL: F61 J29
    Date: 2021–03
  6. By: Emile Cammeraat (OECD); Lea Samek (OECD); Mariagrazia Squicciarini (OECD)
    Abstract: This paper sheds light on the relationship between innovation, human capital endowment and upgrading, organisational capital (OC) and labour productivity. In addition to assessing correlations, it uses a Heckman selection model to address causal links and to account for the ways in which skills and investment in R&D affect the probability of innovating. The analysis finds that innovative output, the proportion of OC-related workers, investment in training (especially in informal training) and physical capital intensity are positively and significantly related to productivity. In most estimates ICT skills, cognitive skills and the presence of highly skilled workers in an industry also emerge as having a significant and positive relationship with productivity. ICT skills further appear to indirectly shape productivity, through a positive relationship with innovation.
    Keywords: Human Capital, ICT, Innovation, Labour Productivity, Organisational Capital, Patent, R&D, Skills, STEM, Training
    Date: 2021–03–16
  7. By: Francisco J. Buera; Hugo Hopenhayn; Yongseok Shin; Nicholas Trachter
    Abstract: Why don't poor countries adopt more productive technologies? Is there a role for policies that coordinate technology adoption? To answer these questions, we develop a quantitative model that features complementarity in firms' technology adoption decisions: The gains from adoption are larger when more firms adopt. When this complementarity is strong, multiple equilibria and hence coordination failures are possible. More important, even without equilibrium multiplicity, the model elements responsible for the complementarity can substantially amplify the effect of distortions and policies. In what we call the Big Push region, the impact of idiosyncratic distortions is over three times larger than in models without such complementarity. This amplification enables our model to nearly fully account for the income gap between India and the US without coordination failures playing a role.
    JEL: E23 L16 O14 O25
    Date: 2021–03
  8. By: Hong Cheng; Lukasz A. Drozd; Rahul Giri; Mathieu Taschereau-Dumouchel; Junjie Xia
    Abstract: We study the effect of modern automation on firm-level labor shares using a 2018 survey of 1,618 manufacturing firms in China. We exploit geographic and industry variation built into the design of subsidies for automation paid under a vast government industrialization program, “Made In China 2025,” to construct an instrument for automation investment. We use a canonical CES framework of automation and develop a novel methodology to structurally estimate the elasticity of substitution between labor and automation capital among automating firms, which for our preferred specification is 3.8. We calibrate the model and show that the general equilibrium implications of this elasticity are consistent with the aggregate trends during our sample period.
    Keywords: labor share; labor’s share in income; automation; labor demand; industrial robots
    JEL: D33 E25 O33 J23 J24 E24 O25
    Date: 2021–03–09
  9. By: Roth, Felix
    Abstract: This paper assesses the productivity puzzle critically and gives an outlook on the COVID-19 crisis. It offers two main conclusions. First, it posits that a large fraction of the productivity puzzle can be solved by incorporating intangible capital into the asset boundary of the national accounts. Thus, the productivity puzzle is largely explained as a consequence of fundamental structural changes that are underway, transforming industrial economies into knowledge economies. Secondly, the contribution foresees a post-COVID-19 scenario that will likely lead to a pronounced increase in labour productivity growth. This depends, however, on whether the current push for digitization will be backed by actual investments into digitization and the necessary complementary investments in (business and public) intangible capital.
    Keywords: productivity puzzle,intangible capital,labour productivity growth,structural change,COVID-19 crisis,re-measurement of GDP
    JEL: E22 F45 O32 O34 O47 O52
    Date: 2021
  10. By: Alberto Galasso; Mark Schankerman
    Abstract: We study the effects of an institution that pools patents across geographical markets on the licensing and adoption of life-saving drugs in low- and middle-income countries. Using data on licensing and sales for HIV, hepatitis C and tuberculosis drugs, we show that there is an immediate and large increase in licensing by generic firms when a patent is included in the Medicines Patent Pool (MPP). The effect is heterogeneous across countries. The findings are robust to identification strategies to deal with endogeneity of MPP patents and countries. The impact on actual entry and sales, however, is much smaller than on licensing, which is due to geographic bundling of licenses by the MPP. More broadly, the paper highlights the potential of pools in promoting technology diffusion in developing countries.
    JEL: I18 O31 O34
    Date: 2021–03
  11. By: Stephen, Dimity; Stahlschmidt, Stephan
    Abstract: This study updates the annual comparative analysis of the performance and structures of the German science system. We use several bibliometric indicators of productivity, impact, and international collaboration to assess Germany's performance for the period 1995-2019 compared against 22 countries and the EU13, EU14, EU27, and OECD country groups, and an intra-Germany assessment of six sectors of the science system. Overall, all countries increased their scientific productivity over time, with particularly strong growth in China and India. China now produces nearly 25 percent of global publications and the USA, Germany, and other leading countries have accordingly lost shares. Germany continued to publish in highly visible journals and attract above-average citations. Notably, China increased both its visibility and impact to above-average levels for the first time in 2017. International collaboration continued to increase, and Germany now collaborates on 60 percent of publications, up from 50 percent a decade ago, a level in line with other large European countries, and remains a sought-after collaboration partner alongside the USA.
    Date: 2021
  12. By: Min Zhu; Chiara Tomasi
    Abstract: Using transaction-level data for the Chinese manufacturing sector, this paper provides a comprehensive analysis of the causal e↵ect that firms’ imports have on quality upgrading. We implement an empirical strategy that delivers quality estimates at the firm-product-destination level. Exploiting this measure and accounting for the endogeneity of imported inputs, this paper shows that sourcing from abroad boosts export quality. Moreover, the analysis indicates that quality improvements are particularly strong when firms purchase inputs from high-income countries. Taken together, these results provide direct evidence that quality upgrading is an important mechanism through which imports favor firms’ export performance.
    Date: 2021
  13. By: Rho, Yeirae; Fabrizi, Simona; Lippert, Steffen
    Abstract: We investigate the determinants of firm absorptive capacity, with a particular focus on the effect of employee characteristics, and study how it affects a firm’s ability to generate new knowledge. Using administrative and national survey data on individuals and businesses, we first estimate absorptive capacity measures for New Zealand firms. We then show that the share of employees with international experience and the average skill level of employees have a positive impact on a firm’s learning capabilities, and that the positive effect of employees with international experience is greater if the firm also has a highly skilled workforce overall. We finally find that a firm's absorptive capacity is highly positively correlated to the likelihood of the firm innovating.
    Keywords: Absorptive capacity, knowledge spillover, innovation, linked employer-employee data
    JEL: D20 D22 D24 O31
    Date: 2021–01–02
  14. By: Liu, Yang (Asian Development Bank Institute); Zhong, Sheng (Asian Development Bank Institute)
    Abstract: We investigate the long-run cross-economy dynamics in energy productivity across the world. We construct a data set comprising value-added and energy use data on 18 productive sectors in 47 economies over the period 2000–2015. First, we analyze the cross-economy distribution of energy productivity. Compared with 2000, this distribution shifted more toward the world average level in 2015. By using an index decomposition approach, we disentangle energy efficiency effect and economic structure effect as key determinants of the overall energy productivity improvement. Our results show that energy productivity progress is to a large extent driven by technological change but offset by economic structural change. Second, we explore the long-run distribution of energy productivity. Diverse patterns of energy productivity changes across these economies contradict the implicit assumption of standard convergence analysis. To address this issue, we adopt the Markov chain transition matrix. In a long-run steady state, around 64% of sample economies upgrade toward the upper end of the whole distribution, with their energy productivity performing better than the world average. Around 18% of sample economies remain at a level lower than the world average. The results suggest the persistent gap in energy efficiency across economies.
    Keywords: energy productivity; decomposition; transition matrix; convergence
    JEL: O13 Q01 Q56
    Date: 2021–01–29
  15. By: Johannes van der Pol; Jean-Paul Rameshkoumar; Sarah Teulière; Thierry Bazerque
    Abstract: In France, Regions do not make their own innovation policies, this is the role of the State. A Region implements national policies and uses grants and subsidies to create and dynamize innovation eco-systems important for its economic development. The Region’s role is therefore largely influential. In order to influence one needs to how and when to exert this influence. A precise understanding of an innovation eco-system is therefore of vital importance. On the occasion of the venue of a Nobel laureate to the French region of Nouvelle-Aquitaine the regional counsel aimed to connect her with the regional innovation eco-system around her research. The purpose of this paper is to show methods and techniques using patents, scientific publications and non-patent literature citations that can help with the identification of an innovation eco-system and how to integrate a researcher into this eco-system.
    Keywords: NPL ; Technology Intelligence ; Patents ; innovation networks
    JEL: R11 O34
    Date: 2021

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