nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2021‒06‒14
fifteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Patenting in 4IR Technologies and Firm Performance By BENASSI Mario; GRINZA Elena; RENTOCCHINI Francesco; RONDI Laura
  2. Barriers to Growth-Enhancing Structural Transformation: The Role of Subnational Differences in Intersectoral Productivity Gaps By Paul, Saumik; Raju, Dhushyanth
  3. Technological breakthroughs in European regions: the role of related and unrelated combinations By Ron Boschma; Ernest Miguelez; Rosina Moreno; Diego B. Ocampo-Corrales
  4. Biopharmaceutical R&D outsourcing: Short-term gain for long-term pain? By Billette de Villemeur, Etienne; Scannell, Jack; Versaevel, Bruno
  5. The emergence of Artificial Intelligence in European regions: the role of a local ICT base By Jing Xiao; Ron Boschma;
  6. The Macroeconomic Effects of a Carbon Tax to Meet the U.S. Paris Agreement Target: The Role of Firm Creation and Technology Adoption By Alan Finkelstein Shapiro; Gilbert E. Metcalf
  7. “Salvation and Profit”: Deconstructing the Clean-Tech Bubble By Vincent Giorgis; Tobias Huber; Didier Sornette
  8. Structural change and the income of nations By Cynthia Armas; Fernando Sánchez-Losada
  9. Stepping-up innovation in manufacturing firms: Knowledge combinations in an Italian local production system By Plechero, Monica; Grillitsch, Markus
  10. The birth of new high growth enterprises: Internationalisation through new digital technologies By Teruel Carrizosa, Mercedes; Coad, Alexander; Domnick, Clemens; Flachenecker, Florian; Harasztosi, Péter; Janiri, Mario Lorenzo; Pál, Rozália
  11. WP 05-21 - Business dynamism and productivity growth in Belgium By Michel Dumont
  12. The Information and Communication Technologies-Economic Growth Nexus in Tunisia: A Cross-Section Dynamic Panel Approach By Mounir Dahmani; Mohamed Mabrouki; Adel Ben Youssef
  13. From organizational capabilities to corporate performances: at the roots of productivity slowdown By Stefano Costa; Stefano De Santis; Giovanni Dosi; Roberto Monducci; Angelica Sbardella; Maria Enrica Virgillito
  14. COVID-19 and Implications for Automation By Alex Chernoff; Casey Warman
  15. The political reception of innovations By Jeffry Frieden; Arthur Silve

  1. By: BENASSI Mario; GRINZA Elena; RENTOCCHINI Francesco (European Commission - JRC); RONDI Laura
    Abstract: We investigate whether firm performance is related to the accumulated stock of technological knowledge associated with the Fourth Industrial Revolution (4IR) and, if so, whether the firm’s history in 4IR technology development affects such a relationship. We exploit a rich longitudinal matched patent-firm data set on the population of large firms that filed 4IR patents at the European Patent Office (EPO) between 2009 and 2014, while reconstructing their patent stocks from 1985 onwards. To identify 4IR patents, we use a novel two-step procedure proposed by EPO (2020), based on Cooperative Patent Classification (CPC) codes and on a full-text patent search. Our results show a positive and significant relationship between firms’ stocks of 4IR patents and labour and total factor productivity. We also find that firms with a long history in 4IR patent filings benefit more from the development of 4IR technological capabilities than later applicants. Conversely, we find that firm profitability is not significantly related to the stock of 4IR patents, which suggests that the returns from 4IR technological developments may be slow to be cashed in. Finally, we find that the positive relationship with productivity is stronger for 4IR-related wireless technology and for AI, cognitive computing and big data analytics.
    Keywords: Fourth Industrial Revolution (4IR); patent applications; technology development; firm performance; longitudinal matched patent-firm data; Industry 4.0
    Date: 2021–05
  2. By: Paul, Saumik (Newcastle University); Raju, Dhushyanth (World Bank)
    Abstract: The movement of workers from the farm sector to a more productive nonfarm sector has failed to generate significant gains in labor productivity in recent decades in many developing countries. This paper offers a new perspective into the barriers to growth-enhancing structural transformation, combining structural modeling with enterprise census data from Ghana. We argue that subnational differences in the intersectoral productivity gap between the nonfarm informal and formal sectors constrain the productivity gain from structural transformation. In Ghana, intersectoral productivity gaps among the richer regions are on average three times larger than among the poorer regions. We model the disparity in regional intersectoral productivity gaps as reflecting the disparity in the regional misallocation of labor between the informal and formal sectors and identify misallocation as the output wedge between the informal and formal sectors. Simulations suggest that a more productive nonfarm informal sector reduces the disparity in regional intersectoral productivity gaps and, in turn, increases national productivity and the contribution of structural transformation to national productivity. For example, a 90-percent reduction in the disparity in regional intersectoral productivity gaps raises Ghana's national aggregate productivity by 11.9 percent and the contribution of structural transformation to productivity by 19.7 percent.
    Keywords: structural transformation, misallocation of resources, labor productivity, nonfarm enterprises, subnational regions, informal and formal sectors, Ghana
    JEL: D24 F15 F43 N10 O11 O14 O47
    Date: 2021–06
  3. By: Ron Boschma; Ernest Miguelez; Rosina Moreno; Diego B. Ocampo-Corrales
    Abstract: This paper analyzes if the emergence and occurrence of breakthrough technologies in 277 European regions in the period 1981 to 2010 is related to the existing technological portfolio of regions. The study shows that, by far, most combinations breakthrough inventions make are between related technologies: almost no breakthrough patent makes combinations between unrelated combinations only. We also find that breakthrough inventions primarily combine and cite technological classes that are present in the region. Regressions show that the occurrence of breakthrough patents in a technology in a region is positively affected by the local stock of technologies that is related to such technology, but we do not find such an effect for the local stock of unrelated technologies, in contrast to studies that suggest otherwise. However, the region’s ability to enter new breakthrough inventions in a technology relies on the combination of knowledge that is both related and unrelated to such technology.
    Keywords: relatedness, unrelatedness, technological breakthroughs, regional diversification, European regions
    JEL: O18 O31 O33 R11
    Date: 2021–06
  4. By: Billette de Villemeur, Etienne; Scannell, Jack; Versaevel, Bruno
    Abstract: From the perspective of pharmaceutical companies, R&D outsourcing offers a range of benefits. For example, costs that were otherwise fixed can become variable, and firms can gain rapid access to a large set of new technologies. Recent theoretical work has added to the list by connecting R&D activities characterized by economies of scope and knowledge spillovers -- those that are likely to have the biggest effect on industry economics and social welfare – to the ability of large drug companies to capture a disproportionate share of economic value from, and transfer a disproportionate share of financial risk to, small new technology providers. The low profitability and high risk associated with the provision of such outsourced R&D activities reduce incentives to invest in new for-profit ventures that specialize in the most promising early-stage projects. We hypothesize that the short- to medium-term efficiency gains from R&D outsourcing may, therefore, be offset by slower innovation in the long run.
    Keywords: research; development; biotechnology; pharmaceuticals; externalities
    JEL: L13 L65 O31
    Date: 2021
  5. By: Jing Xiao; Ron Boschma;
    Abstract: The purpose of this study is to investigate how a regional knowledge base in Information and Communication Technologies (ICTs) influences the emergence of AI technologies in European regions. Replying on patent data and studying the knowledge production of AI technologies in 233 European regions in the period of 1994 to 2017, our study reveals three results. First, ICTs are a major knowledge source of AI technologies and their importance has been increasing over time. Second, a regional knowledge base in ICTs is highly relevant for regions to engage in AI inventing. Third, the effects of regional knowledge base of ICTs are stronger for regions that recently caught up in AI inventing. Our findings suggest that ICTs play a critically enabling role for regions to diversify into AI technologies, especially in catching-up regions.
    Keywords: Artificial intelligence (AI), regional diversification, Information and Communications Technologies (ICTs), technological relatedness, General Purpose Technologies (GPTs), Europe
    JEL: O33 R11 O31
    Date: 2021–05
  6. By: Alan Finkelstein Shapiro (Tufts University); Gilbert E. Metcalf (Tufts University)
    Abstract: We analyze the quantitative labor market and aggregate effects of a carbon tax in a framework with pollution externalities and equilibrium unemployment. Our model incorporates endogenous labor force participation and two margins of adjustment influenced by carbon taxes: firm creation and green production-technology adoption. A carbon-tax policy that reduces carbon emissions by 35 percent - roughly the emissions reductions that will be required under the Biden Administration's new commitment under the Paris Agreement - and transfers the tax revenue to households generates mild positive long-run effects on consumption and output; a marginal increase in the unemployment and labor force participation rates; and an expansion in the number and fraction of firms that use green technologies. In the short term, the adjustment to higher carbon taxes is accompanied by gradual gains in output and consumption and a negligible expansion in unemployment. Critically, abstracting from endogenous firm entry and green-technology adoption implies that the same policy has substantial adverse short- and long-term effects on labor income, consumption, and output. Our findings highlight the importance of these margins for a comprehensive assessment of the labor market and aggregate effects of carbon taxes.
    Keywords: Environmental and Fiscal Policy, Carbon Tax, Endogenous Firm Entry, Green Technology Adoption, Search Frictions, Unemployment, Labor Force Participation
    JEL: E20 E24 E62 H23 O33 Q52 Q55
    Date: 2021–05
  7. By: Vincent Giorgis (ETH Zürich); Tobias Huber (ETH Zürich); Didier Sornette (ETH Zürich - Department of Management, Technology, and Economics (D-MTEC); Swiss Finance Institute; Southern University of Science and Technology; Tokyo Institute of Technology)
    Abstract: From 2004 to 2008, a bubble formed in clean technologies, such as solar, biofuels, batteries, and other renewable energy sources. In this paper, we analyze this clean-tech bubble through the lens of the Social Bubble Hypothesis, which holds that strong social interactions between enthusiastic supporters weave a network of reinforcing feedbacks that lead to widespread endorsement and extraordinary commitment by those involved. We present a detailed synthesis of the development of the clean-tech bubble, its history, and the role of venture capital and government funding in catalyzing it. In particular, we dissect the underlying narrative that was fueling the bubble. As bubbles can be essential in the process of accelerating the development of emerging technologies and diffusion of technological innovations, we present evidence that the clean-tech bubble constituted an example of an innovation-accelerating process.
    Keywords: Financial Bubbles, Narrative Economics, Technological Innovation, Clean Tech, Energy, Venture Capital
    JEL: C54 D61 D70 F64 G01 O25
    Date: 2021–05
  8. By: Cynthia Armas (Universitat de Barcelona); Fernando Sánchez-Losada (Universitat de Barcelona)
    Abstract: An increase in the supply of skilled labor has been common across the world. However, despite the rise in skilled labor force, not all countries have achieved high income levels, even when their structural transformation follows the same path (from agriculture to industry and, then, from industry to services). Skilled workers might end up in either high or low TFP sectors, according to two opposite theories of structural change (skill-biased structural transformation and stagnant structural transformation). We show that directed technical change is needed to achieve skill-biased structural transformation and, therefore, skilled workers are allocated to high TFP sectors. We present macrodata and microdata evidence to identify the existence of directed technical change. We reveal that in the U.S., South Korea and France, skilled workers have ended up in high TFP sectors due to the existence of directed technical change in the process of structural transformation, but not in Canada. There is a lack of clear evidence for Italy and Spain.
    Keywords: Structural change, directed technical change, unskilled and skilled sectors.
    JEL: J24 O14
    Date: 2021
  9. By: Plechero, Monica (Ca’ Foscari University of Venice); Grillitsch, Markus (CIRCLE, Lund University)
    Abstract: Industry 4.0 requires from manufacturing firms to become more innovative in order to remain relevant and competitive. To step-up firm innovation, several studies in Innovation and Economic Geography foreground that firms need to combine knowledge in novel ways either within local industrial structures or over distance. The contribution of this paper is to investigate in-depth how manufacturing firms with traditional roots combine new generative knowledge in and beyond a local production system (LPS), what enables them to access and integrate such knowledge from external sources, and how this relates to the firms’ innovation performance, with a focus on radical and varied forms of innovation. The contribution of this paper lies also in a mixed-methods research approach, which combines a population-based survey of mechatronics firms in an Italian LPS, with in-depth interviews. This allows for a qualitative interpretation of the causes of the identified distributions and correlations. The main finding of the paper is that firms generating radical innovations and varied forms of innovation combine unrelated types of knowledge in-house and through external sources. The pattern is that the traditional manufacturing knowledge of mechatronics firms still prevails but that firms increasingly complement this with new knowledge, in particular science-based analytical knowledge. Firms that have acquired complementary knowledge in-house are able to access new knowledge nationally or internationally. Even though firms source knowledge relatively frequently within the local production system, the firms who access new knowledge nationally and internationally stand out in terms of their innovation performance.
    Keywords: Industry 4.0; knowledge bases; local productive system; innovation; manufacturing firms
    JEL: O33 R11
    Date: 2021–06–02
  10. By: Teruel Carrizosa, Mercedes; Coad, Alexander; Domnick, Clemens; Flachenecker, Florian; Harasztosi, Péter; Janiri, Mario Lorenzo; Pál, Rozália
    Abstract: This paper explores the relationship between new digital technologies, internationalisation activity and its impact on High Growth Enterprises (HGEs), using the EIB Group Survey of Investment and Investment Finance and ORBIS data for 27 EU Member States and the United Kingdom. After controlling for sample selection bias, our results suggest that being a HGE is positively associated with the probability that a firm conducts international activities, particularly FDI. Conversely, the internationalisation process seems to trigger strong subsequent firm-growth for FDI. Furthermore, we show evidence on the positive association between firms that are internationalised and those adopting new digital technologies. The adoption of new digital technologies is indirectly related to the status of being a HGE via internationalisation activity in the current period. Our results highlight the complex influence of exporting and FDI on the capacity to become a HGE and the role of new digital technologies in this process.
    Keywords: Digital technologies,export,FDI,HGE,internationalisation
    JEL: F14 L21 O31
    Date: 2021
  11. By: Michel Dumont
    Abstract: This paper considers the evolution in business dynamism and its potential link with productivity growth in Belgium. Statistics on business creation, the exit of enterprises and within-industry reallocation are presented. Data on Belgian firms, covering the period 2003-2017, are used for a decomposition of productivity growth. The paper provides robust indications of the substantial contribution of productivity growth of startups in the early years after entry.
    Keywords: Start-ups, Young firms, Reallocation, Efficiency, Productivity growth
    JEL: D22 D24 L25 L26 M13
    Date: 2021–05–28
  12. By: Mounir Dahmani (Université de Gafsa, Tunisie); Mohamed Mabrouki (Université de Gafsa, Tunisie); Adel Ben Youssef (Université Côte d'Azur, France; GREDEG CNRS)
    Abstract: The rapid diffusion of information and communication technologies (ICT) is becoming an important determinant of national economic growth. This paper examines the relationship between development of ICT and economic growth in Tunisia based on a sector analysis. We employ the common correlated effect mean group (CCEMG) and augmented mean group (AMG) methods and annual panel data for 1997 to 2017, to study the significant positive relationship between ICT and economic growth in Tunisia. Our sector analysis shows that the effect of ICT on value added is heterogenous depending on the sector of activity and provides three main findings. First, in some sectors such as financial services, transport, building and civil engineering, hotel and restaurant services and other market services ICT have a positive and significant impact on value added. These sectors benefit from use of ICT. Second, in some sectors such as trade and various manufacturing industries, ICT has a negative and significant impact on value added. These sectors need to be well organized and well managed to avoid domination by informalities. Third, in some sectors such as public administration there is a productivity paradox and despite huge investment in ICT they have no impact on value added due to the absence of a deep organizational change.
    Keywords: ICT diffusion index, capital, labor, economic growth, Tunisia, dynamic panel, cross-sectional, CCEMG, AMG
    Date: 2021–05
  13. By: Stefano Costa; Stefano De Santis; Giovanni Dosi; Roberto Monducci; Angelica Sbardella; Maria Enrica Virgillito
    Abstract: This paper is one of the first attempts at empirically identifying organisational capabilities - in this work concerning Italian firms. Together, it proposes new evidence on the link between capabilities and economic performances. In order to do so, we employ the Indagine Multiscopo del Censimento Permanente delle Imprese (IMCPI), a survey carried out by the Italian Statistical Office (ISTAT) in 2019, covering the three-year period 2016-2018, addressing a wide range of organizational characteristics including various organizational routines, human resource management, internationalisation strategies and many others. Our contribution is threefold: first, we aim at detecting what practices and combinations of them result in underlying different capabilities; second, we propose a taxonomy of the production system, both at firm- and sector-level based on the mapping of such capabilities, third we study the performance outcomes of different capability-taxa in terms of productivity and employment growth.
    Keywords: Organizational capabilities; productivity slowdown; employment growth; learning.
    Date: 2021–05–31
  14. By: Alex Chernoff; Casey Warman
    Abstract: COVID-19 may accelerate the automation of jobs as employers invest in technology to safeguard against pandemics. We identify occupations that have high automation potential and also exhibit a high risk of viral infection. We examine regional variation in terms of which U.S. local labor markets are most at risk. Next, we outline the differential impacts COVID-19 may have on different demographic groups. We find that the highest-risk occupations in the U.S. are those held by females with mid- to low wage and education levels. Using comparable data for 25 other countries, we also find that women in this demographic are at the highest risk internationally. We examine monthly employment data from the U.S. and find that women in high-risk occupations experienced a larger initial decline in employment and a weaker recovery during the pandemic.
    Keywords: Coronavirus disease (COVID-19); International topics; Labour markets
    JEL: I14 I24 J15 J16 R12
    Date: 2021–05
  15. By: Jeffry Frieden; Arthur Silve
    Abstract: Why do some societies embrace innovative technologies, policies, and ideas, while others are slow to adopt, or even resist, them? We focus on features of an innovation that are expected to affect the incumbent elite's economic activities, and hence the elite's reaction. The elite can choose whether to appropriate the innovation for itself; encourage its adoption; tax, regulate, or limit or block it. Six features of the innovation affect the elite response: i) whether it is easy to replicate; ii) whether it complements or competes with the elite's sources of income; iii) whether its impact is broad or narrow; iv) whether it is location-dependent, and v) concealable; vi) whether it requires large fixed costs. Some of these factors have been considered in other work; here we assess them together. We provide illustrative evidence of the relevance and generality of the model to understand the fate of a variety of innovations.
    Keywords: : innovation, regulation, rent-seeking
    JEL: D72 L50 O30
    Date: 2021

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