nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2021‒07‒19
twenty papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. "Migrant Inventors as Agents of Technological". By Ernest Miguelez; Andrea Morrison
  2. Financial Innovation in the 21st Century: Evidence from U.S. Patents By Josh Lerner; Amit Seru; Nick Short; Yuan Sun
  3. The Diffusion of Disruptive Technologies By Nicholas Bloom; Tarek Alexander Hassan; Aakash Kalyani; Josh Lerner; Ahmed Tahoun
  4. Product innovation, diffusion and endogenous growth By Klein, Michael A; Sener, Fuat
  5. Technology, market structure and the gains from trade By Giammario Impullitti; Omar Licandro; Pontus Rendahl
  6. Structural Change towards Services By Werner Hölzl
  7. Migration and Growth in a Schumpeterian Growth Model with Creative Destruction By Parello, Carmelo Pierpaolo
  8. The Information and Communication Technology Cluster in the Global Value Chain Network By Amat Adarov
  9. The impact of local and foreign automation on labor market outcomes in emerging countries By Diaz Pavez, Luis R.; Martínez-Zarzoso, Inmaculada
  10. Paying off the Competition: Market Power and Innovation Incentives By Xuelin Li; Andrew W. Lo; Richard T. Thakor
  11. Technological Change and Domestic Outsourcing By Antonin Bergeaud; Clément Malgouyres; Clément Mazet-Sonilhac; Sara Signorelli
  12. Technological Growth and Hours in the Long Run: Theory and Evidence By Magnus Reif; Mewael F. Tesfaselassie; Maik H. Wolters
  13. Servitization Across Countries and Sectors: Evidence from World Input-Output Data By Klaus S. Friesenbichler; Agnes Kügler
  14. Economic development and the structure of cross-technology interactions By Anton Bondarev; Frank C. Krysiak
  15. Broadband speed and firm entry in digitally intensive sectors: The case of Croatia By Drilo, Boris; Stojcic, Nebojsa; Vizek, Maruska
  16. The Knowledge Mobility of Renewable Energy Technology By P. G. J. Persoon; R. N. A. Bekkers; F. Alkemade
  17. Dynamics of Disruption in Science and Technology By Michael Park; Erin Leahey; Russell Funk
  18. Grasping transformative regional development from a co-evolutionary perspective – a research agenda By Camilla Chlebna; Hanna Martin; Jannika Mattes
  19. The Publicness of Publicly Funded Research By Link, Albert; Wagner, Caroline
  20. Digging into Environmental Productivity: Is It All about Technology? By Filippo Belloc; Edilio Valentini

  1. By: Ernest Miguelez (GREThA UMR CNRS 5113 – Université de Bordeaux, France. AQR-IREA – University of Barcelona, Spain.); Andrea Morrison (ICRIOS & Department of Management and Technology - Bocconi University, Italy. Department of Human Geography and Planning – Utrecht University, The Netherlands.)
    Abstract: How do regions enter new and distant technological fields? Who is triggering this process? This work addresses these compelling research questions by investigating the role of migrant inventors in the process of technological diversification. Immigrant inventors can indeed act as carriers of knowledge across borders and influence the direction of technological change. We test these latter propositions by using an original dataset of immigrant inventors in the context of European regions during the period 2003-2011. Our findings show that: immigrant inventors generate positive local knowledge spillovers; they help their host regions to develop new technological specialisations; they trigger a process of unrelated diversification. Their contribution comes via two main mechanisms: immigrant inventors use their own personal knowledge (knowledge creation); they import knowledge from their home country to the host region (knowledge transfer). Their impact is maximised when their knowledge is not recombined with the local one (in mixed teams of inventors), but it is reused (in teams made by only migrant inventors). Our work contributes to the existing literature of regional diversification by providing fresh evidence of unrelated diversification for European regions and by identifying important agents of structural change. It also contributes to the literature of migration and innovation by adding fresh evidence on European regions and by unveiling some of the mechanisms of immigrants’ knowledge transmission.
    Keywords: Patents, Migration, Technological diversification, Relatedness, Europe. JEL classification: O30, F20, F60.
    Date: 2021–07
  2. By: Josh Lerner; Amit Seru; Nick Short; Yuan Sun
    Abstract: We develop a unique dataset of 24 thousand U.S. finance patents granted over last two decades to explore the evolution and production of financial innovation. We use machine learning to identify the financial patents and extensively audit the results to ensure their reasonableness. We find that patented financial innovation is substantial and economically important, with the number of annual grants expanding from a few dozen in the 1990s to over 2000 in the 2010s. The subject matter of financial patents has changed, consistent with the industry’s shift in revenue and value-added towards household investors and borrowers. The surge in financial patenting was driven by information technology firms and others outside of financial sector, which collectively accounted for 69% of the awards. The location of innovation has shifted, with banks moving this activity from regions with tight financial regulation to more permissive ones. High-tech regions have attracted financial innovation by payments, IT, and other non-financial firms. Turning to the source of these ideas, while academic knowledge remained associated with more valuable patents, citations in finance patents to academic papers, especially in those by banks, fell sharply.
    JEL: G20 O31
    Date: 2021–07
  3. By: Nicholas Bloom; Tarek Alexander Hassan; Aakash Kalyani; Josh Lerner; Ahmed Tahoun
    Abstract: We identify novel technologies using textual analysis of patents, job postings, and earnings calls. Our approach enables us to identify and document the diffusion of 29 disruptive technologies across firms and labor markets in the U.S. Five stylized facts emerge from our data. First, the locations where technologies are developed that later disrupt businesses are geographically highly concentrated, even more so than overall patenting. Second, as the technologies mature and the number of new jobs related to them grows, they gradually spread across space. While initial hiring is concentrated in high-skilled jobs, over time the mean skill level in new positions associated with the technologies declines, broadening the types of jobs that adopt a given technology. At the same time, the geographic diffusion of low-skilled positions is significantly faster than higher-skilled ones, so that the locations where initial discoveries were made retain their leading positions among high-paying positions for decades. Finally, these technology hubs are more likely to arise in areas with universities and high skilled labor pools.
    JEL: O31 O32
    Date: 2021–07
  4. By: Klein, Michael A; Sener, Fuat
    Abstract: We develop a model of Schumpeterian growth featuring a stochastic diffusion process where the rate of commercial success of product innovations is endogenously determined by advertising intensity. We consider both informative advertising, which young technological leaders use to increase the probability of diffusion, and defensive advertising, which incumbents use to prevent the diffusion of competing products. Economic growth depends positively on the arrival rate of product innovations and the diffusion rate of innovations into the mainstream market. We show that R&D subsidies shift relative investment incentives towards innovation and away from diffusion. This creates an inverted U-shaped relationship between R&D subsidies and both economic growth and welfare as innovations arrive more frequently, but fewer commercialize successfully. We find that lower advertising costs increase diffusion, growth, and welfare when advertising is purely informative. When we include defensive advertising, lower costs lead to socially wasteful increases in resources devoted to advertising without large increases in diffusion, reducing growth and welfare.
    Keywords: Endogenous growth; innovation; diffusion; commercialization; advertising; marketing; R&D subsidies
    JEL: M30 O31 O33
    Date: 2021–06–25
  5. By: Giammario Impullitti; Omar Licandro; Pontus Rendahl
    Abstract: We study the gains from trade in a model with oligopolistic competition, heterogeneous firms and innovation, and provide a formula to decompose the mechanism. The new insight we provide is that market concentration can be a welfare-relevant feature of market power above and beyond markup dispersion. Trade liberalisation increases foreign competition and reduces the number of active firms in the market, thereby increasing concentration. A more concentrated economy is more efficient due to increasing returns in production. Moreover, higher concentration produces a scale effect on firms’ incentives to innovate, which increases welfare via productivity improvements. In the calibrated version of the model we show that a trade-induced increase in concentration contributes substantially to the gains from trade, mostly via its stimulating effect on innovation. Sizeable gains also come from the reduction of the inefficiency produced by trade in identical goods; i.e. through a reduction in reciprocal dumping. Changes in markup dispersion, in contrast, have only negligible effects.
    Keywords: Gains from Trade, Heterogeneous Firms, Oligopoly, Innovation, Endogenous Markups, Market Concentration
    Date: 2021
  6. By: Werner Hölzl
    Abstract: This paper examines broad patterns of structural change for a large number of countries on a global scale and for a smaller set of advanced industrialised countries over time. The findings show that structural change over the past decades followed the three-sector hypothesis. The past decades were characterised by the rise of the service sector, driven especially by business services and non-market service. At the same time as manufacturing sectors are declining in terms of shares, they remain the sectors with the highest contributions to aggregate productivity growth. An analysis of determinants of structural change confirms that country competencies related to institutional quality, knowledge generation and industrial application of the new knowledge are an important driving force of structural changes towards services, but that they have a heterogeneous impact on manufacturing subsectors. High technology manufacturing share seems not to be characterised by a tendency to decline with the development of country competencies. Broad policy implications are discussed.
    Keywords: Structural Change, Service Share, Manufacturing Share
    Date: 2021–07–05
  7. By: Parello, Carmelo Pierpaolo
    Abstract: This paper incorporates endogenous migration into a second-generation Schumpeterian growth model to study how migration, innovation and growth interact one another. I find that migration always enhances the rates of innovation and growth of the receiving economy, but also that the other way round is not true when the gap in technical knowledge between country is fixed over time. However, when the technology gap is allowed to adjusts endogenously, I find that implementing pro-innovation policies in the receiving economy shrinks immigration flows and reduces the across-country technology.
    Keywords: R&D-based Growth, Labor Migration, R&D policy, Technology Transfer
    JEL: J61 O3 O4
    Date: 2021–06–09
  8. By: Amat Adarov (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Global value chains (GVCs) are among the critical factors shaping the world economy nowadays. Within cross-border production networks an increasingly important role has been played by the information and communication technology (ICT) sectors. Based on the multi-country input-output database recently developed by the Vienna Institute for International Economic Studies, covering the period 2005-2018, this policy brief examines the structure and the dynamics of global value chains associated with the ICT sectors. To this end we use complex network analysis techniques to characterise the overall topology of the international ICT cluster in the GVC network, identify the key countries and sectors therein from the perspective of their connectivity. The analysis shows that the ICT GVC network is dominated by the mutual value-added trade linkages between China, South Korea and Taiwan in the Computers and electronics manufacturing sector. These sectors are heavily interlinked via backward and forward GVC linkages with a large number of ICT and non-ICT sectors, many of which are located in the USA, China and Germany. In the recent decade, there has been a major shift in terms of importance to the GVC network from ICT manufacturing towards ICT services, especially prominent for the ICT services sector in Ireland, which has become among the most interconnected sectors in the global ICT cluster.
    Keywords: global value chains; ICT sector; network analysis; digitalisation
    JEL: F10 F14 F15
    Date: 2021–07
  9. By: Diaz Pavez, Luis R.; Martínez-Zarzoso, Inmaculada
    Abstract: In the XXI century, the labor market effects of automation have gained significant attention from scholars and policymakers alike. Concerns about potential negative effects are particularly relevant in emerging countries, where a rapid acceleration of robot adoption and an increasing involvement in global value chains has been observed in recent years, with the subsequent increase in exposure to foreign competition. This paper estimates the effect of local and foreign robots on labor market outcomes and labor shares using a panel dataset composed of 16 sectors and ten emerging countries from 2008 to 2014. The endogeneity of robots' adoption is addressed with an instru- mental variable approach and using a shift-share index of exposure to foreign robots. When all sectors are considered, the main results show that only foreign robot adoption, but not local, has affected employment, whereas no effects on the labor share are found. When exploring sectoral heterogeneity, we find that the foreign robots' effect on employment has mainly occurred in the agricultural and industrial machinery sectors, the former being driven by a reduction of offshoring and affecting nearly 60% of jobs in emerging countries.
    Keywords: Automation,Labor markets,Inequality,Emerging countries
    JEL: J23 O33 F16
    Date: 2021
  10. By: Xuelin Li; Andrew W. Lo; Richard T. Thakor
    Abstract: How does a firm’s market power in existing products affect its incentives to innovate? We explore this fundamental question using granular project-level and firm-level data from the pharmaceutical industry, focusing on a particular mechanism through which incumbent firms maintain their market power: “reverse payment” or “pay-for-delay” agreements to delay the market entry of competitors. We first show that when firms are unfettered in their use of “pay-for-delay” agreements, they reduce their innovation activities in response to the potential entry of direct competitors. We then examine a legal ruling that subjected these agreements to antitrust litigation, thereby reducing the incentive to enter them. After the ruling, incumbent firms increased their net innovation activities in response to competitive entry. These effects center on firms with products that are more directly affected by competition. However, at the product therapeutic area level, we find a reduction in innovation by new entrants after the ruling in response to increased competition. Overall, these results are consistent with firms having reduced incentives to innovate when they are able to maintain their market power, highlighting a specific channel through which this occurs.
    JEL: D42 D43 G31 K21 L41 L43 L65 O31 O32
    Date: 2021–06
  11. By: Antonin Bergeaud (Banque de France - Banque de France - Banque de France); Clément Malgouyres (IPP - Institut des politiques publiques, PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 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); Clément Mazet-Sonilhac (Banque de France - Banque de France - Banque de France, Institut d'Études Politiques [IEP] - Paris); Sara Signorelli (UvA - University of Amsterdam [Amsterdam])
    Abstract: Domestic outsourcing has grown substantially in developed countries over the past two decades. This paper addresses the question of the technological drivers of this phenomenon by studying the impact of the staggered diffusion of broadband internet in France during the 2000s. Our results confirm that broadband technology increases firm productivity and the relative demand for high-skill workers. Further, we show that broadband internet led firms to outsource some non-core occupations to service contractors, both in the low and high-skill segments. In both cases, we find that employment related to these occupations became increasingly concentrated in firms specializing in these activities, and was less likely to be performed in-house within firms specialized in other activities. As a result, after the arrival of broadband internet, establishments become increasingly homogeneous in their occupational composition. Finally, we provide suggestive evidence that high-skill workers experience salary gains from being outsourced, while low-skill workers lose out.
    Keywords: Broadband,Firm organization,Labor market,Outsourcing
    Date: 2021–06
  12. By: Magnus Reif; Mewael F. Tesfaselassie; Maik H. Wolters
    Abstract: Over the last decades, hours worked per capita have declined substantially in many OECD economies. Using a neoclassical growth model with endogenous work-leisure choice, we assess the role of trend growth slowdown in accounting for the decline in hours worked. In the model, a permanent reduction in technological growth decreases steady state hours worked by increasing the consumption-output ratio. Our empirical analysis exploits cross-country variation in the timing and the size of the decline in technological growth to show that technological growth has a highly significant positive effect on hours. A decline in the long-run trend of technological growth by one percentage point is associated with a decline in trend hours worked in the range of one to three percent. This result is robust to controlling for taxes, which have been found in previous studies to be an important determinant of hours. Our empirical finding is quantitatively in line with the one implied by a calibrated version of the model, though evidence for the model’s implication that the effect on hours works via changes in the consumption-output ratio is rather mixed.
    Keywords: productivity growth, technological growth, working hours, employment
    JEL: E24 O40
    Date: 2021
  13. By: Klaus S. Friesenbichler; Agnes Kügler
    Abstract: This paper uses the supply tables underlying WIOT data to explore the provision of services by manufacturing. The service shares differ substantially across countries and sectors, while they remain largely stable over time. Findings from a latent class analysis reveal that servitization in-crease with labour productivity. The service intensities in the sectoral production mix of broadly defined manufacturing sectors are lower in countries with higher manufacturing shares. This holds for both catching-up and developed economies. Yet, servitization is largely unrelated to productivity and employment growth. We therefore argue that the degree of servitization is contingent on and an attribute of the respective economic model in which a sector operates.
    Keywords: Servitiziation, employment, productivity, latent class analysis, WIOD
    Date: 2021–06–22
  14. By: Anton Bondarev; Frank C. Krysiak
    Abstract: Most explanations of economic growth are based on knowledge spillovers, where the development of some technologies facilitates the enhancement of others. Empirical studies show that these spillovers can have a heterogeneous and rather complex structure. But, so far, little attention has been paid to the consequences of different structures of such cross-technology interactions: Is economic development more easily fostered by homogenous or heterogeneous interactions, by uni- or bidirectional spillovers? Using a detailed description of an r&d sector with cross-technology interactions embedded in a simple growth model, we analyse how the structure of spillovers influences growth prospects and growth patterns. We show that some type of interactions (e.g., one-way interactions) cannot induce exponential growth, whereas other structures can. Furthermore, depending on the structure of interactions, all or only some technologies will contribute to growth in the long run. Finally, some spillover structures can lead to complex growth patterns, such as technology transitions, where, over time, different technology clusters are the main engine of growth.
    Date: 2021–07
  15. By: Drilo, Boris; Stojcic, Nebojsa; Vizek, Maruska
    Abstract: We explore how improvements in digital infrastructure contribute to digital transformation of the Croatian economy. More specifically, we investigate under what conditions improvements in broadband speed are conductive for firm entry in digitally intensive sectors at the local level (cities and municipalities; LGUs) during the period 2014–2017. The results of the benchmark random effects panel data model suggest a 10 percent increase in broadband speed increases the number of new digitally intensive firms by 0.68. Two-way interactions between explanatory variables suggest improvements in broadband infrastructure yield the greatest number of new firm entries in densely populated LGUs, and in LGUs with a higher quality of human capital and greater public investment in physical infrastructure. Using the spatial Durbin panel method, we find improvements in broadband infrastructure exhibit positive firm entry effects both within and between cities and municipalities.
    Keywords: firm entry; digitally intensive sectors; broadband speed; digital transformation; Croatia; spatial spillovers
    JEL: D22 L26 M13 O33
    Date: 2021–07
  16. By: P. G. J. Persoon; R. N. A. Bekkers; F. Alkemade
    Abstract: In the race to achieve climate goals, many governments and organizations are encouraging the regional development of Renewable Energy Technology (RET). The spatial dynamics and successful regional development of a technology partly depends on the characteristics of the knowledge base on which this technology builds, in particular the analyticity and cumulativeness of knowledge. In this study we systematically evaluate these knowledge base characteristics for a set of 13 different RETs. We find that, while several RETs (photovoltaics, fuel-cells, energy storage) have a highly analytic knowledge base and develop more widespread, there are also important RETs (wind turbines, solar thermal, geothermal and hydro energy) for which the knowledge base is less analytic and which develop less widespread. Likewise, the technological cumulativeness tends to be lower for the former than for the latter group. This calls for regional policies to be specific for different RETs, taking for a given RET into account both the type of knowledge it builds on as well as the local presence of this knowledge.
    Date: 2021–06
  17. By: Michael Park; Erin Leahey; Russell Funk
    Abstract: Although the number of new scientific discoveries and technological inventions has increased dramatically over the past century, there have also been concerns of a slowdown in the progress of science and technology. We analyze 25 million papers and 4 million patents across 6 decades and find that science and technology are becoming less disruptive of existing knowledge, a pattern that holds nearly universally across fields. We link this decline in disruptiveness to a narrowing in the utilization of existing knowledge. Diminishing quality of published science and changes in citation practices are unlikely to be responsible for this trend, suggesting that this pattern represents a fundamental shift in science and technology.
    Date: 2021–06
  18. By: Camilla Chlebna (Institute of Social Sciences, Carl von Ossietzky University, Germany); Hanna Martin (Department of Business Administration and Centre for Regional Analysis, School of Business, Economics and Law, University of Gothenburg, Sweden); Jannika Mattes (Institute of Social Sciences, Carl von Ossietzky University, Germany)
    Abstract: A comprehensive perspective of regional transformative development is pertinent in light of recurring crises and grand societal challenges. We propose an integrative research agenda for transformative regional development, based on a co-evolutionary perspective on industry-focused regional path development and transitions. Combining existing knowledge from the debates on evolutionary economic geography and transition studies we define three key dimensions of co-evolution: the interrelations between different paths and their impact, interregional and multiscalar development dynamics, and the interdependence between industries and society. We address each dimension separately and suggest concrete avenues for further research.
    Keywords: evolutionary economic geography, regional industrial path development, socio-technical transitions, co-evolution, research agenda
    Date: 2021
  19. By: Link, Albert (University of North Carolina at Greensboro, Department of Economics); Wagner, Caroline (University of North Carolina at Greensboro, Department of Economics)
    Abstract: In this paper, we chronicle key U.S. legislative initiatives during the post-World War II history of public policy related to the ownership of publicly funded research-based knowledge. Our motivation for recording this history is the observation that many scholars, who are appropriately concerned about taxpayer rights, have argued for the need for public policy to clarify ownership of the publicness or openness of publicly funded research results when in fact such public policies have long been in place. We conclude this historical trace with the proposition that if the past is prologue to the future, one might expect future administrations to continue to acknowledge the importance of public access to findings from publicly funded research, be that research having occurred in federal laboratories, universities, or private-sector organizations.
    Keywords: Publicly funded R&D; open access; National Technical Information Service; Bayh-Dole Act; Stevenson-Wydler Act;
    JEL: H11 H54 O34
    Date: 2021–07–07
  20. By: Filippo Belloc; Edilio Valentini
    Abstract: We propose a mixture model approach to decompose environmental productivity into a managerial and a technological dimension, and to identify locally optimal technologies. For a large sample of plants covered by the EU Emission Trading System, we find that the average output gains, emissions being equal, that plants could reach by adopting the locally optimal technology and the best managerial practices available in the sector are 162% and 53% respectively, with significant cross-plant and cross-sector differentials. This data driven decomposition delivers important policy insights, as it helps predicting larger reductions in emission intensity from exible policies than from one-size-fits-all technology-based standards
    Keywords: Environmental productivity, Emission intensity, Environmental technology, Environmental management
    JEL: D24 L60 Q54 Q55
    Date: 2021–06

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