nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2021‒07‒26
fifteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Identifying complementary relationships between different types of innovation: Evidence from Community Innovation Survey 2012 By Stojkoski, Viktor; Toshevska-Trpchevska, Katerina; Makrevska Disoska, Elena; Tevdovski, Dragan
  2. The impact of trade on R&D: Evidence from UK firms By S, Minkyu.
  3. Innovation and employment in Sub-Saharan Africa By Porath, Daniel; Nabachwa, Sarah; Agasha, Ester; Kijjambu, Nsambu Frederick
  4. "Stabilizer" or "catalyst"? How does green technology innovation affect the risk of stock price crash: an analysis based on the quantity and quality of patents By Ge-zhi Wu; Daming You
  5. Adoption of digital and ICT technologies and firms’ productivity By Zoran Aralica; Bruno Skrinjaric
  6. Innovation-Driven Entrepreneurship By Tristan L. Botelho; Daniel Fehder; Yael Hochberg
  7. COVID-19, Productivity and Reallocation: Timely evidence from three OECD countries By Dan Andrews; Andrew Charlton; Angus Moore
  8. Mechanics of Global Value Chains: India's Perspective By Dutta, Sourish
  9. Crowdsourcing Artificial Intelligence in Africa: Findings from a Machine Learning Contest By Naudé, Wim; Bray, Amy; Lee, Celina
  10. Do Creative Industries Generate Multiplier Effects? Evidence from UK Cities, 1997-2018 By Gutierrez-Posada, Diana; Kitsos, Tasos; Nathan, Max; Nuccio, Massimiliano
  11. A RHOMOLO analysis of the RIS3 innovation targets in Southern Europe By Javier Barbero; Olga Diukanova; Carlo Gianelle; Simone Salotti; Artur Santoalha
  12. Assessing Smart Specialisation: Policy Implementation Measures By Ugo Fratesi; Carlo Gianelle; Fabrizio Guzzo
  13. The early development of new establishments: An evaluation of the role of spatial selection and agglomeration By Javier Changoluisa
  14. Epidemic Exposure, Fintech Adoption, and the Digital Divide By Orkun Saka ⓡ; Barry Eichengreen ⓡ; Cevat Giray Aksoy
  15. Looking for a Star: Evaluating the Effect of the Cohesion Policy on Regional Well-Being By Albanese, Giuseppe; Carrieri, Vincenzo; Speziali, Maria Maddalena

  1. By: Stojkoski, Viktor; Toshevska-Trpchevska, Katerina; Makrevska Disoska, Elena; Tevdovski, Dragan
    Abstract: We explore the complementarities between technological and organizational innovations by utilizing cross-sectional data taken from the Community Innovation Survey - CIS2012 for two group of countries: Central and Eastern Europe (CEE - Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Romania, Slovakia and Slovenia) and Western European countries (WE - Germany, Spain, Norway and Portugal). We find that in CEE there is no complementarity between the different types of innovation analyzed. On the other hand, we show that probably in WE there is complementary relationship between organizational and process innovations, but not between organizational and product innovation. Altogether, this indicates that there is a variety in the relationships between the types of innovation in more developed countries (the WE group), but not in less developed countries (CEE group).
    Keywords: innovation, complementarity, CDM model, Western Europe, Central and Eastern Europe
    JEL: O31 O33
    Date: 2021–07
  2. By: S, Minkyu.
    Abstract: How does firm innovation respond to changing trade environments? This paper investigates this question using the matched administrative datasets for UK firms' R&D expenditures and their trade exposures between 2002 and 2011. I find a strong adverse impact of import competition from China on UK firms' R&D, which is supportive of the `Schumpeterian hypothesis'. There is no evidence that the improved access to Chinese inputs for individual firms offset this negative competition channel. Increased export demand, by contrast, significantly stimulates firms' innovation efforts. Our results also reveal heterogeneity in the R&D responses depending on the firms' initial conditions: First, more productive British firms raise their R&D spending by much more in response to increased foreign demand. Second, exporters reduce R&D by less than non-exporters in the face of the rising Chinese competition. These findings together imply that innovation of purely domestic and less profitable firms was most hurt by globalization, leading to a widening productivity gap across firms.
    Keywords: R&D, Chinese competition, Firm-level trade
    JEL: F14 F60 O31
    Date: 2021–07–08
  3. By: Porath, Daniel; Nabachwa, Sarah; Agasha, Ester; Kijjambu, Nsambu Frederick
    Abstract: The debate on the role of innovation in employment growth is still inconclusive with the available literature focusing largely on industrialised economies. With this concern, we examine the potential of innovations in creating permanent full-time jobs in registered manufacturing companies in Sub-Saharan Africa (SSA) by fitting the model of Van Reenen (1997) to a two-period panel of 687 manufacturing firms. Our paper is the first to examine the impact of innovation on employment with a particular focus on SSA and the first to apply a panel data approach to a larger set of developing countries. Our findings indicate that in the past, innovative firms created more jobs compared to non-innovative ones when controlling for sales, wages, time-invariant firms and country specifics. Likening the results with emerging or developing economies outside of SSA, we find that the effect is considerably larger in SSA than in other regions. As a consequence, we recommend that SSA governments strengthen their technological adaption and adoption mechanisms in their manufacturing sectors to foster innovations. Nonetheless, as a way to discourage imitations (which may not be well aligned to the production demands in SSA), governments are encouraged to invest in sector-specific research and development.
    Keywords: Innovation,Employment,Sub Saharan Africa,Panel model,Enterprise Survey
    Date: 2021
  4. By: Ge-zhi Wu; Daming You
    Abstract: In order to explore the relationship between corporate green technological innovation and the risk of stock price crash, First, we analyzed the data of listed companies in China from 2008 to 2018, and constructed indicators for the quantity and quality of corporate green technology innovation. The study found that the quantity of green technology innovation is not related to the risk of stock price crash, while the quality of green technology innovation is negatively related to the risk of stock price crash. Secondly, we further studied the impact of corporate ownership on the relationship between the quality of green technological innovation and the risk of stock price crash, and found that in non-state-owned enterprises, the quality of green technological innovation is negatively correlated with the risk of stock price collapse, while in state-owned enterprises, the quality of green technological innovation is positively correlated with the risk of stock price collapse. Furthermore, we studied the mediating effect of the number of negative news reports in the media of listed companies on the relationship between the quality of corporate green technology innovation and the stock price crash.Finally, we conducted a DID regression by using the impact of exogenous policy shocks on the quality of green technology innovation, and the main results passed the robustness test.
    Date: 2021–06
  5. By: Zoran Aralica (The Institute of Economics, Zagreb); Bruno Skrinjaric (The Institute of Economics, Zagreb)
    Abstract: This paper has two main goals. First, it aims to answer the question on how the usage of ICT and digital technologies affects firm productivity. Second, it aims to analyze how change in the share of the manufacturing sector and/or the service sector in a given region direct changes in firm productivity. The analysis was carried out using a financial dataset of Croatian enterprises in the period from 2009 to 2019 and Eurostats’ Digital Economy and Society data, based on “Community survey on ICT usage and ecommerce in enterprises”. The data were analyzed using principal component analysis and panel data methods. The results indicate a positive relationship between adoption of ICT technologies and firm productivity, and a negative correlation between adoption of digital technologies and firm productivity. Furthermore, the results show a high degree of deindustrialization of certain regions and a positive correlation between industry intensity in certain regions and firm productivity. Finally, there seems to be a positive premium on productivity for larger-sized firms, firms participating in international trade, companies situated near to key international markets (i.e., located in counties bordering with the City of Zagreb).
    Keywords: ICT, digital technologies, economy structure, productivity, Croatia
    JEL: O14 O33
    Date: 2021–04
  6. By: Tristan L. Botelho; Daniel Fehder; Yael Hochberg
    Abstract: Entrepreneurship is thought to be a key driver of economic growth. While there are myriad forms of entrepreneurship, ranging from self-employment to small and medium size enterprises to technology- and innovation-driven startups, recent research provides evidence that the relationship between entrepreneurship and economic growth is driven not by overall quantity of new firm entry, but rather by a small subset of high-growth startups that are primarily categorized as innovation-driven. This paper provides a survey of the growing literature on the economics of such innovation-driven entrepreneurship. We begin by distinguishing between the various forms of entrepreneurship, which are often confounded in both theory and empirical work. We lay out the current state of knowledge, and describe the challenges faced by researchers in the field, particularly around measurement, data and identification. We conclude with an overview of the major open questions and directions for future research in the area.
    JEL: O0 O3
    Date: 2021–07
  7. By: Dan Andrews; Andrew Charlton; Angus Moore
    Abstract: The longer run consequences of the pandemic will partly hinge on its impact on high productivity firms, and the ongoing process of labour reallocation from low to high productivity firms. While Schumpeter (1939) proposed that recessions can accelerate this process, the nature of the COVID-19 shock coupled with a policy response that prioritised preservation (over reallocation) raises questions about whether job reallocation remained productivity-enhancing. Using novel, near-real-time data for Australia, New Zealand and the United Kingdom, this paper shows that while labour turnover fell in response to the pandemic, job reallocation remained connected to firm productivity – that is, high productivity firms were more likely to expand and low productivity firms were more likely to contract. The pandemic coincided with a temporary strengthening of the reallocation-productivity link in Australia – but a weakening in New Zealand – which appears related to the design of job retention schemes. Finally, firms that intensively used Apps to manage their business were more resilient, even after controlling for productivity. Thus, while policy partly suppressed creative destruction, the nature of the shock – i.e. one where being online and able to operate remotely were key – favoured high productivity and tech-savvy firms, resulting in a reallocation of labour to such firms. The use of timely, novel data to investigate the allocative effects of the pandemic marks a significant advance, given that the seminal paper on productivity-enhancing reallocation during the Great Recession arrived some six years after Lehman Brothers collapsed.
    Keywords: COVID-19, productivity, reallocation, recessions
    JEL: E24 E32 J63 O4
    Date: 2021–07–22
  8. By: Dutta, Sourish
    Abstract: The global production as a system of creating values is eventually forming a vast web of value chains. It explains the transitional structures of world trade and development of the world economy. It is truly a new wave of globalisation, and we term it as the global value chains (GVCs), creating the nexus among firms, workers and consumers around the globe. The emergence of this new scenario raises some crucial questions. It asks how an economy's businesses, producers and employees are connecting to the global economy. How are they capturing the gains out of it regarding different dimensions of economic development? Indeed, this GVC approach is very crucial for understanding the organisation of the global industries and firms. It requires analysing the statics and dynamics of different economic players involved in this complex global production network. Its widespread notion deals with diverse global, regional, and local issues from the top-down to bottom-up, building scope for policy analysis. In this context, this study will attempt to quantify the extent and impacts of India's engagement in GVCs, based on available data. It will also strive to propose a comprehensive strategic framework to identify the objectives of India's GVC participation and development with some suitable economic strategies to achieve them.
    Date: 2021–06–26
  9. By: Naudé, Wim (University College Cork); Bray, Amy (Zindi); Lee, Celina (Zindi)
    Abstract: In this paper, we study the crowdsourcing of innovation in Africa through a data science contest on an intermediated digital platform. We ran a Machine Learning (ML) contest on the continent's largest data science contest platform, Zindi. Contestants were surveyed on their motivations to take part and their perceptions about AI in Africa. In total, 614 contestants submitted 15,832 entries, and 559 responded to the accompanying survey. From the findings, we answered several questions: who take part in these contests and why? Who is most likely to win? What are contestants' entrepreneurial aspirations in deploying AI? What are the obstacles they perceive to the greater diffusion of AI in Africa? We conclude that crowdsourcing of AI via data contest platforms offers a potential mechanism to alleviate some of the constraints in the adoption and diffusion of AI in Africa. Recommendations for further research are made.
    Keywords: crowdsourcing, innovation, data science, artificial intelligence, Africa
    JEL: O31 O33 O36 O55
    Date: 2021–07
  10. By: Gutierrez-Posada, Diana; Kitsos, Tasos; Nathan, Max (UCL); Nuccio, Massimiliano
    Abstract: The creative industries have received much attention from economic geographers and others, both for their propensity to co-locate in urban settings and their potential to drive urban economic development. However, evidence on the latter is surprisingly sparse. In this paper we explore the long-term, causal impacts of the creative industries on surrounding urban economies. Adapting Moretti’s local multipliers framework, we build a new 20-year panel of UK cities, using fixed effects and a historic instrument to identify effects on non-creative firms and employment. We find that each creative job generates at least 1.9 non-tradable jobs between 1998 and 2018: this is associated with creative business services employees’ local spending, rather than visitors to urban amenities such as galleries and museums. We do not find the same effects for workplaces, and find no causal evidence for spillovers from creative activity to other tradable sectors, findings consistent with descriptive evidence on the increasing concentration of creative industries in a small number of cities. Given the small numbers of creative jobs in most cities, however, the overall effect size of the creative multiplier is small, and shapes only a small part of non-tradable urban employment change. Overall, our results suggest creative economy-led policies for cities can have positive – albeit partial – local economic impacts.
    Date: 2021–07–11
  11. By: Javier Barbero (European Commission - JRC); Olga Diukanova (European Commission - JRC); Carlo Gianelle (European Commission - DG REGIO); Simone Salotti (European Commission - JRC); Artur Santoalha (TIK Centre for Technology, Innovation and culture - UIO)
    Abstract: EU regions must formally adopt a Research and Innovation Strategy for Smart Specialisation (RIS3) to access the Cohesion policy funding for research and innovation investments. Smart Specialisation helps regions to identify opportunities for competitive advantages in high value added activities through selectivity and the entrepreneurial discovery process. A recent modelling exercise suggests achieving the R&I numerical targets set by the regional authorities managing the Smart Specialisation funding could lead to substantial GDP gains in the short run and over a longer time horizon. This type of analysis helps quantifying the potential scope of the Smart Specialisation policy based on the objectives set by the RIS3 managing authorities.
    Keywords: Rhomolo, Region, Growth, Smart Specialisation; ex-ante policy impact assessment; CGE models; Cohesion policy.
    JEL: C68 O38 R13 R58
    Date: 2021–07
  12. By: Ugo Fratesi (Polytechnic University of Milan); Carlo Gianelle (European Commission - JRC); Fabrizio Guzzo (European Commission - JRC)
    Abstract: The objective of this report is to provide an account of how and to what extent the Smart Specialisation approach to regional innovation policy has been implemented in practice. The analysis explores how policy measures implemented under the Thematic Objective 1 “Strengthening research, technological development and innovation” of national and regional Operational Programmes, co-financed by the European Regional Development Fund, have incorporated key Smart Specialisation principles during the 2014-2020 programming period. We identify three main design principles of Smart Specialisation and translate them into three research hypotheses characterized in ways that can be tested empirically.We find that the Smart Specialisation strategies under scrutiny mostly apply a limited portfolio of traditional, supply-side instruments. All things considered, there is limited evidence of the implementation of a truly selective intervention logic aimed to support in a dedicated way different investment priorities. We observe quite pervasive support to the establishment of a critical mass of individual and collaborative entrepreneurial initiatives in all the Smart Specialisation areas, while support to the formation and strengthening of stakeholder communities is only present in a very few territories. We find positive although not widespread evidence of the introduction of novel elements in the design of some instruments; this points to a tentative break with tradition and path dependency which is in line with the spirit of Smart Specialisation. Policy implications for the future development and evolution of European regional innovation policy are derived.
    Keywords: regional innovation policy, Smart Specialisation, policy instruments, implementation measures
    JEL: O25 O30 R12 R58
    Date: 2021–07
  13. By: Javier Changoluisa (ESAI Business School, Universidad Espiritu Santo, Guayaquil, Ecuador)
    Abstract: This paper analyzes the early development of new establishments evaluating the role of spatial selection and agglomeration. The analysis shows a clear and strong selection of more productive new establishments into larger regions, regardless of the foundation type. While at the end of the time-period analyzed new establishments located in larger regions still show higher productivity levels as compared to those located in smaller regions, the role of an agglomeration is very distinct depending on the foundation type. Spin-offs in larger regions tend to keep the higher productivity level shown in the first time period, but start-ups suffer negative agglomeration effects over time.
    Keywords: Entrepreneurship, agglomeration, firm selection, productivity
    JEL: L26 L25 R30 R12
    Date: 2021–07–22
  14. By: Orkun Saka ⓡ; Barry Eichengreen ⓡ; Cevat Giray Aksoy
    Abstract: We ask whether epidemic exposure leads to a shift in financial technology usage within and across countries and if so who participates in this shift. We exploit a dataset combining Gallup World Polls and Global Findex surveys for some 250,000 individuals in 140 countries, merging them with information on the incidence of epidemics and local 3G internet infrastructure. Epidemic exposure is associated with an increase in remote-access (online/mobile) banking and substitution from bank branch-based to ATM-based activity. Using a machine-learning algorithm, we show that heterogeneity in this response centers on the age, income and employment of respondents. Young, high-income earners in full-time employment have the greatest propensity to shift to online/mobile transactions in response to epidemics. These effects are larger for individuals in subnational regions with better ex ante 3G signal coverage, highlighting the role of the digital divide in adaption to new technologies necessitated by adverse external shocks.
    JEL: G0 G20 G59 I10
    Date: 2021–07
  15. By: Albanese, Giuseppe (Bank of Italy); Carrieri, Vincenzo (Magna Graecia University); Speziali, Maria Maddalena (Magna Graecia University)
    Abstract: This paper presents new evidence on the last concluded wave (2007-2013) of the EU cohesion policy. We depart from the broadly used GDP-growth approach and evaluate the impact of EU Structural Funds (SFs) on a battery of regional well-being indicators including economic, educational, health, and demographic outcomes. We exploit the SFs assignment rule to construct a fuzzy RDD. Our results reveal an overall null effect of the policy. We further identify how regional (i) quality of government (ii) human capital and (iii) urbanization impact the policy's effectiveness. We conclude that these characteristics affect the relationship between SFs and economic outcomes only.
    Keywords: regional well-being, cohesion policy, Fuzzy RDD
    JEL: C21 H51 H52 I31 R11
    Date: 2021–06

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