nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2021‒09‒20
seventeen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. The impact of the six European Key Enabling Technologies (KETs) on regional knowledge creation By Colin Wessendorf; Alexander Kopka; Dirk Fornahl
  2. The Prerequisites for Increasing the R&D Activity of Companies in Finland By Ali-Yrkkö, Jyrki; Halme, Kimmo; Deschryvere, Matthias; Lehenkari, Janne; Piirainen, Kalle; Suominen, Arho
  3. Productivity Dispersion, Entry, and Growth in U.S. Manufacturing Industries By Cindy Cunningham; Lucia Foster; Cheryl Grim; John Haltiwanger; Sabrina Wulff Pabilonia; Jay Stewart; Zoltan Wolf
  4. The Geography of Breakthrough Innovation in the United States over the 20th Century By Christopher Esposito; ;
  5. Robots and Labor Regulation: A Cross-Country/Cross-Industry Analysis By Traverso, Silvio; Vatiero, Massimiliano; Zaninotto, Enrico
  6. Who develops AI-related innovations, goods and services?: A firm-level analysis By Hélène Dernis; Laurent Moussiegt; Daisuke Nawa; Mariagrazia Squicciarini
  7. Technology, resources and geography in a paradigm shift: the case of Critical & Conflict Materials in ICTs By Diemer, Andreas; Iammarino, Simona; Perkins, Richard; Gros, Axel
  8. The human capital behind AI: Jobs and skills demand from online job postings By Lea Samek; Mariagrazia Squicciarini; Emile Cammeraat
  9. Fourier DF unit root test for R&D intensity of G7 countries. By Yifei Cai; Jamel Saadaoui
  10. Designing Smart Specialization Policy: relatedness, unrelatedness, or what? By Ron Boschma; ;
  11. The multilayer architecture of the global input-output network and its properties By Rosanna Grassi; Paolo Bartesaghi; Gian Paolo Clemente; Duc Thi Luu
  12. Wage Differences According to Workers’ Origin: The Role of Working More Upstream in GVCs By Valentine Fays; Benoît Mahy; François Rycx
  13. Does the expansion of the service sector slow down productivity growth? An empirical assessment across eight developed economies By Adrián Rial
  14. Goodwin, Baumol & Lewis: How structural change can lead to inequality and stagnation By Codrina Rada, Ansel Schiavone, Rudiger von Arnim
  15. From mission definition to implementation: Conceptualizing mission-oriented policies as a multi-stage translation process By Wittmann, Florian; Hufnagl, Miriam; Roth, Florian; Yorulmaz, Merve; Lindner, Ralf
  16. Do ICTs drive wealth inequality? Evidence from a dynamic panel analysis By Henri Njangang; Alim Beleck; Sosson Tadadjeu; Brice Kamguia
  17. The Economic Impact of Mobile Broadband Speed By Edquist, Harald

  1. By: Colin Wessendorf; Alexander Kopka; Dirk Fornahl
    Abstract: The European Commission summarized six young General Purpose Technologies (GPTs) under the label of European Key Enabling Technologies (KETs) in 2009. GPTs are broad, pervasive and widely diffused technologies that enable knowledge creation and economic growth. This study analyzes to what extent the KETs’ structural relevance within their regional knowledge bases leads to regional knowledge creation. Additionally, we analyze whether the structural relevance and the regional knowledge presence in KETs interact with regards to regional knowledge creation. The ‘structure’ of a regional knowledge base describes the relation of all knowledge being present within a given region, while ‘structural relevance’ describes a technology’s impact on the structure. Our analysis focuses on the time period from 1986-2015 and includes Germany’s 141 Labor Market Regions (LMRs) as regional spatial units. Our database consists of patent data from which we map the structure of the regional knowledge bases, by constructing technological spaces based on technology co-occurrences on patents. The structural relevance is operationalized with the help of Social Network Analysis (SNA), by measuring the changes that the removal of KETs causes in the structure of technological spaces. Our findings indicate that KETs enable knowledge creation in different ways. They show that the effects of KETs on regional knowledge creation activities are KET-specific. Furthermore, it proves essential to distinguish between ‘knowledge presence’ and ‘structural knowledge relevance’ when addressing the innovation-spawning function of KETs. Thus, for both further research and for policy-making, it is a fundamental requirement to address KET-driven knowledge creation in particular KET-specific ways.
    Keywords: General purpose technologies, GPT, key enabling technologies, KET, regional innovation, regional knowledge base, knowledge space, technological space, technological integration, German regions
    JEL: O31 O33 R11 R58
    Date: 2021–09
  2. By: Ali-Yrkkö, Jyrki; Halme, Kimmo; Deschryvere, Matthias; Lehenkari, Janne; Piirainen, Kalle; Suominen, Arho
    Abstract: Abstract This study focuses on factors affecting companies’ research and development (R&D), Finland as a location for R&D activities, and R&D intensity (R&D/GDP). According to our results, R&D investments are increasing in Finland but the R&D intensity will not reach 4 % target by 2030. Our results showed that Sweden, Estonia (and to some extent other Baltic countries), and Germany are Finland’s main competitors regarding the location of R&D investments. The key factors affecting R&D location are the availability of R&D personnel, and the geographical proximity to the companies’ other units and customers. We recommend comprehensive and long-term innovation policy which considers policy actions – not only affecting the increase of R&D and its impacts – but also the increase of capabilities. It should be noted, however, that rather than the ultimate target, R&D is a means to reach other goals.
    Keywords: R&D, Research, Development, Target, Location, Factors, Private, Company, Firm, Competition
    JEL: D22 D25 E22 F23 H25 O3 O32 O38
    Date: 2021–09–09
  3. By: Cindy Cunningham; Lucia Foster; Cheryl Grim; John Haltiwanger; Sabrina Wulff Pabilonia; Jay Stewart; Zoltan Wolf
    Abstract: Within-industry productivity dispersion is pervasive and exhibits substantial variation across countries, industries, and time. We build on prior research that explores the hypothesis that periods of innovation are initially associated with a surge in business start-ups, followed by increased experimentation that leads to rising dispersion potentially with declining aggregate productivity growth, and then a shakeout process that results in higher productivity growth and declining productivity dispersion. Using novel detailed industry-level data on total factor productivity and labor productivity dispersion from the Dispersion Statistics on Productivity along with novel measures of entry rates from the Business Dynamics Statistics and productivity growth data from the Bureau of Labor Statistics for U.S. manufacturing industries, we find support for this hypothesis, especially for the high-tech industries.
    Keywords: dispersion; entry; innovation; productivity; manufacturing; high-tech industries
    JEL: O3 O4
    Date: 2021–08
  4. By: Christopher Esposito; ;
    Abstract: Over the 20th century, the geography of breakthrough innovation in the United States – defined as the spatial distribution of the production of patents that are both novel and impactful – underwent three broad changes. At the start of the 20th century, breakthrough innovation was concentrated in populous and knowledge-diverse metropolitan areas. By the 1930s, breakthroughs were created less frequently across the entire country and so their invention had a less distinct geography. The substantial creation of breakthroughs resumed in the 1960s and was once their invention was concentrated in large and knowledge metropolitan areas. However, during the latter part of the century the invention of breakthroughs also frequently involved long-distance collaborations between inventors. In this paper, I document these historical changes to the geography of breakthrough innovation and propose a model to explain why they occurred. The model suggests that the geography of breakthroughs is established by four factors: (1) the prevailing knowledge intensity of breakthrough inventions, (2) the distance- based frictions incurred by technologies used for collaboration, (3) the distance-based frictions incurred by the technologies used for knowledge-sourcing, and (4) the disruptiveness of the regime of technological change. I generate support for the model, and conclude the paper by discussing lessons that the 20th century’s geography of breakthrough innovation provide for anticipating possible futures for the geography of innovation in the 21st century, including in the years beyond COVID-19.
    Date: 2021–09
  5. By: Traverso, Silvio; Vatiero, Massimiliano; Zaninotto, Enrico
    Abstract: This work discusses and empirically investigates the relationship between labor regulation and robotization. In particular, the empirical analysis focuses on the relationship between the discipline of workers' dismissal and the adoption of indus- trial robots in nineteen Western countries over the 2006{2016 period. We find that high levels of statutory employment protection have been negatively associated with robot adoption, suggesting that labor-friendly national legislations, by increasing adjustment costs (such as firing costs), and thus making investment riskier, provide less favorable environments for firms to invest in industrial robots. We also find, however, that the correlation is positively mediated by the sectoral levels of capital intensity, a hint that firms do resort to industrial robots as potential substitutes for workers to reduce employees' bargaining power and to limit their hold-up opportu- nities, which tend to be larger in sectors characterized by high levels of operating leverage.
    Keywords: Robot adoption,Labor regulation,Hold-up
    JEL: K31 O31
    Date: 2021
  6. By: Hélène Dernis (OECD); Laurent Moussiegt (OECD); Daisuke Nawa (OECD); Mariagrazia Squicciarini (OECD)
    Abstract: This study proposes an exploratory analysis of the characteristics of Artificial Intelligence (AI) “actors”. It focuses on entities that deploy AI-related technologies or introduce AI-related goods and services on large international markets. It builds on the OECD Science, Technology and Innovation Micro-data Lab infrastructure, and, in particular, on Intellectual Property (IP) rights data (patents and trademarks) combined with company-level data. Statistics on AI-related patents and trademarks show that AI-related activities are strongly concentrated in some countries, sectors, and actors. Development of AI technologies and/or goods and services is mainly due to start-ups or large incumbents, located in the United States, Japan, Korea, or the People’s Republic of China, and, to a lesser extent, in Europe. A majority of these actors operate in ICT-related sectors. The composition of the IP portfolio of the AI actors indicates that AI is frequently combined with a variety of sector-specific technologies, goods, or services.
    Date: 2021–09–22
  7. By: Diemer, Andreas; Iammarino, Simona; Perkins, Richard; Gros, Axel
    Abstract: The mining of several critical raw materials – including the so-called ‘conflict minerals’ associated with armed conflict and human rights abuses – and their combination, refining and use in many new advanced electronic products, are providing an important material infrastructure to current technological progress. Relying on text analysis of USPTO patent data between 1976 and 2017, our explorative study provides a methodological and empirical starting point for exploring the technological and geographical linkages between technological paradigms and selected critical and conflict materials (CCMs). Our descriptive analysis finds evidence of a clear association between ICT technologies and CCM intensity over time, and of a striking resource-technology divide in global ICT value chains between value creating and value extracting activities across Global North and Global South and their regions. The paperintends to emphasize the need for a more critical, spatially sensitive approach to studying resource-based technological change to expose the uneven development consequences created, sustained, or mitigated by technological progress.
    Keywords: critical and conflict materials; paradigm shift; technological demand; geography of technology; geography of resource supply
    JEL: O30 Q34 Q55 R11
    Date: 2021–09–01
  8. By: Lea Samek (OECD); Mariagrazia Squicciarini (OECD); Emile Cammeraat (OECD)
    Abstract: Building on recent OECD work, this paper analyses the skills sets (“skills bundles”) demanded in artificial intelligence (AI)-related online job postings. The analysis uses Burning Glass Technologies’ data for the United States and the United Kingdom and finds that skills related to the open source programming software Python and to machine learning represent “must-haves” for working with AI. Employers additionally value specialised skills related to robotics, AI development and applying AI. A comparison of the periods 2013-15 and 2017-19 shows that the latter two have become more interrelated over time, with “neural network” skills connecting both groups. Network analysis relating AI skills to general skills highlights the growing role of socio-emotional skills; and of skill bundles related to programming, management of big data and data analysis. Key results hold for both countries and time periods, though differences emerge across occupations and industries.
    Keywords: AI, Online jobs, Skill bundles, Skills
    Date: 2021–09–22
  9. By: Yifei Cai; Jamel Saadaoui
    Abstract: According to the Schumpeterian endogenous growth theory, the efficacy of R&D is lowered by the proliferation of products. To be consistent with empirical data, the ratio between innovative activity and product variety (also called R&D intensity) must be stationary. In this perspective, our contribution investigates whether the R&D intensity series are stationary when structural breaks are considered. Our sample of G7 countries is examined over the period spanning from 1870 to 2016. Our results indicate that traditional unit root tests (ADF, DF-GLS and KPSS) conclude that the R&D intensity series are non-stationary in contradiction with the Schumpeterian endogenous growth theory. The conclusions of these traditional unit root tests may be misleading, as they ignore the presence of structural breaks. Indeed, we use several types of Fourier Dickey-Fuller tests to consider the presence of structural breaks. In the Fourier Dickey-Fuller unit root tests using double frequency and fractional frequency, the R&D intensity is significantly stationary at least at the 5% level for Canada, France, Germany, Italy, Japan when a deterministic trend is included in the tests. Nevertheless, the R&D intensity is non-stationary for the US, even when we consider structural breaks. Indeed, the integration analyses aimed at discriminating between competing theories of endogenous growth should be careful of the presence of structural breaks. Especially when historical data are used, traditional unit root tests may lead to erroneous economic interpretations. These findings may help to understand the true nature of long-run economic growth and may help to formulate sound policy recommendations.
    Keywords: R&D intensity; Schumpeterian growth model; Double frequency; Fourier DickeyFuller unit root test.
    JEL: C12 C22 O30 O40
    Date: 2021
  10. By: Ron Boschma; ;
    Abstract: A key objective of Smart Specialization Strategies (S3) is to stimulate related diversification in European regions, rather than unrelated diversification. This chapter will outline the pros and cons of S3 with a prime focus on either related or unrelated diversification. We argue it depends on the specific regional situation which type of S3 to pursue. While there are good reasons to promote related diversification in general, regions may become over-specialized or trapped in a low-complex economy that might warrant a S3 focus on unrelated diversification.
    Keywords: Smart specialization, related diversification, unrelated diversification, regional diversification, complexity
    JEL: O25 O38 R11
    Date: 2021–09
  11. By: Rosanna Grassi; Paolo Bartesaghi; Gian Paolo Clemente; Duc Thi Luu
    Abstract: We analyse the multilayer architecture of the global input-output network using sectoral trade data (WIOD, 2016 release). With a focus on the mesoscale structure and related properties, we find that the multilayer analysis that takes into consideration the splitting into industry-based layers is able to catch more peculiar relationships between countries that cannot be detected from the analysis of the single-layer aggregated network. We can identify several large international communities in which some countries trade more intensively in some specific layers. However, interestingly, our results show that these clusters can restructure and evolve over time. In general, not only their internal composition changes, but the centrality rankings of the members inside are also reordered, with the diminishing role of industries from some countries and the growing importance of those from some other countries. These changes in the large international clusters may reflect the outcomes and the dynamics of cooperation as well as competition among industries and among countries in the global input-output network.
    Date: 2021–09
  12. By: Valentine Fays; Benoît Mahy; François Rycx
    Abstract: This paper is the first to investigate the role of firm-level upstreamness (i.e. the number of steps before the production of a firm meets final demand) in explaining wage differences according to workers’ origin. Using unique linked employer-employee data relative to the Belgian manufacturing industry for the period 2002-2010, our estimates show that firms that are further up in the value chain pay significantly higher wages. However, the wage premium associated with upstreamness is also found to vary substantially depending on the origin of the workers. Unconditional quantile estimates suggest that those who benefit the most from being employed in more upstream firms are high-wage workers born in developed countries. In contrast, workers born in developing countries, irrespective of their earnings, appear to be unfairly rewarded. Quantile decompositions further show that, while differences in average values of upstreamness according to workers’ origin play a limited role, differences in wage premia associated with upstreamness account for a substantial part of the wage gap between workers born in developed and developing countries, especially at the top of the earnings distribution. These results are shown to be robust to a number of sensitivity tests, including broader or narrower definitions of workers’ wages and different firm environments in terms of technological and knowledge intensity.
    Keywords: Wage Gaps; Workers’ Origin; Global Value Chains; Upstreamness; Unconditional Quantile Estimates and Decompositions
    JEL: J15 J31 F16
    Date: 2021–09–08
  13. By: Adrián Rial (Universidad Complutense de Madrid)
    Abstract: This study examines the impact of the expansion of the service sector on labour productivity growth in eight developed economies, reaching back to the late 1970s. To that end, I develop a shift-share decomposition formula that satisfactorily integrates both Kaldorian and Baumolian effects. Firstly, my decomposition does not assume that productivity growth at the industry level is exogenous but rather incorporates the Verdoorn coefficients that I previously estimated using system GMM. Secondly, consistent with the Baumolian framework, my decomposition includes the impact that arises from the cumulative changes that take place in terms of the nominal value added and employment shares. My results show that, on average, tertiarisation only slows down productivity growth in three economies, where labour shifts away from industries with increasing returns. However, the cumulative reallocation of employment and nominal output leads to a gradual decrease in the productivity growth rate in seven of the eight economies.
    Keywords: Structural change; Kaldor–Verdoorn Law; Baumol’s disease; Labour productivity growth; Shift-share analysis
    JEL: E24 L16 O47
    Date: 2021–05
  14. By: Codrina Rada, Ansel Schiavone, Rudiger von Arnim
    Abstract: This paper presents a classical-Keynesian one sector model of labor-constrained growth that explains secular stagnation as the result of structural change. Structural change is defined as an exogenous increase in the employment share of stagnant activities, which exhibit no or low labor productivity growth. We discuss two models: (i) a classical distributive cycle in employment rate and labor share, and (ii) a Keynes-Kalecki distributive cycle that adds the incomecapital ratio as state variable. Both versions consider labor productivity growth as endogenous to the labor share, reminiscent of induced technical change. Further, growth rates of labor productivity and real wages are assumed to respond negatively to structural change as proxied by the employment share of stagnant activities. Drawing on seminal theories of structural change, we label the positive (negative) difference between these effects dominant Lewis (Baumol) dynamics. In steady state, and across all model variants, the adverse effect of structural change on labor productivity leads to stagnation. However, only the Keynes-Kalecki version with dominant Lewis dynamics and a weak profit squeeze also exhibits a falling labor share.
    Keywords: Goodwin cycle; stagnation; structural change; reserve army JEL Classification: E12, E25, E32, O41
    Date: 2021
  15. By: Wittmann, Florian; Hufnagl, Miriam; Roth, Florian; Yorulmaz, Merve; Lindner, Ralf
    Abstract: The promise of mission-oriented innovation policies (MOIP) to address some of the grand societal challenges as a cross-sectoral and interdisciplinary approach to innova-tion policy with increased directionality has raised high hopes. However, the complexity attached to MOIP constitutes a challenge, both for policy-makers and innovation schol-ars. Seeking to enhance our understanding of MOIP and the diverse policy choices and challenges involved, we propose a conceptualization of missions as multiple, intercon-nected translation processes that span from a societal challenge as the starting point to impacts as the ultimate translational stage. We argue that adopting a process-oriented perspective is well-suited to account for the interdependencies and complex feedback dynamics among the different stages during the realization of MOIP. The proposed framework aims to support the development of frameworks for impact assessment, but also yields relevant insights for policy-makers implementing MOIP.
    Date: 2021
  16. By: Henri Njangang (LAREFA, University of Dschang, Cameroon); Alim Beleck (HTTTC, University of Bamenda); Sosson Tadadjeu (LAREFA, University of Dschang, Cameroon.); Brice Kamguia (LAREFA, University of Dschang, Cameroon.)
    Abstract: Surprisingly, little is known about the cross-country effect of information and communication technology (ICT) on wealth inequality. At the same time, there is some tentative evidence suggesting that information and communication technology is positively correlated with income inequality. However, whether and how ICT affects wealth inequality is less explored, particularly because of the lack of reliable data on wealth inequality. This paper, therefore, fills this gap and contributes to this new literature by investigating the effect of ICT on wealth inequality in a sample of 45 developed and developing countries over the period 2000-2017. ICT is measured with six different indicators (including internet penetration, mobile penetration, ICT service exports, the ICT index, ICT quality, and ICT quantity), while wealth inequality is measured with three different indicators (comprising billionaire wealth to GDP, the Top 1% wealth share, and the Top 10% wealth share). The empirical analysis is based on the Generalised Method of Moments, and the results show that ICT increases wealth inequality. Furthermore, we show that democracy mitigates the increasing effect of ICT on wealth inequality. This result suggests that improving democracy in both developed and developing countries is an effective mechanism for mitigating the effects of ICT on wealth inequality. Therefore, we encourage efforts to implement democratic institutions that ensure respect for citizens' freedoms, greater democratic accountability, and executive constraints that allow for a more egalitarian distribution of wealth.
    Keywords: ICT; Wealth inequality; Panel data
    JEL: O15 O50 Q55
    Date: 2021–01
  17. By: Edquist, Harald
    Abstract: Based on panel data of 116 countries in 2014-2019, this paper investigates the association between mobile broadband speed and labor productivity. It finds no robust contemporaneous relationship, but there is a significant and robust effect when a one-year lag of mobile broadband speed is introduced (significant at 3.7 and 0.9 percent levels for fixed and random effects estimation, respectively). The interpretation of the results is that a 10 percent increase in mobile broadband speed in period t-1 is associated with 0.2 percent increase in labor productivity, cetris paribus.
    Date: 2021

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