nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2021‒10‒25
ten papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. The drivers of SME innovation in the regions of the EU By Hervás-oliver, José-luis; Parrilli, Mario Davide; Rodríguez-pose, Andrés; Sempere-ripoll, Francisca
  2. Geographies of Knowledge Sourcing and the Value of Knowledge in Multilocational Firms By Anthony Frigon; David L. Rigby;
  3. The Value-added Creation Effect of Global Value Chain Participation: Industry-level Evidence from APEC Member Economies By Park, Innwon; Park, Soonchan
  4. Innovation and trade patterns in the Latin American mining sector By Enrico Alessandri
  5. Regional Productivity Slowdown, Tax Havens and MNEs’ Intangibles: where is Measured Value Creation? By Jean-Charles Bricongne; Samuel Delpeuch; Margarita Lopez Forero
  6. Bridging the short-term and long-term dynamics of economic structural change By James McNerney; Yang Li; Andres Gomez-Lievano; Frank Neffke
  7. Patents for Covid-19 vaccines are based on public research: a case study on the privatization of knowledge By Massimo FLORIO
  8. AgriLOVE: agriculture, land-use and technical change in an evolutionary, agent-based model. By Matteo Coronese; Martina OCcelli; Francesco Lamperti; Andrea Roventini
  10. Technological capacity and firms' recovery from Covid-19 By Sebastian Doerr; Magdalena Erdem; Guido Franco; Leonardo Gambacorta; Anamaria Illes

  1. By: Hervás-oliver, José-luis; Parrilli, Mario Davide; Rodríguez-pose, Andrés; Sempere-ripoll, Francisca
    Abstract: European Union (EU) innovation policies have for long remained mostly research driven. The fundamental goal has been to achieve a rate of R&D investment of 3% of GDP. Small and medium-sized enterprise (SME) innovation, however, relies on a variety of internal sources —both R&D and non-R&D based— and external drivers, such as collaboration with other firms and research centres, and is profoundly influence by location and context. Given this multiplicity of innovation activities, this study argues that innovation policies fundamentally based on a place-blind increase of R&D investment may not deliver the best outcomes in regions where the capacity of SMEs is to benefit from R&D is limited. We posit that collaboration and regional specificities can play a greater role in determining SME innovation, beyond just R&D activities. Using data from the Regional Innovation Scoreboard (RIS), covering 220 regions across 22 European countries, we find that regions in Europe differ significantly in terms of SME innovation depending on their location. SMEs in more innovative regions benefit to a far greater extent from a combination of internal R&D, external collaboration of all sorts, and non-R&D inputs. SMEs in less innovative regions rely fundamentally on external sources and, particularly, on collaboration with other firms. Greater investment in public R&D does not always lead to improvements in regional SME innovation, regardless of context. Collaboration is a central innovation activity that can complement R&D, showing an even stronger effect on SME innovation than R&D. Hence, a more collaboration-based and place-sensitive policy is required to maximise SME innovation across the variety of European regional contexts.
    Keywords: regional innovation; SMEs; R&D; place-based; collaboration; EU regions
    JEL: O31 O32 L11
    Date: 2021–11–01
  2. By: Anthony Frigon; David L. Rigby;
    Abstract: A growing body of research in economic geography, international business management and related fields focuses on geographies of knowledge sourcing. This work examines the organizational structure of innovation activities within the firm, the mechanisms by which knowledge is extracted from various external sources and the geography of these different activities. We augment this literature by exploring knowledge sourcing within multilocational firms operating in the US using a unique dataset matching patent records to firm-level ownership and geographical data. The results add value to existing research in three ways. First, the establishments of multilocational corporations are shown to produce different kinds of knowledge in different locations. Second, the patents generated within a firm’s establishments are linked to the knowledge stocks of the cities where they operate, supporting a vision of geographical knowledge sourcing. Third, the complexity of knowledge produced within the firm as a whole is positively related to the number of establishments in which multilocational firms undertake innovation activities. In sum these data suggest that multilocational firms distribute their innovation activities across locations in order to secure access to local pools of tacit knowledge. The complexity value of firms’ knowledge production is enhanced as a result of this spatial strategy.
    Date: 2021–10
    Abstract: We analyze the value-added creation effect of GVC participation by applying a standard fixed effects regression model analysis with economy-wide country-industry data. We use OECD Inter-country Input-Output Tables covering 64 countries (21 APEC members and 43 non-APEC members) and 35 industries (1 Agriculture, forestry and fishing, 3 Mining, 16 Manufacturing, and 15 Service) between 2005 and 2015. We find that APEC member economies’ participation in GVC activities is not distinct from non-APEC member economies but the causal relationship between GVC participation and created domestic value-added is much stronger in APEC member economies. More specifically, from the qualitative evaluation on statistical data, we find that backward linkage has been stronger than forward linkage and both have been recently decreasing. The APEC industries’ upstream positions in production line have been slightly more distinguished than non-APEC industries. From the econometric regres-sion analysis, we find that forward participation in GVCs is more desirable than backward participation in terms of creating domestic value-added. We also find that the industry position in middle stages of production line in contrast to ear-lier and later stages creates higher domestic value-added per output unit. This implies that the firm-specific conventional U-shaped “Smile Curve Hypothesis” is not applicable at the economy-wide country-industry level, especially in APEC member economies. This finding supports that manufacturing industries are still a major driving force for less developed APEC member economies to move up the development ladder. Considering that gains from GVC participa-tion are diversified across industries and upgrading country-industry positions in GVCs is competitive among the interconnected countries, we strongly rec-ommend for APEC member economies to construct effective domestic value chains and coordinate with other members during their process of upgrading GVC participation.
    Keywords: GVC participation; GVC position; value-added creation; smile curve; APEC
    JEL: C23
    Date: 2020–12–04
  4. By: Enrico Alessandri (Department of Economics, Society & Politics, Università di Urbino Carlo Bo - Green-University L.Bocconi, Milan)
    Abstract: This paper examines the trade and innovation specialization patterns in the Latin American mining sector, in terms of exports of mining products, of its exports of mining equipment, and of its production of mining technologies (i.e. innovation). Results suggest that Latin American countries are specialised in the extraction and export of mining products (i.e. minerals), and de-specialised in the production of mining equipment and of mining technology, while they heavily rely on imports of equipment and technology. We also find that the mining innovation taking place in Latin America is of relatively low quality. Considering that innovation in the mining sector is supplier-dominated, the weak technological specialisation of Latin American countries in the mining sector reflects mainly the low innovation capacity of local suppliers to mining companies, in comparison to the global average.
    Keywords: Mining innovation; Mining production; Specialization patterns; Patent quality indicators; Local METS (suppliers); Patents; Trade data; Inward FDI; Latin America
    Date: 2021
  5. By: Jean-Charles Bricongne; Samuel Delpeuch; Margarita Lopez Forero
    Abstract: Based on French firm-level data over around 15 years we evaluate the contribution of the micro-level profit shifting –through tax haven foreign direct investments to the aggregate productivity slowdown measured in France. We show that firm measured productivity in France declines over the immediate years following the establishment in a tax haven, with an average estimated drop by 3.5% in labor apparent productivity. We argue that this productivity decline, following a presence in a tax haven, is most likely explained by multinationals’ tax optimization, where domestic productivity is underestimated as profits are not recorded anymore in the home country. The fall in productivity is especially strong for firms that are intensive in intangible capital and is equivalent to 4.1% (versus 2.7% for low intangible intensive firms), reflecting the fact that these types of assets are more easily shifted across countries and facilitate tax planning. Our results additionally suggest that the mismeasurement has strong dynamic effects, as the decline becomes more important the longer the firm remains in a tax haven. Finally, given these firms’ weight in the economy, our results imply an 8% loss at the aggregate in terms of the level of the labor productivity throughout the whole sample period, which is equivalent to an annual loss of 9.7% in terms of the aggregate annual labor productivity growth.
    Keywords: Tax Havens, Profit shifting FDI, Productivity slowdown, Productivity mismeasurement, Intangible capital
    JEL: D33 F23 H26 H87 O47
    Date: 2021
  6. By: James McNerney; Yang Li; Andres Gomez-Lievano; Frank Neffke
    Abstract: In the short-term, economies shift preferentially into new activities that are related to ones they currently do. Such a tendency should have implications for the nature of an economy's long-term development as well. We explore these implications using a dynamical network model of an economy's movement into new activities. First, we theoretically derive a pair of coordinates that summarize long-term structural change. One coordinate captures overall ability across activities, the other captures an economy's composition. Second, we show empirically how these two measures intuitively summarize a variety of facts of long-term economic development. Third, we observe that our measures resemble complexity metrics, though our route to these metrics differs significantly from previous ones. In total, our framework represents a dynamical approach that bridges short- and long-term descriptions of structural change, and suggests how different branches of economic complexity analysis could potentially fit together in one framework.
    Date: 2021–10
  7. By: Massimo FLORIO (Department of Economics, Management, and Quantitative Methods, Università degli Studi di Milano (Italy))
    Abstract: The COVID-19 pandemic has forced us to reconsider the relationship between public and private research and development (R&D). The policy issue is whether, over the next 20 years, governments’ only negotiating position on biomedical technologies will be to sign one purchase contract after another and transfer value from tax payers to investors in pharmaceutical companies. Knowledge and technologies that are crucial to Covid-19 vaccine development and production were created with the contribution of governments. Patents filed by pharma companies do not protect the public interest arising from such earlier research. The paper offers a case study on the privatization of knowledge created in the first place by R&D in the public sector or supported by public funds and eventually being appropriated by pharmaceutical corporations.
    Keywords: COVID 19 pandemic, vaccines, public and private R&D, Big Pharma, public funding, USA
    JEL: H51 I11 L32 O32
    Date: 2021–03
  8. By: Matteo Coronese; Martina OCcelli; Francesco Lamperti; Andrea Roventini
    Abstract: This paper presents a novel agent-based model of land use and technological change in the agricultural sector under environmental boundaries, finite available resources and changing land productivity. In particular, we model a spatially explicit economy populated by boundedly-rational farmers competing and innovating to fulfill an exogenous demand for food, while coping with a changing environment shaped by their production choices. Given the strong technological and environmental uncertainty, farmers learn and adaptively employ heuristics which guide their decisions on engaging in innovation and imitation activities, hiring workers, acquiring new farms, deforesting virgin areas and abandoning unproductive lands. Such activities in turn impact on land productivity, food production, food prices and land use. We firstly show that the model can replicate key stylized facts of the agricultural sector. We then extensively explore its properties across several scenarios featuring different institutional and behavioral settings. Finally, we showcase the properties of model in different applications considering deforestation and land abandonment; soil degradation; and climate impacts.
    Keywords: Land use; Agent-based model; Technological change; Environmental boundaries; Sustainability.
    Date: 2021–10–17
  9. By: Leonardo Becchetti (Dipartimento di Economia e Finanza, Università di Roma Tor Vergata); Sara Mancini (Dipartimento di Economia e Finanza, Università di Roma Tor Vergata); Nazaria Solferino (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria)
    Abstract: We investigate the effects of domestic and EU incentives on different types of corporate investments in ecological transition on a large representative sample of Italian firms including the universe of companies above 250 employees. We perform propensity score matching tests exploiting revealed information of firms that declare to use the incentives for specific ecological transition investments compared to a synthetic counterfactual of “twin” companies matched on selected characteristics. Our findings show that domestic and EU incentives significantly increase green investments, and more so if we consider investment in energy saving plants and for greenhouse emissions reduction.
    Keywords: EU incentives, green investment, propensity score
    JEL: H23 H25 Q58
    Date: 2021–10
  10. By: Sebastian Doerr; Magdalena Erdem; Guido Franco; Leonardo Gambacorta; Anamaria Illes
    Abstract: Can higher technological capacity help firms to recover quicker from recessions? Analyzing the effects of the Covid-19 pandemic on firm revenues in several countries, we find that firms headquartered in jurisdictions with better digital infrastructure generated relatively higher revenue during the shock period. Improving a country's technological capability by one standard deviation is associated with a relative increase in revenues of the average firm by around 4%. The positive effect of technology is more pronounced among smaller firms, suggesting that it could have helped the recovery of SMEs.
    JEL: E23 G10 G38 O30
    Date: 2021–10

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