nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2021‒12‒13
ten papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Innovation Performance and the Signal Effect: Evidence from a European Program By Aurélien Quignon; Nadine Levratto
  2. Misappropriation of R&D Subsidies: Estimating Treatment Effects with One-Sided Noncompliance By Boeing, Philipp; Peters, Bettina
  3. Environmental Productivity and Convergence of European Manufacturing Industries. Are they Under Pressure? By Stergiou, Eirini; Rigas, Nikos; Kounetas, Konstantinos
  4. Automation and its Employment Effects: A Literature Review of Automotive and Garment Sectors By Guendalina Anzolin
  5. Regions and trademarks. Research opportunities and policy insights from leveraging trademarks in regional innovation studies By Carolina Castaldi; Sandro Mendonca;
  6. What is holding back artificial intelligence adoption in Europe? By Mia Hoffmann; Laura Nurski
  7. Coping with increasing tides: technological change, agglomeration dynamics and climate hazards in an agent-based evolutionary model By Alessandro Taberna; Tatiana Filatova; Andrea Roventini; Francesco Lamperti
  8. Direct and indirect effects of universities on European regional productivity By E. Marrocu; R. Paci; S. Usai
  9. Labor Market Dynamics When Ideas are Harder to Find By Adrien Bilal; Niklas Engbom; Simon Mongey; Giovanni L. Violante
  10. Growth, Concentration and Inequality in a Unified Schumpeter Mark I + II model By Patrick Mellacher

  1. By: Aurélien Quignon; Nadine Levratto
    Abstract: This paper seeks to estimate the effect of a European policy that subsidizes innovation investments. By carefully selecting observables, we compare recipients of the program with non-recipient firms to overcome the endogeneity of R&D grants. We conduct a difference-in-differences design on the universe of a unique firm-level dataset of European SMEs between 2008 and 2017. We find a significant effect of proof of concept grants, which implies an increase in the number of patentapplications and the probability of patenting. There are positive impacts on credit financing, which suggest a signal effect to investors about the project quality of young firms.
    Keywords: R&D subsidies, Innovation, Patent, Financing constraints, H2020
    JEL: G28 G32 O30 O38
    Date: 2021
  2. By: Boeing, Philipp (ZEW); Peters, Bettina (ZEW Mannheim)
    Abstract: In evaluating the effectiveness of R&D subsidies, the literature has focused on potential crowding out effects, while the possibility of misappropriation of public funds that results from moral hazard behavior has been completely neglected. This study develops a theoretical framework with which to identify misappropriation. Using Chinese firm-level data for the period 2001-2011, we show that misappropriation is a major threat. 42% of grantees misused R&D subsidies for non-research purposes, accounting for 53% of the total amount of R&D subsidies. In a second step, we study the loss of effectiveness of R&D subsidies in stimulating R&D expenditures that is due to misappropriation. We measure the loss in effectiveness by estimating the causal effect of R&D subsidies in the presence of misappropriation using an intention-to-treat (ITT) estimator and comparing it to the ideal situation (without misappropriation) using the complier average causal effect (CACE). We find that China's R&D policy could have been more than twice as effective in boosting R&D without misappropriation. R&D expenditures could have been stimulated beyond the subsidy amount (additionality), but noncompliant behavior has resulted in a moderately strong partial crowding out effect. We find significant treatment heterogeneity by period, subsidy size, industry, and ownership. Notably, the loss in effectiveness has diminished following a policy reform in 2006. Nevertheless, the misappropriation of public funds considerably undermines the impact of R&D policies in China.
    Keywords: R&D subsidies, misappropriation, China, moral hazard, policy evaluation
    JEL: O31 O38 C21 H21
    Date: 2021–11
  3. By: Stergiou, Eirini; Rigas, Nikos; Kounetas, Konstantinos
    Abstract: European industries are under pressure regarding their environmental performance and productivity growth. The current energy crisis offsets governments efforts to achieve carbon neutrality while removing significant degrees of freedom in terms of firm's competitiveness. This paper studies environmental productivity and its components at a European industrial level using a dataset of 13 industries of the manufacturing sector from 27 European countries over the 1995-2014 period. Our results point out that industrial environmental productivity has deteriorated across Europe with best practice change being the main contributor. In addition, referring to the technological leaders in Europe, the findings point out that low tend to follow the middle-high technology industries. Finally, the non-convergence hypothesis and the creation of discrete clubs for the productivity index case and its components are supported.
    Keywords: European Industries; Metafrontier Malmquist Luenberger index; Convergence; Technological heterogeneity
    JEL: C61 D24 L60 Q43 Q56
    Date: 2021–11–20
  4. By: Guendalina Anzolin (King's College London)
    Abstract: Over the past decade, the interest around automation and digitalisation processes gained considerable attention both due to industrial and productivity related dynamics that stem from such processes and for their effects on employment. A better understanding of such dynamics, away from futuristic and apocalyptic views and closer to what happens at the shopfloor level are crucial to disentangle the effects of automation on labour and to provide insights both at the research and policy making levels. This paper attempts to dig into this subject looking at technological change as an incremental – rather than disruptive – type of process, like the slow and incremental process that characterised previous waves of technological change. Digital and automated technologies are then defined as bundles of innovations, which are selectively integrated into existing systems and for specific objectives. Against this background, this paper contributes to the existing literature in two aspects: it critically engages in a literature review of the recent studies on the effects that automation technologies have on two manufacturing sectors - i.e., automotive and labour – with a focus on the gender dimension that try to emphasise the effects on female workers. Secondly, it presents an in-depth review of the technologies that are widely discussed under the 4.0 label, addressing their degree of automation and their level of disruptiveness of existing systems.
    Keywords: Automation, Employment, Manufacturing, Industry 4.0
    Date: 2021–11
  5. By: Carolina Castaldi; Sandro Mendonca;
    Abstract: At the intersection of regional and innovation studies, trademark research is producing stylized facts, methodological lessons and policy insights underlining the importance of softer intangible assets for regional resilience and growth. Despite all the recent attention, there are still several opportunities that the present agenda-framing piece tries to canvas, identifying at least two directions for further research: the geography of innovation/entrepreneurship and regional specialization/diversification. Not only do these emerge from a dedicated special issue in Regional Studies (to which this paper also serves as an Editorial), they also unfold in emerging research and policy trajectories.
    Keywords: trademarks, regions, geography, intangibles, innovation, specialization, diversification
    JEL: O3 L5 R1
    Date: 2021–12
  6. By: Mia Hoffmann; Laura Nurski
    Abstract: Artificial intelligence (AI) is considered a key driver of future economic development, expected to increase labour productivity and economic growth worldwide. To realise these gains, AI technologies need to be adopted by companies and integrated into their operations. However, it is unclear what the current level of AI adoption by European firms actually is. Estimates vary widely because of uneven data collection and lack of a standard definition and taxonomy...
    Date: 2021–11
  7. By: Alessandro Taberna; Tatiana Filatova; Andrea Roventini; Francesco Lamperti
    Abstract: By 2050 about 70% of the worldùs population is expected to live in cities. Cities offer spatial economic advantages that boost agglomeration forces and innovation, fostering further concentration of economic activities. For historic reasons urban clustering occurs along coasts and rivers, which are prone to climate-induced flooding. To explore trade-offs between agglomeration economies and increasing climate-induced hazards, we develop an evolutionary agent-based model with heterogeneous boundedly-rational agents who learn and adapt to a changing environment. The model combines migration decision of both households and firms between safe Inland and hazard-prone Coastal regions with endogenous technological learning and economic growth. Flood damages affect Coastal firms hitting their labour productivity, capital stock and inventories. We find that the model is able to replicate a rich set of micro- and macro-empirical regularities concerning economic and spatial dynamics. Without climate-induced shocks, the model shows how lower transport costs favour the waterfront region leading to self-reinforcing and path-dependent agglomeration processes. We then introduce five scenarios considering flood hazards characterized by different frequency and severity and we study their complex interplay with agglomeration patterns and the performance of the overall economy. We find that when shocks are mild or infrequent, they negatively affect the economic performance of the two regions. If strong flood hazards hit frequently the Coastal region before agglomeration forces trigger high levels of waterfront urbanization, firms and households can timely adapt and migrate landwards, thus absorbing the adverse impacts of climate shocks on the whole economy. Conversely, in presence of climate tipping points which suddenly increase the frequency and magnitude of flood hazards, we find that the consolidated coastal gentrification of economic activities locks-in firms on the waterfront, leading to a harsh downturn for the whole economy.
    Keywords: Agglomeration; path-dependency; climate; flood; shock; relocation; migration; agent-based model; tipping point; resilience; lock in.
    Date: 2021–11–29
  8. By: E. Marrocu; R. Paci; S. Usai
    Abstract: For the first time we investigate the effects that Universities exert on Total Factor Productivity dynamics for a very ample sample of 270 European regions over the period 2000-2016. This novel contribution goes beyond the traditional human capital and technological capital indirect effects and proposes a sound empirical assessment of the highly differentiated "third mission" activities. These are unique to engaged academic institutions and shape the key role they play as societal development-promoting agencies. Our analysis provides evidence of sizeable and robust universities direct supply-side effects, which complement the traditional ones in driving European regional productivity growth.
    Keywords: university;Regional Total Factor Productivity;human capital;technological capital;Universities' third mission
    Date: 2021
  9. By: Adrien Bilal; Niklas Engbom; Simon Mongey; Giovanni L. Violante
    Abstract: This paper evaluates the impact of slowing economic growth on labor market dynamism and misallocation. It provides a model of endogenous growth via imitation in a frictional labor market. The framework accounts for rich data on worker job-to-job transitions as well as stochastic and lifecycle properties of firm growth and job reallocation. High productivity entrants gradually replace obsolescing incumbents by poaching their workers, a process that is intermediated via a frictional labor market. When the likelihood of entrants imitating technologies in the tail of the distribution falls (ideas are harder to find), so does growth. Consistent with US data over the past 30 years, firm entry, incumbents’ employment response to productivity shocks, and job-to-job transitions decline, while the share of old firms increases. With lower imitation, however, there is less misallocation, because the slower aggregate rate of obsolescence induces productive firms to invest more in costly hiring and grow faster to their optimal size.
    JEL: E23 E24 O4
    Date: 2021–11
  10. By: Patrick Mellacher
    Abstract: I develop a simple Schumpeterian agent-based model where industries are born and evolve endogenously and use it to study the interrelation between technological change, economic growth, market concentration and inequality. This theoretical model combines features of the Schumpeter Mark I (centering around the entrepreneur) and Mark II model (emphasizing the innovative capacities of firms), and is capable of reproducing a large set of stylized facts concerning growth, market concentration, inequality and productivity. In particular, the model can reproduce the industry life-cycle, a Kuznets curve, a Piketty-style increase of inequality in "mature" economies, as well as recent stylized facts on "declining business dynamism". I conduct an extensive policy analysis to identify the parameters that produce these stylized facts in the model. Notably, the empirically-grounded assumption that the difficulty to imitate a firm depends on its technological distance to the imitator can explain prominent stylized facts of economic development since the 1980s. However, growth in the number of industries triggered by the exploitation of new technological opportunities can prove to be a counteracting force to these tendencies in the short run. Thus, the model suggests a wave-like evolution of growth, inequality and market concentration centered around advances in basic research. Extensive sensitivity analysis suggest that policies aimed at increasing the innovative capacities of firms increase the rate of growth of output and real wages (dynamic efficiency) at the expense of increasing market concentration (static inefficiency) and inequality.
    Date: 2021–11

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