nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2022‒01‒03
ten papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. ultinational Enterprises, Technology Transfers and Robot Adoption By Leone, Fabrizio
  2. Barriers to Creative Destruction: Large Firms and Nonproductive Strategies By Salomé Baslandze
  3. The importance of global value chains and regional capabilities for the economic complexity of EU-regions By F. Colozza; R. Boschma; A. Morrison; C. Pietrobelli
  4. Pivoting from Dirty to Clean: The Intellectual Distance between Clean and Dirty Technologies By Jee, Su Jung; Srivastav, Sugandha
  5. Firm responses to the pandemic crisis: sticky capabilites and widespread restructuring By Stefano Costa; Stefano De Santis; Giovanni Dosi; Roberto Monducci; Angelica Sbardella; Maria Enrica Virgillito
  6. Mission-oriented innovation policy. The case of the Swedish ‘Vision Zero’ approach to traffic safety By Jannes Craens; Koen Frenken; Toon Meelen; C. Pietrobelli
  7. Reconstructing firm-level interactions: the Dutch input-output network By Leonardo Niccol\`o Ialongo; Camille de Valk; Emiliano Marchese; Fabian Jansen; Hicham Zmarrou; Tiziano Squartini; Diego Garlaschelli
  8. The creation and diffusion of knowledge: Evidence from the Jet Age By Pauly, Stefan; Stipanicic, Fernando
  10. Information and Communication Technologies and Medium-Run Fluctuations By Brianti, Marco; Gati, Laura

  1. By: Leone, Fabrizio
    Abstract: Countries compete internationally to attract investment from multinational enterprises (MNEs). Policy-makers hope that they bring superior technology to the host country and boost domestic activity. Because technology is often factor-biased, there are distributional effects to consider beyond aggregate welfare. Measuring the technological content of foreign investment is critical when thinking about the distributional consequences of policies towards foreign investment. This paper shows that multinational enterprises spur industrial robot adoption, an increasingly important type of labour-replacing technology. Using detailed firm-level data for the Spanish manufacturing industry, I find that firms switching from domestic to foreign ownership are about 20% more likely to adopt industrial robots than domestic-owned producers. The reason is that industrial robots allow to reduce marginal costs and scale-up production. Their adoption is a key ingredient of new affiliates’ growth, and higher reliance on foreign technology drives this switch. A structural model of firm investment reveals that both robot adoption and foreign ownership increase TFP. However, robot adoption also fosters capital-biased technological change. A model-based decomposition reveals that an economy without robots and MNEs would have 10% lower aggregate TFP but about 30% higher labour share per year, on average. These findings shed new light on the aggregate and distributional consequences of foreign investment
    Keywords: Multinational Enterprises, Industrial Robots, Technology Transf
    Date: 2021–11
  2. By: Salomé Baslandze
    Abstract: This working paper reviews recent empirical evidence on large firms and nonproductive strategies that hinder creative destruction and reallocation. The focus is on three types of nonproductive strategies: political connections, nonproductive patenting, and anticompetitive acquisitions. Across different contexts using granular micro data sets, we overwhelmingly see that as firms gain market share, they increasingly rely on nonproductive strategies but reduce their productive, innovation-based strategies. I also discuss theoretical channels, aggregate implications, and potentials for some policies.
    Keywords: creative destruction; innovation; growth; patents; political connections; firm dynamics
    JEL: O3 O4
    Date: 2021–09–30
  3. By: F. Colozza; R. Boschma; A. Morrison; C. Pietrobelli
    Abstract: This paper combines various literatures on Global Value Chains (GVC), Economic Complexity and Evolutionary Economic Geography. The objective is to assess the role of regional capabilities and GVC participation in fostering economic complexity in 236 NUTS2-regions in Europe. Our results suggest there is no such thing as a common path of economic upgrading across EU regions. Regions with high economic complexity tend to keep their advantageous positions, as they are capable of benefitting from both regional capabilities (as proxied by a high relatedness between local activities) and external linkages in terms of GVC participation. Conversely, low-complex regions do not benefit from GVC participation, unless their regional capabilities (in terms of relatedness density) are also stronger.
    Keywords: Economic Complexity, Evolutionary Economic Geography, Global Value Chains, Relatedness, Economic Upgrading, EU regions
    JEL: B52 F23 O19 O33 R10
    Date: 2021–12
  4. By: Jee, Su Jung; Srivastav, Sugandha
    Abstract: Do clean technologies learn from their dirty counterparts? Using patents granted by USPTO from 1976 to 2020, we evaluate the "intellectual distance" between clean and dirty technologies. Our measure of intellectual distance is intuitively similar to "degrees of separation" where 1 indicates that a clean patent directly cites a prior dirty patent, and 2 indicates that there is an intermediary technology. We find that less than one-tenth of clean patents directly cite prior dirty art. Since citations are a proxy for learning, this implies that for the most part, leveraging dirty knowledge to pivot into clean sectors is not straightforward. However, there is a high degree of heterogeneity. Some clean technologies such as geothermal energy, carbon capture and storage, and offshore wind learn significantly from dirty technologies, due to shared knowhow related to drilling, pollution-control and operating out at sea. Our analysis identifies "clean adjacent sectors" that build upon dirty knowledge inputs, which could be plausible diversification options for dirty firms.
    Keywords: Green Transition, Intellectual Distance, Clean Technology, Dirty Technology, Intellectual Carbon Lock-in
    Date: 2021–11
  5. By: Stefano Costa; Stefano De Santis; Giovanni Dosi; Roberto Monducci; Angelica Sbardella; Maria Enrica Virgillito
    Abstract: This paper is meant to address the status of the Italian productive system in the wake of the most severe crisis economies are facing since WWII. In order to accomplish the latter task we rely on the combination of two high quality level dataset informing about so called firm behavioural traits: the first, the IMCPI (2019), collected information on organizational capabilities, practices, attitudes toward innovation, business models and strategies during the period 2016-2018, in so called usual times. The second, the SPIESC-19 (2020), was able to monitor firm responses to the pandemic crisis, collecting information in the period June - October 2020. Two results emerge out of our analysis: first, firm responses are highly path-dependent on their pre-crisis organizational capabilities; second, such crisis might turn out be more pervasive than expected, producing widespread, rather than creative, restructuring processes.
    Keywords: Organizational capabilities; Italian productive structure; Pandemic crisis.
    Date: 2021–12–28
  6. By: Jannes Craens; Koen Frenken; Toon Meelen; C. Pietrobelli
    Abstract: There is an increasing consensus among policy makers and academics that Mission-oriented Innovation Policy is needed to tackle the grand societal challenges of our time. However, there is little experience in actually carrying out this new type of policy. In this light, we investigate Sweden’s ambitious traffic safety policy known as ‘Vision Zero’. We consider this policy as a mission-oriented innovation policy towards a societal challenge, as it started from the articulation of a bold, societal goal (zero traffic deaths), fostered multiple types of innovations (technological infrastructural, regulatory), and involved a variety of actors (public, private and professional organizations). We explain what the Vision Zero policy entails, how stakeholders dealt with ‘transformational failures’, and what made the policy a success. We end with lessons for the development of new mission-oriented innovation policies to address societal challenges.
    Keywords: mission, transformative innovation policy, transformational failures, societal challenges, Vision Zero
    Date: 2021–12
  7. By: Leonardo Niccol\`o Ialongo; Camille de Valk; Emiliano Marchese; Fabian Jansen; Hicham Zmarrou; Tiziano Squartini; Diego Garlaschelli
    Abstract: Recent crises have shown that the knowledge of the structure of input-output networks at the firm level is crucial when studying economic resilience from the microscopic point of view of firms that rewire their connections under supply and demand shocks. Unfortunately, empirical inter-firm network data are rarely accessible and protected by confidentiality. The available methods of network reconstruction from partial information, which have been devised for financial exposures, are inadequate for inter-firm relationships because they treat all pairs of nodes as potentially interacting, thereby overestimating the rewiring capabilities of the system. Here we use two big data sets of transactions in the Netherlands to represent a large portion of the Dutch inter-firm network and document the properties of one of the few analysed networks of this kind. We, then, introduce a generalized maximum-entropy reconstruction method that preserves the production function of each firm in the data, i.e. the input and output flows of each node for each product type. We confirm that the new method becomes increasingly more reliable as a finer product resolution is considered and can therefore be used as a generative model of inter-firm networks with fine production constraints. The likelihood of the model, being related to the entropy, proxies the rewiring capability of the system for a fixed input-output configuration.
    Date: 2021–11
  8. By: Pauly, Stefan; Stipanicic, Fernando
    Abstract: This paper provides new causal evidence of the impact of improvements in air travel during the beginning of the Jet Age on the creation and diffusion of knowledge. We digitize airlines’ historical flight schedules and construct a novel data set of the flight network in the United States. Between 1951 and 1966, travel time between locations more than 2,000km apart decreased on average by 41%. The reduction in travel time explains 33% of the increase in knowledge diffusion as measured by patent citations. The increase in knowledge diffusion further caused an increase in the creation of new knowledge. The results provide evidence that jet airplanes led to innovation convergence across locations and contributed to the shift in innovation activity towards the South and the West of the United States.
    Keywords: O31, O33, R41, N72
    Date: 2021–11
  9. By: Jaan Masso; Priit Vahter
    Abstract: This paper investigates the productivity effects for domestic suppliers from joining and exiting the value chains of multinational enterprises (MNEs). The vast majority of prior literature has relied on sector-level input-output tables in estimating the effects of vertical linkages of FDI. Instead, our econometric analysis of the creation and destruction of backward linkages of MNEs is based on information on firm-to-firm transactions recorded in the valued added tax declarations data. Treatment analysis based on propensity score matching and panel data from Estonia suggests that starting to supply multinationals initially boosts the value added per employee of domestic firms, including effects on the scale of production and the capital-labour ratio. These first linkages to MNEs do not affect the total factor productivity (TFP) of domestic firms, suggesting that TFP effects take time to materialise. We further find that there are limits to the wider diffusion of the effects of linkages to MNEs. We find no significant positive effects on the second-tier suppliers: the positive effects are limited to the first-tier suppliers with direct links to MNEs. One novel result is the evidence that the productivity of suppliers does not fall, on average, after decreasing or ending supplier relationships with MNE customers.
    Keywords: FDI, supplier upgrading, global value chains, vertical spillovers, backward linkages
    Date: 2021
  10. By: Brianti, Marco (University of Alberta, Department of Economics); Gati, Laura (European Central Bank)
    Abstract: This paper explores the possibility that productivity improvements in information and communication technologies (ICT) are a source of medium-run fluctuations in total factor productivity (TFP). We document in a structural VAR setting that innovations in ICT investment are followed by hump-shaped increases in TFP. Following the ICT literature, we use a two-sector model to suggest a mechanism behind the hump-shaped TFP response: that ICT is a general-purpose technology (GPT). Using impulse-response matching, we show that a model with a spillover from ICT capital is able to match the hump-shaped TFP response, hinting at the importance of the diffusion of ICT.
    Keywords: information and communication technologies; general-purpose technologies; two-sector models; total factor productivity
    JEL: E30
    Date: 2021–12–15

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