nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2022‒02‒14
twelve papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Automation and related technologies: A mapping of the new knowledge base By Santarelli, Enrico; Staccioli, Jacopo; Vivarelli, Marco
  3. Labour-saving automation and occupational exposure: A text-similarity measure By Montobbio, Fabio; Staccioli, Jacopo; Maria Enrica Virgillito; Vivarelli, Marco
  4. Positioning firms along the capabilities ladder By Coad, Alex; Mathew, Nanditha; Pugliese, Emanuele
  5. Is there job polarization in developing economies? A review and outlook. By Soares Martins Neto, Antonio; Mathew, Nanditha; Mohnen, Pierre; Treibich, Tania
  6. Networks of international knowledge links: new layers in innovation systems By Leonardo Costa Ribeiro; Jorge Nogueira de Paiva Britto; Eduardo da Motta e Albuquerque
  7. How did China's GVCs participation influence its manufacturing productivity? By Ping Hua
  8. A framework to decarbonise the economy By Filippo Maria D’Arcangelo; Ilai Levin; Alessia Pagani; Mauro Pisu; Åsa Johansson
  9. Wage effects of global value chains participation and position: An industry-level analysis By Ndubuisi, Gideon; Owusu, Solomon
  10. Growth and Distribution regimes under Global Value Chains: Diversification, Integration and Uneven Development By Arpan Ganguly; Danilo Spinola
  11. Product market competition, creative destruction and innovation By Rachel Griffith; John Van Reenen
  12. AN AGENT-BASED MODEL OF TRICKLE-UP GROWTH AND INCOME INEQUALITY Documents de travail GREDEG GREDEG Working Papers Series By Elisa Palagi; Mauro Napoletano; Andrea Roventini; Jean-Luc Gaffard

  1. By: Santarelli, Enrico (Department of Economics, University of Bologna, and Department of Economics and Management, University of Luxembourg); Staccioli, Jacopo (Department of Economic Policy, Catholic University of the Sacred Heart, and Institute of Economics, Sant’Anna School of Advanced Studies); Vivarelli, Marco (UNU-MERIT, Maastricht University, and Department of Economic Policy, Catholic University of the Sacred Heart, and Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA))
    Abstract: Using the entire population of USPTO patent applications published between 2002 and 2019, and leveraging on both patent classification and semantic analysis, this paper aims to map the current knowledge base centred on robotics and AI technologies. These technologies are investigated both as a whole and distinguishing core and related innovations, along a 4-level core-periphery architecture. Merging patent applications with the Orbis IP firm-level database allows us to put forward a twofold analysis based on industry of activity and geographic location. In a nutshell, results show that: (i) rather than representing a technological revolution, the new knowledge base is strictly linked to the previous technological paradigm; (ii) the new knowledge base is characterised by a considerable – but not impressively widespread – degree of pervasiveness; (iii) robotics and AI are strictly related, converging (particularly among the related technologies and in more recent times) and jointly shaping a new knowledge base that should be considered as a whole, rather than consisting of two separate GPTs; (iv) the US technological leadership turns out to be confirmed (although declining in relative terms in favour of Asian countries such as South Korea, China and, more recently, India).
    Keywords: Robotics, Artificial Intelligence, General Purpose Technology, Technological Paradigm, Industry
    JEL: O25 O31 O33 O34
    Date: 2022–01–17
  2. By: Priit Vahter; Maaja Vadi
    Abstract: This paper explores the dynamic nature of complementarities between technological and organizational innovation at firms. Using Spanish firm level panel data (PITEC) over period 2008-2016, it investigates how the formation, keeping and ending of the joint adoption of these two core types of innovation is associated with firm performance. In the case of the general static test of complementarities we find no evidence of complementarities. However, once we focus on the analysis of within-firm changes in the complementarity bundle of innovation types, we observe clear evidence that some sequential as well as simultaneous strategy switches towards combining technological and organizational novelties are associated with significant performance premia at firms. Our findings point out the key role of technological innovation in these complementarities. We find evidence of sequential complementarity only when organizational innovation is added to the already existing technological innovation at the firm, not when organizational innovation is added as first component before technological innovation. In the case of dissolving the complementarity bundle of innovation types, the key disadvantage for the firm is related to dropping the technological innovation. Giving up only organizational innovation while keeping the technological innovation appears to have no negative effect, on average, on firm performance.
    Keywords: technological innovation, organizational innovation, complementarities, sequential complementarity
    Date: 2022
  3. By: Montobbio, Fabio (Università Cattolica del Sacro Cuore, BRICK, Collegio Carlo Alberto, and ICRIOS, Bocconi University); Staccioli, Jacopo (Università Cattolica del Sacro Cuore, and Institute of Economics, Scuola Superiore Sant’Anna); Maria Enrica Virgillito (Institute of Economics, Scuola Superiore Sant’Anna, and Università Cattolica del Sacro Cuore); Vivarelli, Marco (UNU-MERIT, Maastricht University, IZA, and Università Cattolica del Sacro Cuore)
    Abstract: This paper represents one of the first attempts at building a direct measure of occupational exposure to robotic labour-saving technologies. After identifying robotic and LS robotic patents retrieved by Montobbio et al. (2022), the underlying 4-digit CPC definitions are employed in order to detect functions and operations performed by technological artefacts which are more directed to substitute the labour input. This measure allows to obtain fine-grained information on tasks and occupations according to their similarity ranking. Occupational exposure by wage and employment dynamics in the United States is then studied, complemented by investigating industry and geographical penetration rates.
    Keywords: Labour-Saving Technology, Natural Language Processes, Labour Markets, Technological Unemployment
    JEL: O33 J24
    Date: 2021–11–25
  4. By: Coad, Alex (Waseda Business School); Mathew, Nanditha (UNU-MERIT, Maastricht University); Pugliese, Emanuele (European Commission, Joint Research Centre (JRC))
    Abstract: We develop and apply a novel methodology for quantifying the capability development of firms, and putting these capabilities (and hence also the firms) in a hierarchy, that we refer to as their position on the capabilities ladder. Our nestedness algorithm, inspired by biology and network science, defines a capability as complex if it is performed by only a few firms at the upper rungs of the ladder. We analyze balance sheet and innovation data of almost 40,000 Indian firms for the time period 1988-2015, and observe significant nestedness. Lower rungs of the capabilities ladder correspond to basic managerial and production capabilities. Mid-level rungs correspond to internationalization and acquiring absorptive capacity. Higher level rungs are more related to M&A and innovation. ICT capabilities have become more fundamental lower-level rungs on the capabilities ladder in recent years. We find that capability ranking can explain future growth patterns and survival probability of firms, summing up in one number their future potential trajectories.
    Keywords: Capabilities, Competences, Complexity, Balance sheet data, Resources
    JEL: L2 D2 O12
    Date: 2021–08–13
  5. By: Soares Martins Neto, Antonio (UNU-MERIT, Maastricht University); Mathew, Nanditha (UNU-MERIT, Maastricht University); Mohnen, Pierre (UNU-MERIT, Maastricht University); Treibich, Tania (SBE, Maastricht University)
    Abstract: This paper analyses the evidence of job polarization in developing countries. We carry out an extensive review of the existing empirical literature and examine the primary data sources and measures of routine intensity. The synthesis of results suggests that job polarization in emerging economies is only incipient compared to other advanced economies. We then examine the possible moderating aspects preventing job polarization, discussing the main theoretical channels and the existing empirical literature. Overall, the literature relates the lack of polarization as a natural consequence of limited technology adoption and the offshoring of routine, middle-earning jobs to some host developing economies. In turn, the limited technology adoption results from sub-optimal capabilities in those economies, including the insufficient supply of educated workers. Finally, we present the main gaps in the literature in developing economies and point to the need for more micro-level studies focusing on the impacts of tech- nology adoption on workers’ careers and studies exploring the adoption and use of technologies at the firm level.
    Keywords: Job polarization, Routine intensity, Skills, Developing countries
    JEL: J24 J63 O15 O33 E24
    Date: 2021–11–25
  6. By: Leonardo Costa Ribeiro (Cedeplar/UFMG); Jorge Nogueira de Paiva Britto (Universidade Federal Fluminense); Eduardo da Motta e Albuquerque (Cedeplar/UFMG)
    Abstract: The unit of analysis of this paper is an international knowledge link (IKL), a knowledge flow that leaves a trace and connects two nodes – different institutions, firms and universities, in different countries. We present and analyze 17,240,834 international knowledge links (data from 2017). These international knowledge links form three basic networks. These three international layers overlap and interweave, forming a network of networks. The contribution of this paper is the identification and preliminary analysis of this overlapping and intertwinement. These networks are robust and their properties suggest a hierarchical structure of a multilayer network that is asymmetric. These networks are interpreted as new layers of innovation systems, with implications for the dynamic of innovation – a reorganization of different levels of innovation systems, now a more complicated structure with interaction between local, sectoral and national levels, as well as these overlapping international networks.
    Keywords: International Knowledge flows; Innovation Systems; Networks of networks
    JEL: O32 O34 O39
    Date: 2022–01
  7. By: Ping Hua (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)
    Abstract: By using panel data of 15 Chinese manufacturing industries over the 2005-2014 period from OECD TiVA and WIOD databases, the impact of China's GVCs participation on labor productivity is estimated. We find that while the productivity elasticity of the share of sector's foreign value added relative to sector's exports known as sector backward linkages is negative, that relative to China's gross exports named structure backward linkage is positive. As the annual average growth rates of both backward linkages are negative, China's backward linkages have contributed to productivity growth of 6.41% per year on average. We find that the positive productivity elasticity of the share of domestic intermediate goods embodied in exports of third countries relative to sector's exports, named sector forward linages together with a positive annual average growth rate, and that relative to China's exports named structure forward linkages together with a negative annual average growth rate, have increased productivity of 1.97% per year on average. We find finally that GVCs position is improved from 0.3 in 2005 to 0.7 in 2014. China's GVCs participation exerted positive productivity effects via optimizing resource allocation inside sectors towards more efficiency ones, via moving up from low productivity backward linkages to higher productivity forward linkages and via improving its position. This diminished the risk to be entrenched in low-profitability low productivity growth GVCs activities in China. However, the productivity contribution of backward linkages 3 times higher than that of forward linkage suggests that the future positive productivity impact of GVCs moving up may be much more difficult in a less favorable context (trade war between China and USA, reindustrialization and trade protection related to Covid-19 for example).
    Keywords: JEL Classification Numbers: F62,F63,O5,O47 global value chains,manufacturing productivity,China
    Date: 2021–12–31
  8. By: Filippo Maria D’Arcangelo; Ilai Levin; Alessia Pagani; Mauro Pisu; Åsa Johansson
    Abstract: Global progress towards tackling climate change is lagging. This paper puts forward a framework to design comprehensive decarbonisation strategies while promoting growth and social inclusion. It first highlights the need of evaluating a country’s national climate targets and current policy mix, in conjunction with facilitating monitoring tools to assess current and future progress, as a key step to design effective decarbonisation strategies. It then provides a detailed comparison of several policy instruments across different assessment criteria, which indicates that no single instrument is clearly superior to all others. This highlights the need for developing decarbonisation strategies based on a wide policy mix consisting of three main components: 1) emission pricing policy instruments; 2) standards and regulations; 3) complementary policies to facilitate the reallocation of capital, labour and innovation towards low-carbon activities and to offset the adverse distributional effects of reducing emissions. However, there is no one-size-fits-all policy mix, as feasible policy choices depend on countries’ industrial structure, social preferences and political constraints. A robust and independent institutional framework, stakeholders engagement and credible communication campaigns are key to managing these constraints and ultimately enhancing public acceptance of climate mitigation policies.
    Keywords: climate change, emission pricing, green investments, green R&D and innovation, green standards and regulations, growth and inclusion, mitigation policies, political economy of climate policy
    JEL: H54 P48 Q42 Q52 Q54 Q55 Q58
    Date: 2022–02–04
  9. By: Ndubuisi, Gideon (UNU-MERIT, Maastricht University, and German Development Institute (DIE)); Owusu, Solomon (UNU-MERIT, Maastricht University, and German Development Institute (DIE))
    Abstract: We examine how participation and positioning in global value chains (GVC) affect wages. We also examine whether this relationship is conditioned by a country's development level and labour market regulation. The results show that participation and upstream specialisation in GVCs are associated with higher wages but only in developed countries. In developing countries, while GVC participation is associated with higher wages, upstream specialisation exerts downward pressure on wages. For analysis focusing on the role of labour market regulation, we find that GVC participation only exerts a positive effect on wages under stringent labour market regulation. Under flexible labour market conditions, it exerts downward pressure on wages but allows for the effective reallocation of GVC workers into knowledge-intensive and high value added upstream activities in the value chain that are more productive and wage rewarding. Additional analysis on the effects of GVCs along the wage distribution show that participation and upstream specialisation in GVCs are associated with higher wages across all wage segments in the developed countries. In developing countries, GVC participation only benefits higher wage earners and make low-wage earners worse-off. Even when upstream specialisation is associated with lower wages across all wage segments, low wage earners are disproportionately affected.
    Keywords: Wages, Global Value Chain, GVC Participation, Upstream Specialisation
    JEL: F14 F16 J16 O14 O15 P51
    Date: 2021–11–11
  10. By: Arpan Ganguly; Danilo Spinola
    Abstract: This article aims to theoretically and empirically study the macroeconomic interactions between productive structure and income distribution in the context of the Global Value Chains (GVC). Firstly, we develop a theoretical framework, inspired by the Structuralist macroeconomic literature, establishing distinct regimes in the scenario of globalized production chains. The regimes are defined in terms of (1) a structure/diversification regime, (2) an integration/GVC regime, both drawn from the Balance of Payments Constrained Model (BPCM) literature, and (3) a functional income distribution regime. The theoretical framework guides the selection of proxies used to characterize each regime, measured using Principal Component Analysis (PCA) scores. That allows us to identify country patterns in a structured typology. Finally, we focus on growth trajectories, estimating the causal relationship between each of the beforementioned regimes and per-capita growth, using IV estimations. The dataset consists of 37 countries, with sources from the World Development Indicators (WDI), World Input-Output Database (WIOD), Trade in Value Added (TiVA), and the Penn World Tables (PWT). On one hand, this article contributes to structuralist growth models that typically estimate demand and distribution regimes independently, thereby offering a unified narrative on regimes of economic growth in the context of GVCs. On the other hand, our typology depicts how growth dynamics vary distinctly by geographical regions and how globalization has retained and accelerated processes of uneven development globally. The results show that (1) developed countries are more inclusive in terms of distribution under GVCs, (2) structural change has been exclusive, and growth patterns have been following a specialized pattern, and (3) the growth pattern has been associated with higher integration, but less diversification.
    Keywords: Global Value Chains, Uneven Development, Income Distribution
    JEL: E12 F15 F43 O47
    Date: 2022–02
  11. By: Rachel Griffith (Institute for Fiscal Studies and University of Manchester); John Van Reenen (Institute for Fiscal Studies)
    Abstract: We examine the economic analysis of the relationship between innovation and product market competition. First, we give a brief tour of the intellectual history of the area. Second, we examine how the Aghion-Howitt framework has influenced the development of the literature theoretically and (especially) empirically, with an emphasis on the “inverted U”: the idea that innovation rises and then eventually falls as the intensity of competition increases. Thirdly, we look at recent applications and development of the framework in the areas of competition policy, international trade and structural Industrial Organization.
    Date: 2021–12–03
  12. By: Elisa Palagi (SSSUP - Scuola Universitaria Superiore Sant'Anna [Pisa]); Mauro Napoletano (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (... - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015-2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur, OFCE - Observatoire français des conjonctures économiques - Sciences Po - Sciences Po, SKEMA Business School, SSSUP - Scuola Universitaria Superiore Sant'Anna [Pisa]); Andrea Roventini (SSSUP - Scuola Universitaria Superiore Sant'Anna [Pisa], OFCE - Observatoire français des conjonctures économiques - Sciences Po - Sciences Po); Jean-Luc Gaffard (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (... - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015-2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur, OFCE - Observatoire français des conjonctures économiques - Sciences Po - Sciences Po, SKEMA Business School)
    Abstract: We build an agent-based model to study how coordination failures, credit con- straints and unequal access to investment opportunities affect inequality and aggre- gate income dynamics. The economy is populated by households who can invest in alternative projects associated with different productivity growth rates. Access to investment projects also depends on credit availability. The income of each house- hold is determined by the output of the project but also by aggregate demand conditions. We show that aggregate dynamics is affected by income distribution. Moreover, we show that the model features a trickle-up growth dynamics. Redis- tribution towards poorer households raises aggregate demand and is beneficial for the income growth of all agents in the economy. Extensive numerical simulations show that our model is able to reproduce several stylized facts concerning income inequality and social mobility. Finally, we test the impact of redistributive fiscal policies, showing that fiscal policies facilitating access to investment opportunities by poor households have the largest impact in terms of raising long-run aggregate income and decreasing income inequality. Moreover, policy timing is important: fiscal policies that are implemented too late may have no significant effects on in- equality.
    Keywords: income inequality,social mobility,credit constraints,coordination failures,effective demand,trickle-up growth,fiscal policy JEL classification: C63,D31,E63,E21
    Date: 2022–01–04

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