nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2023‒01‒02
fourteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Identifying and characterising AI adopters: A novel approach based on big data By Flavio Calvino; Lea Samek; Mariagrazia Squicciarini; Cody Morris
  2. R&D Subsidies and Technological Progress in the Chinese ICT Manufacturing Industry By Li, Junjun
  3. Skilled Immigration, Task Allocation and the Innovation of Firms By Anna Maria Mayda; Gianluca Orefice; Gianluca Santoni
  4. Welfare effects of R&D support policies By Takalo, Tuomas; Tanayama, Tanja; Toivanen, Otto
  5. Does FDI increase product innovation of domestic firms? Evidence from China By Lu, Yue; Deng, Lijing; Tang, Yao
  6. Wages and productivity in Argentinian manufacturing. A structuralist and distributional firm-level analysis By Maria Celeste Gomez; Maria Enrica Virgillito
  7. Personality and regional innovativeness: An empirical analysis of German patent data By Reher, Leonie; Runst, Petrik; Thomä, Jörg
  8. Robots, Exports and Top Income Inequality: Evidence for the U.S. By Andrés César; Guillermo Falcone; Pablo Garriga
  9. Cap-and-Innovate: Evidence of regulation-induced innovation in California By Vanessa da Cruz
  10. The Regulation of Medical AI: Policy Approaches, Data, and Innovation Incentives By Ariel Dora Stern
  11. Productivity drivers of infrastructure companies: network industries to maximize economies of scale in the digital era By Nakatani, Ryota
  12. What skills and abilities can automation technologies replicate and what does it mean for workers?: New evidence By Julie Lassébie; Glenda Quintini
  13. Systems of Innovation in Central and Eastern European countries: Path of Economic Transition and Differences in Institutions By Mariia Shkolnykova; Lasse Steffens; Jan Wedemeier
  14. Accountability in Artificial Intelligence By Gil, Olga

  1. By: Flavio Calvino; Lea Samek; Mariagrazia Squicciarini; Cody Morris
    Abstract: This work employs a novel approach to identify and characterise firms adopting Artificial Intelligence (AI), using different sources of large microdata. Focusing on the United Kingdom, the analysis combines data on Intellectual Property Rights, website information, online job postings, and firm-level financials for the first time. It shows that a significant share of AI adopters is active in Information and Communication Technologies and professional services, and is located in the South of the United Kingdom, particularly around London. Adopters tend to be highly productive and larger than other firms, while young adopters tend to hire AI workers more intensively. Human capital appears to play an important role, not only for AI adoption but also for firms’ productivity returns. Significant differences in the characteristics of AI adopters emerge when distinguishing between firms carrying out AI innovation, those with an AI core business, and those searching for AI talent.
    Keywords: artificial intelligence, productivity, technology adoption
    Date: 2022–12–19
  2. By: Li, Junjun
    Abstract: In the past decades, the Chinese ICT industry has received fiscal, taxation, and financial policy support in technology R&D. This research adopts causal inference methods for mediation analysis with interaction to empirically examine the direct and indirect effects of R&D subsidies in the Chinese ICT manufacturing industry. We found that the impact of R&D subsidies on private R&D expenditure and innovation outputs is positive and statistically significant. However, higher subsidy intensity crowds out private R&D expenditures. Second, in the Eastern region, firms invest more in R&D but more in incremental rather than radical innovation. And, the enterprise average private R&D expenditure is insufficient in the ECE sector. Finally, openness and information levels positively contribute to innovation outputs. Based on the findings, we propose several policy suggestions.
    Keywords: R&D subsidies,innovation output,private R&D investment,Chinese ICT manufacturing,causal mediation analysis
    Date: 2022
  3. By: Anna Maria Mayda; Gianluca Orefice; Gianluca Santoni
    Abstract: This paper analyses the impact of skilled migrants on the innovation (patenting) activity of French firms between 1995 and 2010, and investigates the underlying mechanism. We present district-level and firm-level estimates and address endogeneity using a modified version of the shift-share instrument. Skilled migrants increase the number of patents at both the district and firm level. Large, high-productivity and capital-intensive firms benefit the most, in terms of innovation activ-ity, from skilled immigrant workers. Importantly, we provide evidence that one channel through which the effect works is task specialization (as in Peri and Sparber, 2009). The arrival of skilled immigrants drives French skilled workers towards language-intensive, managerial tasks while foreign skilled workers specialize in technical, research-oriented tasks. This mechanism manifests itself in the estimated increase in the share of foreign inventors in patenting teams as a consequence of skilled migration. Through this channel, greater innovation is the result of productivity gains from specialization.
    Keywords: skilled immigration, innovation, patents
    JEL: F22 J61
    Date: 2022
  4. By: Takalo, Tuomas; Tanayama, Tanja; Toivanen, Otto
    Abstract: We construct a model of innovation incorporating R&D externalities, R&D participation, financial market imperfections, and application and allocation of R&D subsidies, estimate it using Finnish R&D project level data and conduct a welfare analysis. The intensive, not the extensive R&D margin is important. Financial market imperfections are small. Tax credits and subsidies do not reach first best R&D but increase R&D 29-47% compared to laissez-faire. Welfare effects are small: Tax credits increase welfare 1%; subsidies reduce welfare once application costs are taken into accout. In terms of fiscal cost, tax credits are 90% more expensive than R&D subsidies.
    Keywords: R&D subsidies,R&D tax credits,extensive and intensive margin,financial market imperfections,welfare,counterfactual,economic growth
    Date: 2022
  5. By: Lu, Yue; Deng, Lijing; Tang, Yao
    Abstract: Exploiting a change in policy governing the entry of foreign direct investment (FDI) in 2002, we apply the difference-in-differences model to estimate the effect of FDI on the product scope of domestic Chinese firms. In industries that experienced relaxation in FDI regulations, the average product scope increased by 5% which indicates a rise in product innovation. FDI's spillovers along vertical linkages are also important, as we find that the product scope of firms is positively affected by FDI in upstream industries, but negatively affected by FDI in downstream industries. Further analysis shows that the negative effect of FDI in downstream industries is mainly concentrated in industries with a high level of processing trade, as firms in those industries rely more on imported inputs and have less contact with domestic suppliers. The main channels of effect are firm-level R&D and industry-level technological distance, as the entry of FDI leads to an improvement in these variables. Positive effects are found in medium- and low-tech industries but not in high-tech industries, indicating that indigenous effort is important for product innovation in high-tech industries.
    Keywords: Foreign direct investment, product scope, Chinese firms
    JEL: F2 L5 O3
    Date: 2022–11–26
  6. By: Maria Celeste Gomez; Maria Enrica Virgillito
    Abstract: Wages and productivity represent two of the most relevant variables to consider in economic development. Given the low productivity levels that emerging countries reveal, the accumulation of productive capabilities and a narrower dispersion across sectors would enable emerging countries to overcome the middle-income trap. Yet, this positive trend in productivity should translate into higher wages. Thus, we pose the following questions applied to a middle-income trapped country: is there a link between labour productivity and wages in the Argentine manufacturing sector? Does it differ across techno-productive classes or wage levels? Which factors affect this nexus, considering premature deindustrialisation? Using a firm-level dataset from 2010 to 2016, we perform quantile regression estimates to evaluate the link between productivity and wages across the conditional wage distribution among manufacturing firms. Based on a structural analysis, we identify the differences in these elasticities at 2-ISIC code levels and across Pavitt taxonomies. Our results confirm a positive, but extremely low, pass-through between productivity and wages in the Argentinian manufacturing firms, different across sectors according to their techno-productive capabilities, robust under different empirical strategies.
    Keywords: Gains from productivity; Development; Asymmetries.
    Date: 2022–12–11
  7. By: Reher, Leonie; Runst, Petrik; Thomä, Jörg
    Abstract: This paper contributes to the new literature on the role of personality for regional innovativeness by examining whether this role varies between different types of regions. Building on regionally aggregated levels of individual Big Five personality traits, we find that only extraversion has a positive effect on patenting in German regions. Its impact is particularly important in lagging regions. We interpret this result as an indication of the compensatory role of collaboration for the innovativeness of lagging regions characterized by low levels of (business) R&D, which demonstrates the need for place-sensitive policies that take into account different modes of innovation.
    Keywords: Innovation,Big Five,Personality,Lagging regions
    JEL: J24 O18 O30 R1
    Date: 2022
  8. By: Andrés César (CEDLAS - IIE-UNLP); Guillermo Falcone (CEDLAS - IIE-UNLP); Pablo Garriga (World Bank)
    Abstract: The last decades have witnessed a revolution in manufacturing production characterized by increasing technology adoption and a strong expansion of international trade. Simultaneously, the income distribution has exhibited both polarization and concentration among the richest. Combining datasets from the U.S. Census Bureau, the U.S. Internal Revenue Service, the International Federation of Robotics, and EU KLEMS, we study the causal effect of industrial automation on income inequality in the U.S. during 2010–2015. We exploit spatial and time variations in exposure to robots arising from past differences in industry specialization across U.S. metropolitan areas and the evolution of robot adoption across industries. We document a robust positive impact of robotics on income for only the top 1 percent of taxpayers, which is largest for top income fractiles. Therefore, industrial automation fuels income inequality and, particularly, top income inequality. According to our estimates, one more robot per thousand workers results in relative increments of the total taxable income accruing to fractiles P99 to P99.9, P99.9 to P99.99 and P99.99 to P100, of 2.1 percent, 3.8 percent and 6.4 percent, respectively. We also show that robotization leads to increased exports to high-income and upper-middle-income countries and that this is one of the key mechanisms behind the surge in top incomes.
    JEL: J23 J24 J31 O14 O33
    Date: 2022–12
  9. By: Vanessa da Cruz (CER-ETH Centre of Economic Research at ETH Zurich, Switzerland)
    Abstract: The paper applies the synthetic control method to examine the effects of California’s Cap-and-Trade Program on environmental innovation. The analysis exploits the International Patent Classification system to identify patents relating to environmentally sound technologies. This enables the study to focus on the effects of the policy intervention on green patent filings. A counterfactual is constructed by the combination of other states in the US which allows the comparison of patent applications in California to the estimated counterfactual situation in the absence of a Cap-and-Trade program. The study finds that the number of patents related to green technologies increased by approximately 22.5% after the passing of the Cap-and-Trade regulation. This result is robust to alternative specifications of the synthetic control method.
    Keywords: Induced Innovation, Environmental Policy, Climate Change, California Cap-and-Trade Program
    JEL: Q55 Q58 O31 O38
    Date: 2022–12
  10. By: Ariel Dora Stern
    Abstract: For those who follow health and technology news, it is difficult to go more than a few days without reading about a compelling new application of Artificial Intelligence (AI) to health care. AI has myriad applications in medicine and its adjacent industries, with AI-driven tools already in use in basic science, translational medicine, and numerous corners of health care delivery, including administrative work, diagnosis, and treatment. In diagnosis and treatment, a large and growing number of AI tools meet the statutory definition of a medical device or that of an in-vitro diagnostic. Those that do are subject to regulation by local authorities, resulting in both practical and strategic implications for manufacturers, along with a more complex set of innovation incentives. This chapter presents background on medical device regulation—especially as it relates to software products—and quantitatively describes the emergence of AI among FDA-regulated products. The empirical section of this chapter explores characteristics of AI-supported/driven medical devices (“AI devices”) in the United States. It presents data on their origins (by firm type and country), their safety profiles (as measured by associated adverse events and recalls), and concludes with a discussion of the implications of regulation for innovation incentives in medical AI.
    JEL: I11 I18 K2 K32 O31 O32 O33
    Date: 2022–12
  11. By: Nakatani, Ryota
    Abstract: What drives the productivity dynamics of infrastructure companies? Using a panel of firms in fourteen countries, we study total factor productivity (TFP) enhancers of utility and network services companies. We find that the catching up of TFP with the technological frontier drives productivity growth at higher speeds in Asian countries than in European countries. We also find that financial leverage exerts a positive effect on TFP growth for larger infrastructure firms, and more financially developed countries utilize economies of scale through better use of financial resources. Large utility and transportation companies display a higher rate of TFP growth, indicating that a competition policy to encourage M&As would be prudent for the utility/transportation sectors to maximize economies of scale. In contrast, we find diseconomies of scale for energy companies in some countries. Moreover, young network firms improve TFP growth faster than their peers in countries with fewer product market regulations. Therefore, the policies should remove entry barriers while facilitating the exit of old and low-productivity firms from the network markets. Finally, policymakers should offer well-targeted fiscal incentives for intangible investments to boost TFP because the accumulation of intangible assets such as digital technology promotes more scale economies through network effects.
    Keywords: total factor productivity; utility and network services; infrastructure companies; energy industry; transportation industry; (dis)economies of scale; financial leverage; intangible assets
    JEL: D24 E22 G38 L25 L87 L9 O34
    Date: 2022–12–03
  12. By: Julie Lassébie; Glenda Quintini
    Abstract: This paper exploits novel data on the degree of automatability of approximately 100 skills and abilities collected through an original survey of experts in AI, and link them to occupations using information on skill and ability requirements extracted from O*NET. Similar to previous studies, this allows gauging the number of jobs potentially affected by automation and the workers who are most at risk of automation. The focus on the automatability of skills and abilities as opposed to entire occupations permits a direct assessment of the share of highly automatable and bottleneck tasks in each occupation. The study finds that thanks to advances in AI and robotics, several high-level cognitive skills can now be automated. However, high-skilled occupations continue to be less at risk of automation because they also require skills and abilities that remain important bottlenecks to automation. Furthermore, jobs at highest risk of automation will not disappear completely, as only 18 to 27% of skills and abilities required in these occupations are highly automatable. Rather, the organisation of work will change and workers in these jobs will need to retrain, as technologies replace workers for several tasks.
    Keywords: AI, future of work, skills
    JEL: J2 J21 J24 O33 O3
    Date: 2022–12–13
  13. By: Mariia Shkolnykova; Lasse Steffens; Jan Wedemeier
    Abstract: Against the background of the current political developments in Central and Eastern European (CEE) countries, like Ukraine, Poland, and Romania, the question arises what role the transformation of the economy and the resulting innovation linkages have played in these countries. This paper addresses this issue by exploring the impact of economic and institutional dimensions on the development of CEE countries, thereby explicitly distinguishing between European Union (EU) members and non-members. First of all, the performance development of the Gross Domestic Product (GDP) of the CEE countries and Western European countries is observed. In a further analysis step, the development of EU members is compared with that of CEE countries that are non-members of the EU. This paper estimates the impact of such factors as innovation, institutions, and political practices on the economic development of 37 European countries for the period from 2000 until 2020 by using a panel regression. The results of the analysis show that institutions matter, especially for non-EU-member CEE countries. Stable institutions—such as freedom of the press, freedom of expression, but also high levels of the Human Development Index—help countries to achieve a higher income development over time. The role of the innovative ability of countries is also decisive for a positive development.
    Keywords: Central and Eastern European Countries, Economic growth, Innovation, Institution, GDP
    JEL: O40 O47 R11
    Date: 2022–11
  14. By: Gil, Olga
    Abstract: This work stresses the importance of AI accountability to citizens and explores how a fourth independent government branch/institutions could be endowed to ensure that algorithms in today´s democracies convene to the principles of Constitutions. The purpose of this fourth branch of government in modern democracies could be to enshrine accountability of artificial intelligence development, including software-enabled technologies, and the implementation of policies based on big data within a wider democratic regime context. The work draws on Philosophy of Science, Political Theory (Ethics and Ideas), as well as concepts derived from the study of democracy (responsibility and accountability) to make a theoretical analysis of what artificial intelligence (AI) means for the governance of society and what are the limitations of such type of AI governance. The discussion shows that human ideas, as cement of societies, make it problematic to enshrine governance of artificial intelligence into the world of devices. In ethical grounds, the work stresses an existing trade off between greater and faster advancement of technology, or innovation on the one hand, and human well being on the oher, where the later is not automatically guaranteed by default. This trade off is yet unresolved. The work contends that features of AI offer an opportunity to revise government priorities from a multilevel perspective, from the local to the upper levels.
    Date: 2022–09–07

This nep-tid issue is ©2023 by Fulvio Castellacci. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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