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on Technology and Industrial Dynamics |
| By: | Ando, Yoshiki; Bessen, James; Wang, Xiupeng |
| Abstract: | R&D investment has grown robustly, yet aggregate productivity growth has stagnated. Is this because “ideas are getting harder to find”? This paper uses micro-data from the US Census Bureau to explore the relationship between R&D and productivity in the manufacturing sector from 1976 to 2018. We find that both the elasticity of output (TFP) with respect to R&D and the marginal returns to R&D have risen sharply. Exploring factors affecting returns, we conclude that R&D obsolescence rates must have risen. Using a novel estimation approach, we find consistent evidence of sharply rising technological rivalry. These findings suggest that R&D has become more effective at finding productivity-enhancing ideas but these ideas may also render rivals’ technologies obsolete, making innovations more transient. |
| Keywords: | R&D, innovation, productivity, obsolescence |
| JEL: | L10 O32 O33 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124764 |
| By: | Yoichiro NISHIMURA; Katsushi SUZUKI |
| Abstract: | This study examines the impact of bank–firm relationships on innovation outcomes by utilizing patent data from Japanese firms. Our results reveal that compared with other firms, (1) firms with closer relationships with banks are less likely to engage in high-risk innovation and that (2) firms that receive board member appointments or equity investment from banks tend to pursue exploitative innovation rather than exploratory innovation. Conversely, firms with greater dependence on loans from specific banks tend to exhibit greater R&D investment but produce fewer patents than do other firms. These findings suggest that while banks with close relationships with firms may encourage higher levels of R&D investment, they simultaneously impede the pursuit of high-quality and exploratory innovation. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25051 |
| By: | Peter Persoon |
| Abstract: | Technological knowledge evolves not only through the generation of new ideas, but also through the reinterpretation of existing ones. Reinterpretations lead to changes in the classification of knowledge, that is, reclassification. This study investigates how reclassified inventions can serve as renewed sources of innovation, thereby accelerating technological progress. Drawing on patent data as a proxy for technological knowledge, I discuss two empirical patterns: (i) more recent patents are more likely to get reclassified and (ii) larger technological classes acquire proportionally more reclassified patents. Using these patterns, I develop a model that explains how reclassified inventions contribute to faster innovation. The predictions of the model are supported across all major technology domains, suggesting a strong link between reclassification and the pace of technological advancement. More generally, the model connects various, seemingly unrelated knowledge quantities, providing a basis for knowledge intrinsic explanations of growth patterns. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.08656 |
| By: | Marco Vivarelli (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italy – UNU-MERIT, Maastricht, The Netherlands – IZA, Bonn, Germany - Global Labor Organization (GLO), Essen, Germany); Mariacristina Piva (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Piacenza, Italy); Massimiliano Tani (School of Business, The University of New South Wales, Canberra, Australia – IZA, Bonn, Germany) |
| Abstract: | Labor mobility is considered a powerful channel to acquire external knowledge and trigger complementarities in the innovation and R&D investment strategies; however, the extant literature has focused on either scientists’ mobility or migration of high-skilled workers, while virtually no attention has been devoted to the possible role of short-term business visits. Using a unique and novel database originating a country/sector unbalanced panel over the period 1998-2019 (for a total of 8, 316 longitudinal observations), this paper aims to fill this gap by testing the impact of BVs on R&D investment. Results from GMM-SYS estimates show that short-term mobility positively and significantly affects R&D investments; moreover, our findings indicate - as expected - that the beneficial impact of BVs is particularly significant in less innovative countries and in less innovative industries. These outcomes justify some form of support for BVs within the portfolio of the effective innovation policies, both at the national and local level. |
| Keywords: | Business visits; labor mobility; knowledge transfer; R&D investments |
| JEL: | O31 J61 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:ctc:serie5:dipe0049 |
| By: | Joshua S. Gans |
| Abstract: | Building on recent advances in the literature on knowledge creation and innovation (notably Carnehl and Schneider (2025), we propose a novel general equilibrium model that explicitly incorporates artificial intelligence (AI) as a decision-enhancing technology capable of interpolating between known points of knowledge. Our framework formalises the trade-off between AI’s coverage— its ability to span wider knowledge gaps—and its accuracy, and reveals the surprising result that, beyond producing immediate productivity gains, AI fundamentally alters the novelty of research. Specifically, when AI systems offer sufficiently broad coverage, they incentivise exploratory research that taps into novel, distant areas of knowledge and accelerates long-run growth; conversely, limited coverage promotes incremental research that may boost short-term efficiency while dampening the overall advancement of new ideas. Moreover, our analysis uncovers that the type of knowledge—whether novel or dense—plays a critical role in determining both the growth and welfare implications of AI, charting a new path for understanding how knowledge influences research strategies. By also examining the roles of market structure, licensing arrangements, and regulatory frameworks, our work contributes new, policy-relevant insights that reconcile the immediate benefits of AI adoption with the demands of sustainable long-term economic expansion. |
| JEL: | O30 O31 O40 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33907 |
| By: | Shijun Gu; Chengcheng Jia |
| Abstract: | Can the expansion of higher education lead to firm productivity growth? In this paper, we examine how China's college expansion program contributes to the rapid growth of firms' R&D expenditure and productivity. In our model, heterogeneous firms make endogenous R&D decisions, requiring them to allocate skilled workers between production and R&D. We structurally estimate the model using firm-level data on the level and distribution of R&D, as well as macro-level data on skill prices and sectoral allocation. Quantitative analysis reveals that between 2004 and 2018, the combination of the R&D-sector-biased technology shock, the skill-biased technology shock, and the skilled-labor supply shock leads to a 12 percent increase in total factor productivity (TFP), of which one-fifth is explained by the rising supply of skilled labor. Counterfactual analysis shows that a further increase in the share of skilled labor has the potential to increase TFP by an additional 2 percent, but the marginal effect diminishes due to the rising wages of unskilled labor. |
| Keywords: | R&D; TFP; skilled labor; college expansion; Chinese economy |
| JEL: | J24 O31 O32 |
| Date: | 2025–06–23 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedcwq:101133 |
| By: | Aghion, Philippe; Bunel, Simon; Jaravel, Xavier; Mikaelsen, Thomas; Roulet, Alexandra; Søgaard, Jakob |
| Abstract: | Using French firm-level data on AI adoption from 2017-2020, we find that, first, firms adopting AI are larger and more productive and skill intensive. Second, difference-in-difference estimates reveal an increase in firm-level employment and sales after AI adoption, suggesting that the induced productivity gains allow firms to grow and outweigh potential displacement effects. Third, occupations classified in recent work as substitutable with AI expand. Fourth, AI usage is a relevant dimension of heterogeneity in the labor demand response: We find positive employment growth for certain uses (e.g., information and communications technology security) and negative for others (e.g., administrative processes). |
| JEL: | R14 J01 |
| Date: | 2025–05–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128375 |
| By: | Ronald B. Davies; Mahdi Ghodsi (The Vienna Institute for International Economic Studies, wiiw); Francesca Guadagno (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | The hope that multinational firms will improve local employment and productivity is a driving force behind policy efforts to attract investment. Such spillovers are often motivated by technological spillovers from foreign to domestic firms. We address this possibility by using the patenting activity of foreign multinationals in Europe as a measure of affiliate activity alongside more traditional proxies. We find that local firms’ employment and labour productivity is higher when FDI activity increases, particularly when those multinationals are upstream of locals. Furthermore, this effect is particularly significant among domestic patenting firms. Thus, it seems that the benefits of inbound investment are greatest for local innovators who are exposed to inbound innovating foreigners. |
| Keywords: | spillovers; Foreign Direct Investment; Patents |
| JEL: | F23 O24 O33 O34 Q55 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:wii:wpaper:265 |
| By: | Khezri, Mohsen |
| Abstract: | This study explores the impacts of 11 diverse entrepreneurship indicators on green technology innovation (GTI) to determine the optimal environmental regulatory framework that fosters green entrepreneurship. Additionally, the study investigates the impacts of environmental regulations on GTI by utilizing nonlinear panel smooth threshold regression (PSTR) models on data collected from 18 countries from 2002 to 2020. By identifying a critical regulatory threshold of 1.89, the research reveals how varying levels of environmental regulations significantly influence GTI dynamics. The estimation results emphasize that GDP per capita and financial development are critical in fostering GTI. However, stringent environmental regulations can counteract these positive effects. Urbanization and trade openness also positively influence GTI, with environmental regulations complementing their impacts. The transition to a service-oriented industrial structure positively affects GTI. The results underscore the negative impact of entrepreneurship indicators, potentially diverting resources away from GTI. Nonetheless, environmental regulations with stringent enforcement mechanisms can counterbalance the negative impacts of specific entrepreneurship metrics. Among the entrepreneurship indicators analyzed, financing for entrepreneurs, governmental support and policies, and governmental programs exhibit an inverted U-shaped impact pattern, peaking at specific levels of environmental regulation. |
| Keywords: | entrepreneurial indicators; environmental regulations; GTI; Green Technology Innovation; panel smooth threshold regression; PSTR |
| JEL: | R14 J01 |
| Date: | 2025–07–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128368 |
| By: | Gaetan de Rassenfosse |
| Abstract: | Patent systems vary widely in how rigorously they define and enforce inventors' rights. On one hand, formal statutes ("law on the books") set the scope of what can be patented and outline procedural safeguards. On the other hand, actual enforcement ("law in practice") determines whether those rights hold up in practice. To capture these dimensions, researchers have developed simple indices of legal provisions and more nuanced proxies for enforcement effectiveness, along with metrics of how applicant-friendly each office's procedures are. Comparative studies of "twin patents" -- identical inventions filed in multiple jurisdictions -- reveal systematic differences in grant rates and bar heights across major offices. By combining these approaches, we gain a multifaceted view of patent-system strength that balances statutory design, administrative practice, and actual enforcement. This perspective is crucial for understanding how different regimes support innovation and shape global knowledge flows. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.07121 |
| By: | Réka Juhász; Nathan J. Lane; Emily Oehlsen; Veronica C. Perez |
| Abstract: | Since the 18th century, policymakers have debated the merits of industrial policy (IP). Yet, economists lack basic facts about its use due to measurement challenges. We propose a new approach to IP measurement based on information contained in policy text. We show how off-the-shelf supervised machine learning tools can be used to categorize industrial policies at scale. Using this approach, we validate longstanding concerns with earlier approaches to measurement which conflate IP with other types of policy. We apply our methodology to a global database of commercial policy descriptions, and provide a first look at IP use at the country, industry, and year levels (2010-2022). The new data on IP suggest that i) IP is on the rise; ii) modern IP tends to use subsidies and export promotion measures as opposed to tariffs; iii) rich countries heavily dominate IP use; iv) IP tends to target sectors with an established comparative advantage, particularly in high-income countries. |
| JEL: | C38 L52 O25 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33895 |
| By: | Estrin, Saul; Herrmann, Andrea; Levesque, Moren; Mickiewicz, Tomasz; Sanders, Mark |
| Abstract: | We present a Schumpeterian model of new venture creation, under uncertainty, which explains the tradeoff between speed-to-breakeven and revenue-at-breakeven and relates this to the level of innovation. We then explore the tradeoffs between these outcomes empirically in a sample of 331 information and communication technology (ICT) ventures using a multi-input, multi-output stochastic frontier model. We estimate the contribution of financial capital and labor to the outcomes and the tradeoffs between them, as well as address heterogeneity across ventures. We find that more innovative (and therefore more uncertain) ventures have lower speed-to-breakeven and/or lower revenue-at-breakeven. Moreover, for all innovativeness levels, new ventures face a tradeoff between speed-to-breakeven and revenue-at-breakeven. Our results suggest that it is the availability of proprietary resources (founder equity and founder labor) that helps ventures overcome bottlenecks in the venture creation process, and we propose a line of research to explain the variation in venture creation efficiency. |
| Keywords: | entrepreneurship; innovation; new venture creation; proprietary resource; Stochastic frontier analysis; Schumpeterian growth model |
| JEL: | O31 L29 |
| Date: | 2025–06–06 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128098 |
| By: | Shujiro URATA; Youngmin BAEK |
| Abstract: | The expansion of global value chains (GVCs) has reshaped labor markets in developed countries, influencing both wage levels and inequality. By linking the "Basic Survey of Japanese Business Structure and Activities" with the "Basic Survey on Wage Structure, †this study employs the Mincer model to empirically examine the effects of a firm’s GVC participation on workers' wages. The results indicate that GVC participation is associated with higher wages across nearly all worker characteristics, with both direct and indirect GVC firms offering wage premiums relative to non-GVC firms. Moreover, GVC participation appears to mitigate the wage inequality between male and female workers, non-production and production workers, and non-routine and routine workers. However, these benefits are not distributed evenly. Cognitive and regular workers experience greater wage gains, whereas manual and non-regular workers face lower wage growth, leading to a widening wage gap. This finding aligns with the Stolper-Samuelson theorem because Japan, a developed country, specializes in capital- and skill-intensive production while offshoring labor-intensive tasks. These findings have significant implications for Japan’s labor market, where wage inequality persists despite prolonged wage stagnation. As many Japanese firms are likely to engage in GVCs and many GVC firms faced with shrinking domestic markets intensify their participation in GVCs, the wage disparity between cognitive and manual workers, as well as between regular and non-regular workers, may further intensify. To cope with this problem, policies should focus on reskilling and upskilling manual and non-regular workers to ensure that they benefit from globalization. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25057 |
| By: | Emilio Colombo; Luca Michele Portoghese; Patrizio Tirelli |
| Abstract: | Is the roll-out of (fast)broadband connections a driver of firms' total factor productivity (TFP) growth in the European Union? Does broadband generate convergence or polarisation? In this regard, which firms benefit most from a broadband connection and is the traditional divide between rural and urban deployment areas important? To answer these questions, we estimate the effects of broadband coverage shocks on individual firms' TFP growth, exploiting broad firm-level coverage from the ORBIS dataset and a relatively long time span (2011–2022) over which broadband shocks are observed. Broadband shocks permanently raise firms' TFP, but their effect is uneven: fast-growth firms improve their relative position. They are more beneficial for the TFP of firms in non-digital sectors, supporting the view that internet connectivity is a general-purpose technology. Firms in urban areas are also better equipped to benefit from increased broadband connectivity. TFP responses to fast-broadband shocks are almost muted. |
| JEL: | L25 D24 L9 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:dis:wpaper:dis2504 |
| By: | Philippe Aghion; Timo Boppart; Michael Peters; Matthew Schwartzman; Fabrizio Zilibotti |
| Abstract: | We develop and quantify a novel growth theory in which economic activity endogenously shifts from material production to quality improvements. Consumers derive utility from goods with differing environmental footprints: necessities are material-intensive and polluting, while luxuries are more service-based and emit less. Innovation can be directed toward either material productivity or product~quality. Because demand for luxuries is more sensitive to quality, the economy gradually becomes “weightless”: growth is driven by quality improvements, services become the dominant employment sector, and material production stabilizes at a finite level. This structural transformation enables rising living standards with declining environmental intensity, providing an endogenous path to degrowth in material output without compromising economic progress. Policy can accelerate the transition, but its burden is uneven, falling more heavily on the poor than on the rich. |
| JEL: | E0 O41 O44 Q5 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33634 |