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on Technology and Industrial Dynamics |
| By: | Jose Luis Hervas-Oliver; Mario Davide Parrilli; Andres Rodriguez-Pose; Francisca Sempere-Ripoll |
| Abstract: | European Union (EU) innovation policies have for long remained mostly research driven. The fundamental goal has been to achieve a rate of R&D investment of 3% of GDP. Small and medium-sized enterprise (SME) innovation, however, relies on a variety of internal sources —both R&D and non-R&D based— and external drivers, such as collaboration with other firms and research centres, and is profoundly influence by location and context. Given this multiplicity of innovation activities, this study argues that innovation policies fundamentally based on a place-blind increase of R&D investment may not deliver the best outcomes in regions where the capacity of SMEs is to benefit from R&D is limited. We posit that collaboration and regional specificities can play a greater role in determining SME innovation, beyond just R&D activities. Using data from the Regional Innovation Scoreboard (RIS), covering 220 regions across 22 European countries, we find that regions in Europe differ significantly in terms of SME innovation depending on their location. SMEs in more innovative regions benefit to a far greater extent from a combination of internal R&D, external collaboration of all sorts, and non-R&D inputs. SMEs in less innovative regions rely fundamentally on external sources and, particularly, on collaboration with other firms. Greater investment in public R&D does not always lead to improvements in regional SME innovation, regardless of context. Collaboration is a central innovation activity that can complement R&D, showing an even stronger effect on SME innovation than R&D. Hence, a more collaboration-based and place-sensitive policy is required to maximise SME innovation across the variety of European regional contexts. |
| Keywords: | regional innovation; SMEs; R&D; place-based; collaboration; EU regions |
| JEL: | O31 O32 L11 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2122&r= |
| By: | Laurence Jacquet; Stéphane Robin (CY Cergy Paris Université, THEMA) |
| Abstract: | We examine the R&D, innovation and productivity effects of R&D tax credits (R&DTC) in 8 EU countries, in the context of a proposed EU-wide "super deduction" on R&D expenditures. Our econometric analysis, performed on industry-level panel data, shows that past R&D feeds current R&D, whether it is conducted under an R&DTC or not. Our estimate of additionality during an R&DTC phase is generally close to 1. R&D intensity also affects patenting intensity positively in Belgium, Czech Republic, France, Spain and the UK, but this relationship is R&DTC-related only in Belgium, France and Spain. Only in France and the UK do we observe a full (yet fragile) R&D – innovation – productivity relationship. In the UK, this relationship is not affected by the R&DTC scheme. In France, a 1% increase in R&D conducted under the second to fourth phases of R&DTC (1999-2017) entails a cumulated 0.37% increase in patenting intensity, which translates to a 0.16% increase in productivity. The main policy implication of these results is that a "super-deduction" on R&D is likely to help the EU reach its "R&D at 3% of GDP" objective, but only time will tell how generous it must be to really spur innovation and productivity. |
| Keywords: | R&D Tax Credits, Public Support to R&D, Science and Technology Policy, European Policy |
| JEL: | O38 H25 H54 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ema:worpap:2021-14&r= |
| By: | Koski, Heli; Fornaro, Paolo |
| Abstract: | Abstract In OECD countries, tax subsidies are widely used to increase incentives for companies to invest in research and development. Recent international research suggests that R&D tax support increases both R&D investment and patent applications. However, it is unclear what kind of R&D tax scheme provides the best incentives for companies to invest in research and development and generate innovation. There are considerable differences between the countries’ R&D tax relief schemes, not only in terms of the amount of tax relief but also in terms of the characteristics of the tax support scheme. Typically, a company can make a tax deduction from income tax based on the total volume of R&D costs underlying the relief. Our empirical analysis among 35 OECD countries during 2000–2018 indicates that the generosity of the R&D tax subsidies positively relates to the R&D investment intensity of the corporate sector. Our study further suggests that the R&D intensity and the number of patent applications filed with the USPTO are higher in the countries that use either the incremental R&D tax scheme or the hybrid scheme involving incremental and volume-based R&D tax deduction possibilities. |
| Keywords: | R&D tax incentives, R&D investments, Innovation policy, Patents |
| JEL: | K34 L5 O3 O31 |
| Date: | 2021–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:rif:briefs:97&r= |
| By: | Marie-Theres Schickfus von; Marie-Theres von Schickfus |
| Abstract: | The tightening of climate policies may cause technologies based on fossil fuels to lose value compared to “green” technologies. For firms with significant fossil-based knowledge, this implies that their firm (market) value is at risk. This technological risk is also relevant for financial market actors, in particular institutional investors following long-term investment strategies. Measuring technological knowledge using patent data at the firm level, this paper uses a dynamic patent count data model and explores whether institutional investors address technological transition risk via engagement activities. Despite robust evidence for a positive influence of institutional investors on overall innovation, no evidence can be found that institutional ownership is associated with a change in the direction of innovation. |
| Keywords: | Green innovation, climate policy, green finance, climate risk, institutional investors |
| JEL: | Q55 G23 O34 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ifowps:_356&r= |
| By: | Makrevska Disoska, Elena; Toshevska-Trpchevska, Katerina; Tevdovski, Dragan; Jolakoski, Petar; Stojkoski, Viktor |
| Abstract: | In this paper, we perform a detailed longitudinal analysis on the innovation performance in nine European countries by using data stemming from the Community Innovation Survey. The temporal dimension of our dataset includes the period during the financial crisis of 2008 as well as the period after the crisis. As such, it allows us to fully evaluate the changes in the innovation processes within the countries during and after the crisis. Our findings suggest that there are no significant differences between the countries in the determinants for firms which decide to enter the innovation process. However, the effect of innovation output over labor productivity varies between economies: there is a positive relationship in the more developed economies compared to a negative or neutral relationship in the less developed. We use these results to speculate that the national innovation system in developing economies becomes more vulnerable in periods of financial crises. |
| Keywords: | CIS, European countries, national innovation systems, longitudinal studies, labor productivity |
| JEL: | C33 C36 O31 O33 |
| Date: | 2021–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:108399&r= |
| By: | Bondarev, Anton; Dato, Prudence (University of Basel); Krysiak, Frank C. |
| Abstract: | The transition to a green technology is central to environmental policy. During such a transition, technology and market structure often change simultaneously, as firms developing the new technology enter the market of incumbents supplying the old one. This leads to the questions how technological change and market changes interact and at which stage of the technology transition incumbents or newcomers are more likely to drive the technology transition. We advance a model that describes this co-evolution of technology and market. Our results show that this co-evolution induces substantial market failures. The transition might be blocked by an incumbent protecting the old technology and, even if it is not, emissions decline less rapidly than in the social optimum. Furthermore, incentives change during the transition: At the beginning, entrants can be crucial to start the transition, but, later on, the incumbent will usually become the driving force. When this switch occurs depends on the propensity of the new technology to attract new customers and on the possible speed of technological development. Our results have implications for environmental policy, as they indicate that supporting small new- comers might be desirable at the beginning but can be detrimental at later stages of a technology transition. |
| Keywords: | Green Technology, Innovation, Imperfect Competition, Endogenous Market Structure, Technology Transition, Emissions, Climate Change |
| JEL: | C60 L10 O31 Q54 Q55 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:bsl:wpaper:2021/07&r= |
| By: | Jason Deegan; Tom Broekel; Rune Dahl Fitjar |
| Abstract: | This paper examines which economic domains regional policy-makers aim to develop in regional innovation strategies, focusing in particular on the complexity of those economic domains and their relatedness to other economic domains in the region. We build on the economic geography literature that advises policy-makers to target related and complex economic domains (e.g. Balland et al. (2018a), and assess the extent to which regions actually do this. The paper draws on data from the smart specialisation strategies of 128 NUTS-2 regions across Europe. While regions are more likely to select complex economic domains related to their current economic domain portfolio, complexity and relatedness figure independently, rather than in combination, in choosing priorities. We also find that regions in the same country tend to select the same priorities, contrary to the idea of a division of labour across regions that smart specialisation implies. Overall, these findings suggest that smart specialisation may be considerably less place-based in practice than it is in theory. There is a need to develop better tools to inform regions’ priority choices, given the importance of priority selection in smart specialisation strategies and regional innovation policy more broadly. |
| Keywords: | Smart Specialisation, Regional Policy, Complexity, Relatedness, Innovation Policy, European Cohesion Policy |
| JEL: | O25 O38 R11 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2123&r= |
| By: | Valentina DI IASIO; Ernest MIGUELEZ |
| Abstract: | This study investigates whether high-skilled immigration in a sample of OECD countries fosters technological diversification in the migrants' countries of origin. We focus on migrant inventors and study their role as vectors of knowledge remittances. Further, we particularly analyze whether migrants spark related or unrelated diversification back home. To account for the uneven distribution of knowledge and immigrants within the host countries, we break down the analysis at the metropolitan area level. Our results suggest that inventors' diasporas have a positive effect on the home countries' technological diversification, particularly for developing countries and technologies with less related activities around - thus fostering unrelated diversification. |
| Keywords: | high-skilled migrants, diversification, relatedness, unrelatedness, technological development |
| JEL: | O31 O33 F22 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:grt:bdxewp:2021-13&r= |
| By: | Gert Bijnens; Emmanuel Dhyne |
| Abstract: | Whilst overall productivity growth is stalling, firms at the frontier are still able to capture the benefits of the newest technologies and business practices. This paper uses linked employer-employee data covering all Belgian firms over a period of almost 20 years and investigates the differences in human capital between highly productive firms and less productive firms. We find a clear positive correlation between the share of high-skilled and STEM workers in a firm's workforce and its productivity. We obtain elasticities of 0.20 to 0.70 for a firm's productivity as a function of the share of high-skilled workers. For STEM (science, technology, engineering, mathematics) workers, of all skill levels, we find elasticities of 0.20 to 0.45. More importantly, the elasticity of STEM workers is increasing over time, whereas the elasticity of high-skilled workers is decreasing. This is possibly linked with the increasing number of tertiary education graduates and at the same time increased difficulties in filling STEM-related vacancies. Specifically, for high-skilled STEM workers in the manufacturing sector, the productivity gain can be as much as 4 times higher than the gain from hiring additional high-skilled non-STEM workers. To ensure that government efforts to increase the adoption of the latest technologies and business practices within firms lead to sustainable productivity gains, such actions should be accompanied by measures to increase the supply and mobility of human (STEM) capital. Without a proper supply of skills, firms will not be able to reap the full benefits of the digital revolution. |
| Keywords: | education, human capital, linked employer-employee data, productivity, Skills |
| JEL: | E24 I26 J24 |
| Date: | 2021–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaac:26-en&r= |
| By: | Foreman-Peck, James (Cardiff Business School); Zhou, Peng (Cardiff Business School) |
| Abstract: | This paper shows that EU and national innovation subsidy policies stimulated Central and East-ern Europe Countries (CEEC) productivity in the years after their entry to the EU. However, the average effectiveness of national funding was higher for the Western control group coun-tries than for the CEEC sample. EU innovation subsidies partly compensated the CEEC for the greater innovation effectiveness and impact of western economies. Although they crowded out innovation projects or funding of local governments at the country level, the subsidies crowded in national and local projects at the firm level. Local/regional state innovation aid to enterprises encouraged no increase in labour productivity in all but one of sample CEEC countries. These impacts are assessed in a sequential structural econometric model estimated using Eurostat’s collection of Community Innovation Surveys covering the years 2006-2014. |
| Keywords: | innovation policy; European Union; R&D; subsidies |
| JEL: | L53 L21 H71 H25 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2021/15&r= |
| By: | Carol Corrado (The Conference Board); Chiara Criscuolo (OECD); Jonathan Haskel (Imperial College); Alexander Himbert (OECD); Cecilia Jona-Lasinio (LUISS Guido Carli) |
| Abstract: | This paper presents new evidence on the impact of intangible capital on productivity dispersion within industries. It first shows that rise in productivity dispersion after 2000 is more pronounced in intangible-intensive industries; then analyses the link between intangible capital intensity and productivity dispersion both at the top and at the bottom of the productivity distribution, and in different industries. The findings suggest that industries that have experienced a stronger increase in intangible investment have also seen a steeper rise in productivity dispersion both at the top and at the bottom of the productivity distribution. While the results at the top seem to be associated with the scalability of intangible capital – which is likely to disproportionally benefit high-productivity firms and incumbents – dispersion at the bottom appears to be linked to complementarities between intangible investment and factors like digital intensity, trade openness and venture capital. |
| Keywords: | Innovation, Investment, Science and Technology |
| Date: | 2021–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stiaaa:2021/10-en&r= |
| By: | Cristiana Benedetti-Fasil (European Commission - JRC); Giammario Impullitti (School of Economics, University of Nottingham); Omar Licandro (School of Economics, University of Nottingham); Petr Sedlacek (Department of Economics, Oxford University) |
| Abstract: | Growth and business cycles have a long tradition of being studied separately. However, events such as the Great Recession raise concerns that severe downturns may have detrimental implications for growth. If so, what policies may help alleviate such long-lasting effects of large recessions? To study these questions, we develop a tractable general equilibrium model of endogenous growth featuring heterogeneous firms, financial constraints and a range of innovation policies. A preliminary analysis suggests that counter-cyclical tax credits may serve as a powerful automatic stabilizer alleviating the long-lasting negative effects of severe cyclical downturns. |
| Keywords: | Firm dynamics, innovation policy, endogenous growth, business cycles |
| JEL: | F12 F13 O31 O41 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:termod:202104&r= |
| By: | Abbasiharofteh, Milad; Kinne, Jan; Krüger, Miriam |
| Abstract: | The proximity framework has attracted considerable attention in a scholarly discourse on the driving forces of knowledge exchange tie formation. It has been discussed that too much proximity is negatively associated with the effectiveness of a knowledge exchange relation. However, little is known about the key factors that trigger the formation of the boundaryspanning knowledge ties. Going beyond the "dyadic" perspective on proximity dimensions, this paper argues that the key factor in bridging distances may reside at the "triadic" level. We build on the notion of "the strength of weak ties" and its recent development by investigating the innovative performance and relations of more than 600,000 German firms. We explored and extracted information from the textual and relational content of firms' websites by using machine learning techniques and hyperlink analysis. We thereby proxied the innovative performance of firms using a deep learning text analysis approach and showed that the triadic property of bridging dyadic relations is a reliable predictor of firms' innovativeness. Relations embedded in cliques (i.e., strong ties) that connect cognitively distant firms are more strongly associated with firms' innovation, whereas inter-regional relations connecting different parts of a network (i.e., weak ties) are positively associated with firms' innovative performance. Also, the results suggest that a combination of strong inter-community and weak inter-regional relations are more positively related with firms' innovativeness compared to the combination of other relation types. |
| Keywords: | weak and strong ties,proximity,knowledge exchange,innovation,web mining,natural language processing |
| JEL: | C81 D83 L14 O31 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:21049&r= |
| By: | Giacomo Domini; Marco Grazzi; Daniele Moschella; Tania Treibich |
| Abstract: | This paper investigates the impact of investment in automation- and AI- related goods on within-firm wage inequality in the French economy during the period 2002-2017. We document that most of wage inequality in France is accounted for by differences among workers belonging to the same firm, rather than by differences between sectors, firms, and occupations. Using an event-study approach on a sample of firms importing automation and AI-related goods, we find that spike events related to the adoption of automation- or AI-related capital goods are not followed by an increase in within-firm wage nor in gender inequality. Instead, wages increase by 1% three years after the events at different percentiles of the distribution. Our findings are not linked to a rent-sharing behavior of firms obtaining productivity gains from automation or AI adoption. Instead, if the wage gains do not differ across workers along the wage distribution, worker heterogeneity is still present. Indeed, aligned with the framework in Abowd et al. (1999b), most of the overall wage increase is due to the hiring of new employees. This adds to previous findings showing picture of a 'labor friendly' effect of the latest wave of new technologies within adopting firms. |
| Keywords: | Automation; AI; wage inequality; gender pay gap. |
| Date: | 2021–07–05 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2021/25&r= |
| By: | Ferschli, Benjamin; Rehm, Miriam; Schnetzer, Matthias; Zilian, Stella |
| Abstract: | This paper investigates the links between digitalization, market concentration, and labor productivity at the sectoral level in Germany. Combining data for digitalization and labor productivity from the EU KLEMS database with firm-level data from the CompNet and Orbis Bureau Van Dijk databases to construct market concentration measures between 2000 to 2015, we show that (1) the German economy appears to have digitized since 2000, and (2) there is no clear-cut relationship between digitalization and market concentration at the sectoral and descriptive level. Using a time and sector fixed effects model, however, we find evidence for (3) a positive relationship of productivity to both market concentration and digitalization at the sectoral level in Germany. This finding is robust to alternative measures of digitalization and market concentration, but sensitive to the sector sample. We therefore cautiously conclude that recent technological change appears to have been labor-saving, and that productivity-enhancing "superstar firm" effects seem to exist in Germany. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifsowp:14&r= |
| By: | Clément Bosquet (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Paul Maarek (LEMMA - Laboratoire d'économie mathématique et de microéconomie appliquée - UP2 - Université Panthéon-Assas - Sorbonne Université); Elliot Moiteaux (THEMA - Théorie économique, modélisation et applications - CNRS - Centre National de la Recherche Scientifique - CY - CY Cergy Paris Université) |
| Abstract: | Taking advantage of geographic (and time) variation in the proportion of routine occupations in the US, we study the impact of this variation on the wage rate of workers by educational group. Using individual data and a Bartik-type IV strategy, we show that not only non-college-educated workers but also, in the same proportion, workers with fewer than four years of college are negatively impacted by this routinebiased technological change. The latter skill group currently represents 30% of the US population. We show that only 10% to 20% of the impact on both educational groups is related to occupational and industrial downgrading (the composition eect) and that most of the wage impact occurs within industries and occupations, including manual service occupations. This is consistent with the displacement eect described in the theoretical literature on task-biased technological change and automation. |
| Keywords: | job polarization,routine occupations,wages,education |
| Date: | 2021–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-03270715&r= |
| By: | Leonardo Gasparini (CEDLAS-IIE-FCE-UNLP & CONICET); Irene Brambilla (CEDLAS-IIE-FCE-UNLP & CONICET); Guillermo Falcone (CEDLAS-IIE-FCE-UNLP & CONICET); Carlo Lombardo (CEDLAS-IIE-FCE-UNLP & CONICET); Andrés César (CEDLAS-IIE-FCE-UNLP) |
| Abstract: | In this paper we characterize workers’ vulnerability to automation in the near future in the six largest Latin American economies as a function of the exposure to routinization of the tasks that they perform and the potential automation of their occupation. We combine (i) indicators of potential automatability by occupation and (ii) worker’s information on occupation and other labor variables. We find that the ongoing process of automation is likely to significantly affect the structure of employment. In particular, unskilled and semi-skilled workers are likely to bear a disproportionate share of the adjustment costs. Automation will probably be a more dangerous threat for equality than for overall employment. |
| JEL: | J21 J23 J24 O33 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:dls:wpaper:0281&r= |
| By: | Sebastian Rohe (Institute of Social Sciences, Carl von Ossietzky University, Germany); Camilla Chlebna (Institute of Social Sciences, Carl von Ossietzky University, Germany) |
| Abstract: | In transition studies, formal inter-organizational networks – ‘networking organizations’ – are considered essential for inducing socio-technical change. Yet, there is little research on how their structural composition and role evolve in advanced transitions and which tensions arise over time. We address these gaps by combining insights from network research in social and economic science with transition studies, where networking organizations are conceptualized as intermediaries and key elements of Technological Innovation Systems. We synthesize a framework capturing the evolution of and result-ing tensions within networking organizations in sustainability transitions. It is applied to two regional energy networking organizations from Germany. We draw on qualitative expert interviews and a complementary social network analysis. We show that networking organizations do not necessarily stabilize once the initial technologies they were centered around become established. Instead, their member base broadens to different sectors. This can lead to tensions over the networking organiza-tions’ scope. Tensions also arise from misalignments between ‘private’ goals of member firms and the ‘public’ goal of transforming system-level structures. Furthermore, complementary or competing networking organizations might emerge during the transition. Managers need to navigate these ten-sions and regularly review the networking organization’s mission to maintain its relevance in the transition process. |
| Keywords: | networking organizations, networks, regional energy transitions, sustainability transitions, intermediaries, technological innovation systems |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:aoe:wpaper:2104&r= |
| By: | Akio Kawasaki (Faculty of Economics, Oita University); Tomomichi Mizuno (Graduate School of Economics, Kobe University); Kazuhiro Takauchi (Faculty of Business and Commerce, Kansai University) |
| Abstract: | It is well known that when a rival introduces a new product, a firm's response is affected by conflicting factors. For example, a certain factor stimulates firms to introduce their new products in a quick and retaliatory manner if their rivals introduce new products. Based on this fact, we build a simple vertical relation model: two downstream firms decide whether to introduce a horizontally differentiated new product, whereas a single upstream supplier invests in cost-reducing research and development (R&D). We show that the equilibrium of downstream innovation depends on upstream efficiency. If upstream R&D efficiency is high, downstream innovation is a strategic complement; this corresponds to the scenario in which downstream firms act in a retaliatory manner against their rivals introducing new products. Conversely, if upstream efficiency is low, downstream innovation is a strategic substitute: this implies that downstream firms behave passively when their rivals introduce new products. We also find that upstream R&D efficiency works similarly to the R&D spillover parameter in the d'Aspremont and Jacquemin's (1988) model. When R&D spillover is high (low), the firm's innovation behavior is a strategic complement (substitute). Hence, we offer a new insight into the innovation literature. |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:koe:wpaper:2118&r= |
| By: | MARQUES SANTOS Anabela (European Commission - JRC); HAEGEMAN Karel (European Commission - JRC); MONCADA PATERNO' CASTELLO Pietro (European Commission - JRC) |
| Abstract: | Innovation and growth of firms in the EU were more affected by the Covid-19 pandemic (year 2020) than by the previous economic downturn (2009). The economic performance of innovative firms was considerably less affected by the pandemic than that of non-innovative ones. The pandemic made innovation twice as critical for companies to have potential turnover growth than before the crisis. Innovating firms focused on organisational and marketing innovation to increase demand and reduce costs in the short term. EU instruments such as the Recovery and Resilience Facility and Horizon Europe offer wide opportunities for firms to exit from the Covid-19 crisis and boost their future competitiveness. The full completion and exploitation of the (Digital) Single Market appears crucial for stimulating short and long term demand for innovative goods/services and investments in intangibles. |
| Keywords: | Covid-19, Innovation, Growth, Europe |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc125544&r= |