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on Technology and Industrial Dynamics |
| By: | Gugler, Klaus; Szücs, Florian; Wiedenhofer, Thomas |
| Abstract: | This article evaluates if and to which extent policy can steer innovation towards eco-friendly technologies. We construct a cross-country dataset on sectoral green innovation and complement it with data on policies designed to address environmental market failures: environmental taxes, regulation, and R&D subsidies. While all of these tools exert a positive effect on green innovation, our IV estimates reveal substantial heterogeneities across policies. Overall, green innovation reacts most strongly to R&D subsidies for renewables, but interaction effects between different policies need to be considered. |
| Keywords: | climate change; environmental policies; directed technological change; green patents; regulation; taxes; R&D |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wus005:59343718&r=tid |
| By: | Peter Claeys (Universidad Pontificia Comillas); Juan Jung; Gonzalo Gómez-Bengoechea |
| Abstract: | The decision to innovate or to adopt existing technologies is driven by productivity levels. Large productive incumbents may have an advantage over new entrants and laggards and lead innovation, yet depending on the type of technology, the latter may catch up by pursuing more advanced technologies. Different technologies can therefore widen or shrink the distribution of productivity across firms (Benhabib et al., 2021). Using a novel dataset of around 60, 000 Spanish firms from different industries between 2017-2019, we show that investment in a particular technological innovation – online sales – is indeed pursued by the sector’s most productive and largest firms, yet laggard firms do try to catch up by investing more in new technologies, despite starting at lower productivity levels. This suggests that costly innovation and easy adoption may actually curb overall productivity growth as more firms’ free ride on innovation efforts by the leaders in each sector. |
| Keywords: | Innovation, adoption, diffusion, Probit, productivity, ICT |
| JEL: | L O |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:inf:wpaper:2024.01&r=tid |
| By: | Tamás Sebestyén; Erik Braun; Zoltán Elekes |
| Abstract: | It is now well established that complex economies with sophisticated export specialization experience higher income and economic growth levels. A group of countries, including those in Central and Eastern Europe (CEE), have pursued a distinctive and arguably successful economic development strategy, focusing on foreign direct investment and embedding in global value chains (GVCs) in manufacturing. However, while these countries now appear to have a high degree of economic sophistication after considerable modernization, they also face significant challenges in catching up with more developed economies in terms of prosperity. In this paper, we propose that considering the coordination of local and non-local capabilities in the same theoretical framework and empirical application helps to resolve this apparent complexity puzzle. Using a panel dataset covering 67 territories and 45 sectors from 1995 to 2018, we first show that measuring countries’ economic complexity based on value-added trade adjusts the resulting country ranking and reduces the measured complexity gap favoring CEE countries. Second, we argue that value-added-based economic complexity needs to be complemented by measures of positions in GVCs to account for access to non-local capabilities. Our results from benchmark regression analyses show that economic complexity and positions in GVCs together offer improved predictive power for income and economic growth. Finally, we show that GVC positions in services are particularly important for economic development but that a related pattern of diversification, whereby CEE countries and factory economies more broadly strengthen their GVC positions in manufacturing activities, is likely to limit their future opportunities for functional upgrading and for achieving highly complex economic structures that would be rooted in local capabilities. |
| Keywords: | capability base, economic complexity, global value chains, upstreamness, down- streamness, economic development |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2401&r=tid |
| By: | Ma, Xiao; Zhang, Yiran |
| Abstract: | Multinationals play a crucial role in international knowledge diffusion. Given the recent concern that multinationals are departing China, understanding the importance of multinationals for China's technology is also particularly policy-relevant. Using comprehensive patent data from China, we document: (1) multinational affiliates and their foreign parent firms comprise a significant portion of patents filed with China’s patent office; and (2) there are subsequent transfers and spillovers of these technologies to domestic firms. Guided by the empirical findings, we develop a quantitative framework of multinational activities featuring cross-country technology flows, transfers, and spillovers. Quantitatively, we find that without multinational production and knowledge spillovers, China's total technology capital would drop by 36%. Furthermore, due to the externalities of multinationals’ technology investments, subsidizing multinationals in China will be socially beneficial, and reduced knowledge transfers/spillovers largely amplify the negative effects of multinationals' departing China on both China's GDP and technology. |
| Keywords: | multinational activities; technology transfers; knowledge spillovers |
| JEL: | F23 O33 |
| Date: | 2023–12–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:119371&r=tid |
| By: | LaBelle, Jesse (Northwestern University); Martinez-Zarzoso, Inmaculada (Univerity of Göttingen & Universitat Jaume I); Santacreu, Ana Maria (Federal Reserve Bank of St. Louis); Yotov, Yoto (Drexel University) |
| Abstract: | We build a stylized model that captures the relationships between cross-border patenting, globalization, and development. A byproduct of our theory is a gravity equation for cross-border patents. To test the model’s predictions, we compile a new comprehensive dataset that tracks patents within and between countries and industries, for 1980-2019. The econometric analysis reveals a strong, positive impact of policy and globalization on cross-border patent flows, especially from rich (North) to poor (South) countries. A counterfactual welfare analysis suggests that the increase in patent flows from North to South has benefited both regions, with South gaining more than North post-2000, thus lowering real income inequality in the world. |
| Keywords: | Cross-border Patents; Gravity; Policy; Globalization; Development |
| JEL: | F63 O14 O33 O34 |
| Date: | 2023–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2023_007&r=tid |
| By: | Hasan, Iftekhar; Li, Xiang; Takalo, Tuomas |
| Abstract: | This paper studies whether and how banks' technological innovations affect the bank lending channel of monetary policy transmission. We first provide a theoretical model in which banks' technological innovation relaxes firms' earning-based borrowing constraints and thereby enlarges the response of banks' lending to monetary policy changes. To test the empirical implications, we construct a patent-based measurement of bank-level technological innovation, which can specify the nature of technology and tell whether it is related to the bank's lending business. We find that lending-related innovations significantly strengthen the transmission of the bank lending channel. |
| Keywords: | Innovation, FinTech, Monetary Policy Transmission, Bank Lending Channel |
| JEL: | E52 G21 G23 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bofitp:280960&r=tid |
| By: | Abeliansky, Ana Lucia; Prettner, Klaus; Stöllinger, Roman |
| Abstract: | We propose a model of production featuring the trade-off between employing workers versus employing robots and analyze the extent to which this trade-off is altered by the emergence of a highly transmissible infectious disease. Since workers are - in contrast to robots - susceptible to pathogens and also spread them at the workplace, the emergence of a new infectious disease should reduce demand for human labor. According to the model, the reduction in labor demand concerns automatable occupations and increases with the viral transmission risk. We test the model's predictions using Austrian employment data over the period 2015-2021, during which the COVID-19 pandemic increased the infection risk at the workplace substantially. We find a negative effect on occupation-level employment emanating from the higher viral transmission risk in the COVID years. As predicted by the model, a reduction in employment is detectable for automatable occupations but not for non-automatable occupations. |
| Keywords: | automation; robots; pandemics; viral transmission risk; occupational employment; shadow cost of human labor |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wus005:59341739&r=tid |
| By: | Iaria Fusacchia; Anna Giunta; Marianna Mantuano; Enrico Marvasi; Silvia Nenci; Luca Salvatici; Davide Vurchio |
| Abstract: | This paper provides a methodological contribution to reconciling and integrating the Inter- Country Input-Output accounting framework, commonly used for country-industry Global Value Chain (GVC) analysis, with firm-level data. The goal is to establish robust micro-founded indicators of GVC participation and positioning. Firm-level data on production, and exported and imported (narrowly defined) products are used to more precisely measure bilateral trade flows by intermediate or final use within the Global Trade Analysis Project (GTAP). This integration enhances the accuracy of estimating the sourcing and allocation of imported inputs across sectors, thereby improving the quality of data for calculating trade in value-added indicators. The resulting integrated database is used to compute improved GVC-related indicators, providing insights into the participation and positioning of Italian firms. |
| Keywords: | Global Value Chains; Inter-Country Input-Output tables; Firm-level data; GTAP |
| JEL: | C67 C81 E01 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:rtr:wpaper:0279&r=tid |
| By: | Roth, Felix |
| Abstract: | This paper analyzes the intertemporal variation of trust on economic growth. Constructing a unique global country panel dataset and applying a system-generalized method of moments (SYSGMM) estimation approach to a sample of 75 market economies over a 40-year time span (1980-2019), this paper finds evidence of a causal curvilinear (inverted U-shape) relationship between trust and growth. This relationship corroborates earlier panel data results but challenges findings that posit a general positive relationship between trust and growth. Only a minority of global economies can attain a position close to or above the optimum threshold for trust and growth. Most economies, in fact, fall well below that threshold, and for them, it is incumbent upon their policymakers to consider trust-building measures in order to achieve higher growth. In countries that are close to the optimum threshold, however, such policies can likely be neglected. In fact, in countries where trust levels exceed the optimum, an increase in trust might even hamper growth. |
| Keywords: | Trust, Growth, Intertemporal Variation, Panel Analysis, Curvilinear (inverted U-shape) Relationship, Causality |
| JEL: | C33 O43 O47 O50 Z13 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:uhhhdp:14&r=tid |
| By: | Bischoff, Thore Sören; Runst, Petrik; Bizer, Kilian |
| Abstract: | Previous studies have found that generalized trust positively affects innovation at the country and regional level. We extend this literature by arguing that there are four reasons to believe that the trust-innovation relationship is heterogeneous across geographic space. First, there is a saturation effect where regions in the lower half of the trust distribution are more likely to benefit from an increase in trust than regions in the upper half. Second, trust is more important in regions with less developed innovation capacities as it fosters cooperation and knowledge transfer, which is known to be especially relevant in lagging regions. Third, generalized trust and institutional trust can serve as substitutes: when institutional trust is low, generalized trust can be used as an alternative facilitator of cooperation. Finally, as smaller firms lack the legal capacities for sophisticated contractual arrangements and therefore resort to informal cooperation, the trust-innovation relationship is stronger in regions with a large share of small firms. Our results mostly support the small-firm and lower-trust region hypothesis. These findings underline the fact that regional innovation systems work differently and different mechanisms of cooperation can be leveraged to achieve innovation success depending on the regional characteristics. |
| Keywords: | Innovation, trust, regional innovation systems |
| JEL: | D02 D83 O12 O18 O31 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifhwps:280972&r=tid |
| By: | Jonathan Colmer; David Lagakos; Martin Shu |
| Abstract: | This paper asks whether increasing productivity in the electricity sector can yield larger long-run GDP gains than suggested by electricity's small share of aggregate economic activity. We answer this question using a dynamic model in which electricity is a strong complement to other inputs in production. We parameterize the model using our own new measures of electricity-sector TFP across countries. The model predicts modest long-run GDP gains from improving electricity-sector TFP, contrary to the notion that electricity is a weak link. Parameterizations that make electricity a weak link mostly require the electricity sector to be counterfactually large or unproductive. |
| Keywords: | electricity, economic development, weak link, TFP |
| Date: | 2024–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1970&r=tid |
| By: | Prettner, Klaus |
| Abstract: | Over the past decades, labor productivity and per capita GDP have increased steadily, while real wages for most workers have remained stagnant. This development challenges conventional economic insights according to which the remuneration of a production factor is determined by its productivity. Augmenting an otherwise standard production function with industrial robots as a substitute for workers allows to reconcile the two trends. If workers are compensated according to their marginal product, wages may decrease when robot use intensifies, whereas output and measured labor productivity both increase. Using data on labor input, physical capital input, and industrial robot use in the United States, I show that a sizable part of the observed wedge between wages and labor productivity can be explained using such a framework. |
| Keywords: | automation; productivity; wage growth; inequality |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wus005:59342809&r=tid |
| By: | Brencic, Vera (University of Alberta, Department of Economics); McGee, Andrew (University of Alberta, Department of Economics) |
| Abstract: | In job ads, employers express demand for personality traits when seeking workers to perform tasks that can be completed with different behaviors (e.g., communication, problem-solving) but not when seeking workers to perform tasks involving narrowly prescribed sets of behaviors such as routine and mathematics tasks. For many tasks, employers appear to demand narrower personality traits than those measured at the Big Five factor level. The job ads also exhibit substantial heterogeneity within occupations in the tasks mentioned. Workers may thus sort based on personality-derived comparative advantages in tasks into jobs rather than occupations. In the National Longitudinal Survey of Youth 1997, we confirm that personality sorting based on tasks occurs at both the occupation and job levels. In this sample, however, there is little evidence of task-specific wage returns to personality traits, which would influence the supply of traits to jobs with particular tasks. This may explain why personality sorting based on tasks in the sample is very limited in spite of the correlations between tasks and employers’ demands for traits. |
| Keywords: | personality; tasks; sorting; job ads; employer demand |
| JEL: | D22 J23 J24 J33 M51 |
| Date: | 2023–12–29 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2023_013&r=tid |
| By: | L. Vargiu; B. Biagi; M.G. Brandano; P. Postiglione |
| Abstract: | The last decades registered a significant increase in Research Infrastructures (RIs) everywhere and in Europe. The EU supports these projects and their activities by implementing strategies and allocating financial resources for these costly projects. Although RIs main goal is to foster science, they produce relevant effects that go beyond scientific output including economic output, innovation, and social impact. These effects take place simultaneously at different geographic levels - regional, national, and international. RIs' hosting regions absorb a significant part of them. This phenomenon is the object of a stream of literature that analyses the several effects that single RIs have on the economy and society. However, little attention is paid to the aggregate dimension of these effects at the regional level and how it changes in different regional contexts. This work contributes to the main literature on RIs socio-economic effects by disentangling the aggregate economic growth effect driven by RIs in EU NUTS 2 regions for two periods - 2001-2020 and 1981-2020. The empirical analysis is carried out on an original database with information about 667 RIs. A spatial Durbin model estimates both the direct impact and spatial spillovers. The main findings suggest that RIs have a positive impact on regional economic growth over the two periods considered. However, spillover effects to neighbouring regions are not significant. |
| Keywords: | Research Infrastructures;regional economic growth;Socio-economic effects;european regions;spatial analysis |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:202314&r=tid |
| By: | Simon Evenett; Adam Jakubik; Fernando Martín; Michele Ruta |
| Abstract: | This paper introduces the New Industrial Policy Observatory (NIPO) dataset and documents emergent patterns of policy intervention during 2023 associated with the return of industrial policy. The data show that the recent wave of new industrial policy activity is primarily driven by advanced economies, and that subsidies are the most employed instrument. Trade restrictions on imports and exports are more frequently used by emerging market and developing economies. Strategic competitiveness is the dominant motive governments give for these measures, but other objectives such as climate change, resilience and national security are on the rise. In exploratory regressions, we find that implemented measures are correlated with the past use of measures by other governments in the same sector, pointing to the tit-for-tat nature of industrial policy. Furthermore, domestic political economy factors and macroeconomic conditions correlate with the use of industrial policy measures. We intend for the NIPO to be a publicly available resource to help monitor the evolution and effects of industrial policies. |
| Keywords: | Industrial Policy; Trade Policy; Data |
| Date: | 2024–01–04 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2024/001&r=tid |