International and Intersectoral R&D Spillovers in the OECD and East Asian Economies

This study empirically explores international and intersectoral R&D spillover effects on the total factor productivity growth of manufacturing and nonmanufacturing sectors based on a pooled time-series data set of 14 OECD economies and 3 East Asian economies—Korea, Singapore, and Taiwan. The study finds that foreign manufacturing R&D has strong influence on domestic productivity growths of both sectors and that domestic manufacturing R&D has a substantial intersectoral R&D spillover effect on domestic nonmanufacturing productivity growth. The social rates of return to manufacturing R&D are estimated to be two to six times greater than the private rates of return.     

THE IMPACT OF TRADE COSTS ON FIRM ENTRY,EXPORTING, AND SURVIVAL IN KOREA

This study examines how changes in trade costs have affected entry, exit, productivity, and exporting in the Korean manufacturing sector. We verify several predictions of heterogeneous‐firm models of international trade. For example, falling import‐trade costs are associated with less entry and lower market shares among existing domestic firms, and higher total factor productivity for Korean manufacturing as a whole. The size of firms plays an important role in many of our results. New domestic firms are more likely to be small, but large firms are less likely to exit and more likely to have an increase in total factor productivity. (JEL F10, D24)     

Innovation Policy Challenges in Transition Countries: Foreign Business R&D in the Czech Republic and Hungary

R&D expenditures of national firms decreased considerably and structural changes of R&D financing followed the fall of planned economy in the transition period of Central Eastern European economies. In the middle of the 1990s, business R&D started to grow in the Czech Republic and Hungary due to investments of foreign affiliates and restructuring of domestic companies. Nowadays multinational companies have a decisive share in business R&D in these countries, which entails special challenges for national innovation policy. In this paper, we look through the development of the Czech and Hungarian innovation policy considering MNEs R&D. We use case studies of the Czech automobile industry, the Hungarian pharmaceutical industry, and the new MNE-related university units and private universities to show how these companies influence innovation systems in transition economies.      

ESTIMATION OF THE DEPRECIATION RATE OF PHYSICAL AND R&D CAPITAL IN THE U.S. TOTAL MANUFACTURING SECTOR

Numerous studies on production and cost, the sources of productivity, and endogenous growth have recognized the pivotal role played by physical and R&D capital stocks. Analysis of the contributions of these capitals often requires measures of the stocks of physical and R&D capital, which in turn requires measuring their depreciation rates. In this paper we specify a model of factor demand that allows us to estimate the depreciation rates of both physical and R&D capital jointly with other model parameters. The model is estimated for the U.S. total manufacturing sector.     

INTERNATIONAL R&D SPILLOVERS AND OECD ECONOMIC GROWTH

This paper quantifies the cross-national spillover effects of government and private investment in research and development (ROD), using a panel data set of ten OECD countries. The results show that domestic private research is a significant determinant of both domestic and foreign productivity growth, and that foreign government research stimulates domestic private research. These findings are significant in that they provide empirical support for arguments in favor of international economic policy coordination, particularly in the area of international science and technology.     

Unions and innovative activity in Germany

This study is the first attempt to investigate the influence of unions on innovative activities in Germany at the industry level. Econometric models estimated by a highly robust method and submitted to a number of specification tests indicate that trade unions do not have a negative impact on innovative activity which is measured by either the percentage of revenues spent on R&D or the percentage of employees working in R&D. This finding is consistent with evidence on the influence of unions on productivity in Germany and with considerations about the German system of industrial relations.     

OLIGARCHIES AND DEVELOPMENT IN A GLOBAL ECONOMY: A TALE OF TWO ELITES

This paper studies how comparative advantage and the political elites' endowments shape long‐run performance in economies with imperfect political institutions. The trade regime interacts with industrial policy and regulations on capital mobility in governing capital accumulation. In a capital‐scarce economy, capitalist oligarchs striving for import substitution industrialization (ISI) initially shelter the economy from trade, while promoting industrial policies that promote total factor productivity growth in the manufacturing sector. This gradually shifts the comparative advantage toward manufacturing and renders the economy attractive to foreign investors. Allowing for trade and foreign capital inflows are thus complementary policies that spur growth in the capital oligarchy. By contrast, landed oligarchs in a capital‐scarce economy favor openness to trade at an early stage of development, neglect industrial policies, and block foreign capital to maximize extractable rents. The policy mix causes the economy to stagnate. Consistent with the experiences of South Korea and Argentina in the postwar era, the model predicts that the success of ISI policies depends crucially on the conditions governing the incentives for capital accumulation. (JEL F10, F20, P40, P50, O10, O24)     

GROWTH AND CONVERGENCE WHEN TECHNOLOGY AND HUMAN CAPITAL ARE COMPLEMENTS

This article presents a model of endogenous growth, in which a firm's technology and a country's human capital stock are complementary in the production of output. Production technologies are created by costly research and development (R&D) and are owned by firms that can freely choose where in the world to produce. Both production and R&D have a positive effect on a country's human capital stock. While all countries typically grow at the same rate in the long run, they differ in their levels of human capital, per capita output, and the quality of the technologies that are used in production. A country's relative position in terms of productivity is history dependent. Countries that start out with a lower human capital stock or industrialize later end up with a lower per capita GDP in long‐term equilibrium. (JEL O4, O33, O47)     

The dual role of R&D expenditures in European Union’s member states: short- and long-term prospects

The objective of this article is to assess a potential dual role of public expenditures in R&D upon economic growth and employment, using these dimensions as partial representations of the socioeconomic state of affairs in European Union’s Member States. First, we look into direct, short-term impacts arising from R&D expenditures, much in the sense of a multiplier effect. Second, we analyse impacts from the stage of development of National Innovation Systems (NIS) upon the macroeconomic conditions of interest, assuming that current stages of development are products of previous commitment to innovation, that is, a structural, long-term outcome of innovation-oriented investments. In order to empirically test our propositions, we have analysed 28 EU Member States (1990–2013) through three sets of econometric (static and dynamic panel data) models. Results highlight that EU countries’ governmental commitment to their respective innovation systems catalyses current and prospective economic growth and employment levels, suggesting a complementarity between Neo-Schumpeterian and Neo-Keynesian perceptions over governmental R&D involvement. This can bring innovation efforts closer to the macroeconomic debate on monetary and fiscal policies and function as a criticism to austerity measures, as this may not only affect the present socioeconomic situation, but also generate the cornerstone for a perennial state of divergence among EU Member States.     

What are the likely interactions among innovation,government debt,and employment?

The study here analyzes the interactions among labor, R&D intensity, and public expenditure on education (indicators of innovation), considering public debt of countries. The study is based on 27 European countries over the 1995–2009 and applies multiple regression analysis. Main findings seem to be: a significant interaction of public expenditure on education and R&D intensity with employment rate, whereas an increase of general government consolidated gross debt has a negative interaction for employment rate as well as for technology indicators. The theoretical framework and empirical evidence suggest vital political economy implications to support employment rate during contractions of the business cycle. In particular, considering the specificity of the economic structure of countries, a fruitful lung-run political economy of growth should slowly dry out public debt by supporting GDP growth, rather than reducing government debt with high taxation and balanced-budget rules, in order to decrease frictional effects for patterns of economic, technological, and employment growth.     

ASSET PRICE BUBBLES AND TECHNOLOGICAL INNOVATION

We introduce borrowing constraints into a two‐sector Schumpeterian growth model and examine the impact of asset price bubbles on innovation. In this environment, rational bubbles arise when the intermediate good producing R&D sector is faced with adverse productivity shocks. Importantly, these bubbles help alleviate credit constraints and facilitate innovation in the stagnant economy. On the policy front, we make a case for debt financed credit to the R&D sector. Further, we establish that a constant credit growth rule (akin to the Friedman rule) outperforms the often prescribed counter‐cyclical “lean against the wind” credit policy. (JEL E32, E44, O40)     

Foreign trade barriers and jobs in global supply chains

This article uses ILO global supply chain job estimates to study the impact on domestic jobs of foreign barriers to trade in goods and services. Empirical analysis largely confirms predictions derived from a theoretical model calibrated to WIOD data for 2000 and 2011. Barriers to trade in manufacturing and services are both found to have a cross‐border impact on jobs in their own sector and spill‐over effects in other sectors, the latter becoming stronger over time. This article shows the labour market consequences of the increased interconnectedness of countries and sectors through global supply chains, which suggests that trade policy can have significant external effects on foreign labour markets.     

INTERNATIONAL R&D SPILLOVERS AND PRODUCTIVITY TRENDS IN THE ASIAN MIRACLE ECONOMIES

This paper examines the importance of the domestic research and development stock and foreign knowledge spillovers on total factor productivity for six Asian miracle economies over the period from 1955 to 2006. The productivity effects of international knowledge spillovers through the following channels are considered: imports, exports, inward foreign direct investment, patents, geographical proximity, and the general channel. The general channel is a transmission mechanism where knowledge spillovers occur automatically and do not pass through any specific channel. The estimates show that knowledge has been transmitted through all the channels considered but that the import channel and the general channel have probably been the most important ones for the Asian miracle economies. (JEL O10, O30, O40)     

Boeing’s Diffusion of Commercial Aircraft Technology to Japan: Surrendering the U.S. Industry for Foreign Financial Support

Japanese firms have become increasingly important first-tier suppliers to the U.S. commercial aircraft industry (large passenger jets). Over time, this relationship has evolved from a simple “build to print” subcontractor arrangement to a turnkey “design and build” risk-sharing partnership. Using the Boeing 767, 777, and 787 as examples, we argue that the motives for Boeing’s commercial outsourcing to Japan are to access the Japanese market, spread risk, gain access to capital, and lower U.S. spending on research and development (R&D). This has clear implications for U.S. trade and employment, in that Japanese-subcontracting boosts foreign imports and reduces the need for domestic production workers and U.S. suppliers. From a trade perspective, however, a troubling feature of allowing the Japanese to produce large commercial aircraft subassemblies is that major Japanese public financial supports are involved which contravene existing international agreements on production subsidies. We review the types of production contracts that Japanese companies have sought on the Boeing 767, 777, and 787 programs. These contracts have allowed the Japanese to develop new capabilities in terms of production capacity, tooling, design, and final assembly. Ultimately, these capabilities imply that Japan will eventually enter the market as a fully-fledged producer of commercial aircraft. This does not bode well for the U.S. commercial aerospace sector.     

Domestic Credit and Diversification of Manufactured Exports from Developing Countries

This article uses panel data to analyse the effect of domestic credit on the diversification of manufactured exports from developing countries. Given the evidence that export variety of manufactured goods affects productivity positively, the results imply that policy reforms that improve access to domestic credit for firms can raise productivity and hence economic growth in many poor countries. In addition, the results also show that building infrastructure and implementing reforms in governance that improve the quality of government regulations are important for encouraging diversification of manufactured export products in developing countries.     

Main Determinants of Foreign Direct Investment in the Southeast European Countries

The growth of foreign direct investments (FDI) in the world has been significant in recent years. Between 1990 and 2000 worldwide FDI inflows increased more than five times, and since 2000 they have declined. During the period of FDI expansion, growth was especially strong from 1997 onward. However, most of the FDI transactions were between the developed countries. The distribution of FDI is unequal and less-developing countries face difficulties in attracting FDI. Despite the fact that FDI is increasingly important to developing countries, over the past few years the share of the developing countries in worldwide FDI inflows has been declining. The paper analyses geographical and sector distribution of FDI in the Southeast European countries (SEEC) and compares its amount with that in Central East European countries. According to economic theory, FDI towards developing countries flows for labor-intensive and low-technology production, while towards developed states, it flows for high-technology production. Identification of determining factors of FDI is a complex problem which depends on several characteristics specific for each country, sectors, and companies. All those factors could be grouped in three broad categories: economic policy of host country, economic performance, and attractiveness of national economy. On the desegregated level, FDI depends on size and growth potential of a national economy, natural resources endowments and quality of workforce, openness to international trade and access to international markets, and quality of physical, financial, and technological infrastructure. An important question is how SEEC can attract more foreign investment. To find the answer, this paper uses data on FDI inflows to SEEC to determine the main host country determinants of FDI and provides regression-based estimation of determinants of FDI. Using a sample of SEEC and panel data techniques, the determinants of FDI in this part of Europe are investigated. The paper researches the relationship between FDI, GDP, GDP per capita, number of inhabitants, trade openness, inflation, external debt, and information and communication technology sectors. For SEEC, FDI inflows are largely dependent on the completion of the privatization process and in this paper we include the level of private sector and privatization as explanatory variables. Our findings suggest that certain variables such as privatization and trade regime, as well as the density of infrastructure, appear to be robust under different specifications. A positive significance of the agglomeration factor is also observed, confirming the relevant theoretical propositions. However, certain differential variables, such as the privatization, could not be fully captured due to the statistical homogeneity of the sample.     

The Determinants of Employment of Affiliates of US Multinational Enterprises in Africa

Employment of foreign affiliates of multinational enterprises has been shown to promote growth by boosting wages, increasing the transfer of technology and enhancing productivity in host countries. Yet, the factors affecting such multinational employment in Africa have not been studied. Using panel data, this article indicates that – in contrast to natural resource availability – good infrastructure, higher income, openness to trade and an educated labour force have a significant positive impact on employment. In order to realise the employment benefits of FDI, therefore, sub‐Saharan Africa needs to attract investments in non‐natural resource industries, and host countries need to improve their infrastructure and educate their population.     

Women Underrepresentation in R&I: A Sector Program Assessment of the Contribution of Gender Equality Policies in Research and Innovation

Despite decades of efforts to achieve gender equality in research and innovation (R&I), all EU member states still face remarkable difficulties in driving forward the development of their innovation system while at the same time improving gender equality by using all the available research potential. In this paper we focus on the development of the share of women researchers in four national innovation systems, i.e. in Austria, Denmark, Hungary and Spain in the time period 2005-2015. The four selected cases represent countries with significant differences in their innovation capacity, gender regimes and progress of gender equality in R&I. A qualitative comparative analysis (QCA) is carried out to conduct a sector program evaluation based on statistical data and qualitative studies to understand the dynamic development of the proportion of women researchers. The study aims to provide insights into the aggregated gender equality interventions and policies implemented in the four countries studied and their contributions to the development of the proportion of women scientists at the structural level. The analysis reveals that the development of the share of women researchers during the studied period has been particularly influenced by contextual factors, namely the relative size of the business enterprise sector and the share of women among holders of tertiary education. While this is the case, it is found that gender equality interventions need to be more widespread and more effectively designed to be a strong contributing factor to an increasing representation of women in R&I.     

RISING R&D INTENSITY AND ECONOMIC GROWTH

Over the past decades, private R&D spending in the United States and other developed countries has been growing faster than gross domestic product. At the same time, the growth rates of per-capita and aggregate output have been rather stable, possibly declining slightly. This article proposes a growth model that can account for the observed phenomenon by explicitly describing competition among technological leaders and followers in individual markets in a way that is consistent with existing studies on firms' motivation to invest in R&D. The model shows the possibility that the unsustainable trend of rising R&D intensity persists for a very long time. (JEL O3, O4, L1)     

Rooted transnational publics: Integrating foreign ties and civic activism

Can civic organizations be both locally rooted and globally connected? Based on a survey of 1,002 of the largest civic organizations in Hungary, we conclude that there is not a forced choice between foreign ties and domestic integration. By studying variation in types of foreign interactions and variation in types of domestic integration, our analysis goes beyond notions of footloose experts versus rooted cosmopolitans. Organizations differ in their rootedness according to whether they have ties to their members and constituents, whether they have ties to other organizations in the civic sector, and whether they associate with actors from outside the civic sector. Similarly, we specify different types of foreign ties. In both domains our emphasis is on the type of action involved in the tie–especially relations of accountability and partnership. By demonstrating a systematic relationship between the patterns of foreign ties and the patterns of domestic integration, we chart three emerging forms of transnational publics.