Productivity and Innovation

Harald Fadinger, Christian Ghiglino, Mariya Teteryatnikova, 24 December 2016

Economists are just starting to understand how observed input-output linkages and productivity differences are connected. This column investigates how differences in the distribution of sectoral input-output multipliers interact with sectoral productivities to determine cross-country differences in aggregate income. It finds that the impact of the linkages on productivity are substantial, which in turn has significant implications for policy.

Susan Helper, Jennifer Kuan, 20 December 2016

Innovation is often associated with a few visionaries working in new and dynamic industries. In practice, however, critical innovation occurs daily at many points throughout a supply chain. This column uses recent survey data to examine innovation in the US automotive supply chain. Process innovations can have major downstream benefits, and ‘collaborative creativity’ between suppliers and customers is found to be critical in innovation efforts. US automakers should focus on strengthening ties with their suppliers in order to remain competitive.

Elisa Gamberoni, Claire Giordano, Paloma Lopez-Garcia, 13 December 2016

An efficient allocation of inputs across firms is a necessary condition to boost TFP growth. This column presents evidence that in large Eurozone economies, capital misallocation trended upwards in the period 2002-2012 while labour misallocation dynamics were flatter. Uncertainty and credit market frictions were strongly associated with the observed developments in capital misallocation, whereas the overall deregulation in the product and labour markets contributed to dampening input misallocation dynamics. 

Matthew Lindquist, Joeri Sol, Mirjam van Praag, Theodor Vladasel, 02 December 2016

Policies aimed at encouraging entrepreneurship are popular around the world, but a recent literature suggests that entrepreneurship might be more predetermined than previously thought. This column uses sibling correlations to tease apart the importance of genes, family background, and neighbourhood effects for later entrepreneurship. Parental entrepreneurship and genes are the two main drivers of sibling similarities in entrepreneurship. However, children do appear to be able to learn about entrepreneurship through their family and community, so it may be possible to teach relevant skills to young people.

Federica Coelli, Andreas Moxnes, Karen-Helene Ulltveit-Moe, 21 November 2016

Free trade is under fire, with evidence documenting the distributional impacts and labour adjustment costs of trade liberalisation mounting. This column instead presents new evidence on the benefits of freer trade in terms of growth and innovation. It points to gains that could be lost if support for globalisation is not maintained.

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