The proposed EU capital markets union aims to revitalise Europe’s economy by creating efficient funding channels between providers of loanable funds and firms best placed to use them. This column argues that a successful union would deliver investment, innovation, and growth, but it depends on overcoming difficult regulatory challenges. A successful union would also change the nature of systemic risk in Europe.
Jon Danielsson, Eva Micheler, Katja Neugebauer, Andreas Uthemann, Jean-Pierre Zigrand, Monday, February 23, 2015
Neil Lee, Andrés Rodríguez-Pose, Tuesday, February 17, 2015
Creativity is assumed to be the mother of invention, but research testing whether this is the case is surprisingly rare. This column addresses this gap in the literature by assessing whether firms in creative industries in the UK are more innovative than firms outside creative industries. The authors also examine whether the location of creative-industry firms in creative cities – and the size of creative cities – matters for the innovative capacity of these firms.
Hiroyasu Inoue, Kentaro Nakajima, Yukiko Umeno Saito, Wednesday, February 11, 2015
Despite vast improvements in information and communications technology, the tendency of firms in related industries to cluster together hardly changed between 1985 and 2005. This column examines the relationship between geographic clustering and innovation using establishment-level data from Japan. Research establishments – especially those in high-technology industries – are more localised than average. The degree of localisation is greater when establishments are weighted by their creativity, as measured by the number of patents created and the number of citations received.
Philippe Aghion, Monday, January 19, 2015
Jean Tirole’s Nobel was for his transformative work on industrial organisation. In this Vox Talk Philippe Aghion talks about Tirole’s contribution. The interview was recorded in November 2014.
Enrico Minelli, Friday, December 19, 2014
Growth and inequality are back at the centre of the economic debate. This column presents a framework for interpreting Thomas Piketty’s data based on Paul Romer’s model of endogenous growth. Two balanced growth regimes are possible in this framework: one (‘merit’) with a low capital–output ratio, a high interest rate, and high growth; and another (‘rent’) with a higher capital–output ratio, a somewhat lower interest rate, and much lower growth. An increase in the returns to physical capital accumulation compared to innovation could explain a shift from ‘merit’ to ‘rent’.
Daron Acemoglu, Gino Gancia, Fabrizio Zilibotti, Tuesday, September 30, 2014
Offshoring of production can have a deep impact on the wages and welfare of workers with different abilities through its effect on technological progress. This column argues that, when labour is sufficiently cheap abroad, firms have incentives to offshore low-skill tasks and invest in skill-biased technologies at home. Over time, however, offshoring raises foreign wages. This increases demand for all firms and makes innovations complementing low-skill workers more profitable. As a result, offshoring can eventually lead to higher wages for everybody and less inequality.
Avner Offer, Friday, September 19, 2014
Victory in World War I relied on three types of energy: renewable energy for food and fodder, fossil energy, and high explosive. This column argues that the Allies had a clear advantage in manpower, coal, and agriculture, but not enough for a quick decision. Mobilisation in continental economies curtailed food production, occasionally to a critical level. Technical competition was a matter of capacity for innovation, not of particular breakthroughs. Coercive military service and rationing of scarce energy and food had egalitarian consequences that continued after the war.
Marco Annunziata, Saturday, August 16, 2014
Africa has generated a lot of enthusiasm lately. The cynical view of the continent as a hopeless basket case has been replaced by the lofty narrative of Africa Rising. This column argues that Africa’s progress is impressive, and there is more to the story than a commodity boom. But Africa is at a crossroads. The opportunities are huge, but the road ahead is long, and will require persistent and patient effort from policymakers as well as business.
Hongyong Zhang, Monday, July 21, 2014
The Chinese government has been actively promoting innovation via policies such as R&D subsidies, tax relief, and location policies. Since 1995, central and local governments have established more than 100 clusters in over 60 cities. This column presents new evidence on the effect of the concentration of firms on product innovation (new products) in the manufacturing industries.
Masayuki Morikawa, Sunday, July 20, 2014
Innovation is a key driver of productivity growth, but innovation in the service sector has received relatively little attention. This column shows that the total factor productivity gap between Japanese firms with and without innovations is larger in services than in manufacturing. Whereas the percentage of firms holding patents is much higher in manufacturing than in services, trade secrets are just as important in both sectors. These results suggest that the protection of trade secrets makes an important contribution to productivity growth.
Holger Görg, Olivier N. Godart, Aoife Hanley, Christiane Krieger-Boden, Tuesday, July 8, 2014
Many firms are replacing traditional working hours with more flexible arrangements, reflecting new thinking on employee motivation. This column presents evidence from Germany that trust-based working time is associated with increased innovation. However, trust-based working hours also contribute to the blurring of workers’ professional and private lives, and may lead to excessive overtime. Careful design of trust-based working arrangements is required to reap the innovations gains while avoiding the health pitfalls.
Bernhard Dachs, Georg Zahradnik, Sunday, July 6, 2014
The Global Crisis brought a halt to three decades of R&D internationalisation, in which foreign firms’ share of total R&D expenditure had increased in almost all countries where data is available. However, this column argues that the crisis did not lead to a new global distribution of overseas R&D expenditure, despite the erosion of the EU’s share. The persistence of R&D expenditure is attributed to the costs of relocating R&D and to the autonomy of foreign subsidiaries.
Giovanni Peri, Kevin Shih, Chad Sparber, Thursday, May 29, 2014
Immigrants to the US are drawn from both ends of the education spectrum. This column looks at the effect of highly educated immigrants – in particular, those with degrees in Science, Technology, Engineering, or Mathematics – on total factor productivity growth. The authors find that foreign STEM workers can explain 30% to 60% of US TFP growth between 1990 and 2010.
Geoff Mulgan, Friday, April 11, 2014
Geoff Mulgan talks to Romesh Vaitilingam about his recent book, 'The Locust and the Bee: Predators and Creators in Capitalism's Future'. Mulgan suggests that the economic crisis was a dramatic reminder that capitalism can both produce and destroy, but that it also provides a historic opportunity to choose a radically different future for capitalism - one that maximizes its creative power yet minimizes its destructive force. They discuss the importance of social innovation and the creative economy. The interview was recorded in May 2013.
Carlo Altomonte, Tommaso Aquilante, Gábor Békés, Gianmarco I.P. Ottaviano, Friday, March 21, 2014
Internationalisation and innovation policies are frequently considered to be key drivers of growth. This column documents a strong positive association between internationalisation, innovation, and productivity at the firm-level across seven European countries. This association continues to hold after controlling for country, size, industrial sector, and firm specific characteristics, with some evidence of causality running from innovation to internationalisation. The analysis suggests that policymakers should coordinate, if not integrate, innovation and internationalisation policies in order to boost productivity and growth.
Ursula Fritsch, Holger Görg, Monday, September 23, 2013
Outsourcing is a controversial practice. This column looks at its effects on firm-level innovation in emerging markets. The authors find robust evidence that outsourcing is positively related to various innovation measures. However, outsourcing only leads to increased R&D spending in countries where intellectual-property rights are well-protected.
Neil Lee, Andrés Rodríguez-Pose, Saturday, August 24, 2013
In recent years, policymakers have enthusiastically backed the fashionable ‘creative industries’. This column presents new research on the creative sector, creative occupations and innovation in the UK. The results raise questions about the dominant perception of the creative industries as an ‘innovative’ sector. Instead, it might be more appropriate for policymakers to focus on creative workers regardless of the sector in which they work.
Carsten Fink, Ernest Miguelez, Julio Raffo, Wednesday, July 17, 2013
Migration is a hot-button issue across the globe. This column summarises new evidence on the patterns of skilled-worker migration, focusing on the specific case of inventors. A novel data source that traces worldwide migration flows for inventors suggests that, excluding a few nuances, the economic incentives for general migration also seem to influence inventors’ migration decisions.
Aaron Chatterji, Edward Glaeser, William Kerr, Tuesday, June 4, 2013
Contrary to received wisdom, entrepreneurial clusters in the US – like Silicon Valley – are seen as success stories. But what is the rationale behind these clusters? Do they actually work? This column reviews the evidence and discusses localised policies currently being pursued in the US. In general, our understanding of what works remains limited and economists should more thoroughly pursue researching the effects of entrepreneurial clusters.
Alberto Galasso, Mark Schankerman, Tuesday, May 14, 2013
Do patents encourage innovation? This column presents a new analysis, suggesting that patent rights block cumulative innovation only in very specific environments. To encourage innovation, remedial government policies should be targeted; a ‘broad based’ scaling back of patent rights is unlikely to be appropriate. Policies and institutions should facilitate more efficient licensing, promoting cumulative innovation without diluting the innovation incentives that patents provide.