Deepak Hegde, Kyle Herkenhoff, Chenqi Zhu, 16 June 2022

Patents seek to trade off the benefits to the inventor of exclusivity with the social benefits of disclosure to the public. Most studies of the patent system focus on the benefits of exclusivity. This column analyses the broader impacts of patents on innovation, leveraging a change in patent disclosure requirements in the US in 1999. Accelerating patent publication by two years increases future patent citations by 15% relative to the baseline, suggesting a significant impact on knowledge diffusion. This finding is contrary to historical arguments that patent disclosure stifles innovation or does not reveal useful information. 

Andreas Lichter, Max Löffler, Ingo E. Isphording, Thu-Van Nguyen, Felix Poege, Sebastian Siegloch, 21 December 2021

Studies have shown that targeted R&D tax incentives – such as tax credits for R&D spending – induce firms to conduct more R&D. However, little is known about the effects of general profit taxes on firm-level R&D spending and innovation output. This column presents evidence from Germany that points to sizeable negative effects of increasing profit taxes on firms’ R&D spending and patents. However, slashing business tax rates may not be the most efficient policy instrument to spur innovation altogether.

Ana Cusolito, Alvaro Garcia Marin, William Maloney, 04 November 2021

The impacts of rising competition on innovation remain unclear, and often depend on country context. This column analyses the impact of increased import competition from China on innovation by Chilean firms. It finds a negative overall impact of competition on innovation indicators. Low-productivity firms in particular see declines across all innovation measures, while the most productive firms experience improvements in product innovation and product quality. Raising the capabilities of firms and their access to resources may be an important complement to pro-competition policies.

Torje Hegna, Karen Helene Ulltveit-Moe, 31 August 2021

Though R&D is a key driver of productivity growth, the effects of immigration on R&D investment remain poorly understood. This column investigates the impact that a large immigration shock – in this case, the sudden influx of migrants to Norway following the 2004 enlargement of the EU – had on R&D investments. The results suggest that immigration shocks can have a negative impact on a receiving country’s R&D investments, with potentially long-term consequences for productivity growth.

Philippe Aghion, Antonin Bergeaud, John Van Reenen, 01 February 2021

While there is suggestive evidence that regulations may have a stifling effect on innovation, there is as yet no rigorous economic framework to quantify the magnitude of such regulatory effects on innovation and the aggregate economy. This column proposes such a framework tests its implications on data from France. As the framework predicts, regulations do indeed hamper innovation, but the negative effects concern only incremental innovations and are absent for radical innovations.  Overall, regulations are estimated to reduce aggregate innovations by 5%. 

Ufuk Akcigit, Jeremy Pearce, Marta Prato, 10 October 2020

For economies to innovate and grow past the COVID-19 crisis, policymakers have to understand the implications of various policies for innovation and economic growth, and take into account how people sort into professions and how potential scientists and innovators respond to policy. This column presents a comprehensive framework to study theoretically and empirically the role of education and R&D policies for boosting innovation and economic growth. It finds that policy tools in both education and R&D are complementary in developing talent, which is the key ingredient to innovation. The best mix of policies depends on how unequal society is and how urgently innovation is needed.

Pietro Santoleri, Andrea Mina, 19 July 2020

Direct public support for business R&D is common practice in many countries, but evidence on its causal effects has been mixed. This column exploits discontinuity in the assignment mechanism of the first large-scale European R&D grant programme to assess the impact of the policy. The results indicate that direct grants have positive and sizable effects on a wide range of firm-level outcomes suggesting that R&D grants are an effective policy tool. 

Elena Argentesi, Paolo Buccirossi, Emilio Calvano, Tomaso Duso, Alessia Marrazzo, Salvatore Nava, 04 March 2020

Dominant companies in the digital market may use merger and acquisitions – especially ‘killer’ or ‘zombie’ acquisitions – and the (under)enforcement of merger control to stifle competition and cement their market dominance. This column analyses acquisition activity by Amazon, Facebook, and Google between 2008 and 2018, and finds that they often targeted very young firms. Because the evolution of young firms is still uncertain, it is difficult for competition authorities to assess the effects of these mergers, especially when the focus is on single acquisitions without considering the overall acquisition strategy.

Ufuk Akcigit, Yusuf Emre Akgündüz, Seyit Mümin Cilasun, Elif Ozcan-Tok, Fatih Yılmaz, 27 November 2019

Numerous empirical studies have shown a decrease in business dynamism in the US and other high-income countries in the last decades. This column investigates the case of the Turkish manufacturing sector. Results indicate that business dynamism in the sector has declined since 2012. Market concentration and exit rates have risen, and new business creation, the labour share in output and economic activities of young firms have fallen. Using an endogenous growth framework, it argues that the inability of follower firms to credibly challenge market leaders is a likely reason, brought on by a lack of access to finance.

Tsutomu Miyagawa, Takayuki Ishikawa, 13 November 2019

Following the Global Crisis, some countries increased expenditures on research and development (R&D) to address secular stagnation. This column investigates how successful this rise in R&D scale was in supporting productivity growth in Japan and other advanced economies. It argues that R&D efficiency has declined in many of these countries in the past decade, compared to the preceding ten years. This suggests that increasing R&D spending is not enough to foster growth, and that countries need to do more to support innovation and collaboration in carefully chosen sectors.

Alberto Galasso, Hong Luo, 30 October 2019

Higher risk perception may suppress demand for a product class and chill R&D investment, or increase the incentive to innovate risk-mitigating technologies. The column uses media coverage of accidents involving CT scanners to investigate the impact on firm innovation. Higher public risk perception increased patent applications and the rate of new product innovation, even without changes in liability or regulation.

Ufuk Akcigit, Sina T. Ates, 04 July 2019

The US economy has witnessed a number of striking trends that indicate rising market concentration and a slowdown in business dynamism in recent decades. This column uses a micro-founded model of endogenous firm dynamics to show that a decline in the intensity of knowledge diffusion from frontier firms to laggard ones plays a key role in the observed shifts. It presents new evidence on higher concentration of patenting in the hands of firms with the largest stock that corroborates declining knowledge diffusion in the economy. 

Johannes Eugster, Giang Ho, Florence Jaumotte, Roberto Piazza, 12 June 2019

Technology diffusion to emerging markets helps share growth potential across countries and lift global living standards. Using a global patent citation dataset, this column estimates the magnitude and impact of international knowledge and technology diffusion, as well as the role that globalisation has played. In emerging markets, knowledge flows have increased innovation and productivity. Competition from emerging markets benefits global innovation.

Ramy El-Dardiry, Bastiaan Overvest, Michiel Bijlsma, 24 May 2019

Digitalisation is transforming human life – from the way we interact with each other to the way we work, relax, and create. R&D within companies is no exception. This column lays out pathways for policymakers to successfully adapt R&D policies to these changes based on three guiding principles: direct policies towards spillovers, make policies technology-neutral, and do not favour superstars over challengers.

Bettina Peters, Mark Roberts, Van Anh Vuong, 30 March 2019

International markets can provide exporting firms with more opportunities to generate and introduce innovations and capitalise on their investments relative to purely domestic firms. Using German data, this column demonstrates that exporting firms introduce innovations more frequently than domestic firms and have higher economic gains from their innovations. Trade restrictions such as tariffs can affect a firm’s economic activities in foreign markets and also their R&D and innovation activities.

Semih Akcomak, Bastiaan Overvest, 22 March 2019

The European Commission plans to spend about €120 billion on research and innovation under mission-oriented programmes between 2021 and 2027. This column shows that planned spending is small both relative to the total R&D spending of individual EU countries and relative to previous missions. In addition, there is a lack of clarity on how missions will be determined, designed and governed. Experiences in other countries suggest that the Commission should find new ways of increasing funding to missions and increase clarity on the implementation of mission-oriented policies.

Philippe Aghion, 08 March 2019

Philippe Aghion, of the College de France and LSE, discusses work on merged datasets from the UK – one detailing occupation & wages, the other looking at R&D and investment.

James Harrigan, Ariell Reshef, Farid Toubal, 23 January 2019

Economists have studied the nexus between labour demand, globalisation, and technology adoption for decades, but quantifying the relative importance of these factors is challenging. Using firm-level data from France, this column proposes a new measure of productivity based on the number of workers in technology-related occupations. It finds large effects of importing, ICT, and R&D on the relative demand for skilled workers through their effects on productivity. Interestingly, the demand for both skilled and unskilled workers rises when firms hire ‘techies’ or engage in offshoring.

Peter Egger, Nicole Loumeau, 16 January 2019

Innovative activity is unevenly distributed geographically, with regional characteristics such as global market accessibility or an innovation-promoting policy environment affecting the spatial distribution. Using global data on regional characteristics, regional patenting output, and innovation-promoting policy environments, this column examines the origins of innovation clusters, and particularly the role of R&D tax policy instruments, in attracting innovative firms. It estimates that innovation-promoting R&D tax policy instruments contribute to about one-tenth of the long-term economic growth around the globe.

Jing Cai, Yuyu Chen, Xuan Wang, 17 December 2018

R&D tax breaks are often offered to businesses to encourage innovation. This column uses evidence from a tax reform in China to study the relationship between tax enforcement and firm innovation. Lower taxes improve both the quantity and quality of firm innovation, and have a bigger impact on those firms that are either financially constrained or those that engage more in tax evasion. 

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