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Marriott Philadelphia Downtown, Grand Ballroom Salon C
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American Economic Association
We find that domestic firms are affected by strong negative competition effects when foreign firms produce in the same four-digit sector. We use a sector-level measure of "technological closeness,"
based on the extent to which patents citations cluster in similar technologies, to show that positive knowledge
spillovers to domestic firms disproportionately occur when domestic and foreign firms operate in sectors
that are technologically close. On average, positive knowledge spillovers from foreign firms explain
45 percent of the total factor productivity improvement.
Domestic and International Dimensions of Innovation Spillovers
Paper Session
Sunday, Jan. 7, 2018 10:15 AM - 12:15 PM
- Chair: Ufuk Akcigit, University of Chicago
Are Ideas Getting Harder to Find?
Abstract
In many growth models, economic growth arises from people creating ideas, and the long-run growth rate is the product of two terms: the effective number of researchers and the research productivity of these people. We present a wide range of evidence from various industries, products, and firms showing that research effort is rising substantially while research productivity is declining sharply. A good example is Moore’s Law. The number of researchers required today to achieve the famous doubling every two years of the density of computer chips is more than 75 times larger than the number required in the early 1970s. Across a broad range of case studies at various levels of (dis)aggregation, we find that ideas — and in particular the exponential growth they imply — are getting harder and harder to find. Exponential growth results from the large increases in research effort that offset its declining productivityForeign Investment and Domestic Productivity: Identifying Knowledge Spillovers and Competition Effects
Abstract
We use a new large representative firm level data set, spanning six advanced countries to identify knowledge spillovers from foreign investment. We use novel measures of "closeness" of foreign and domestic firms to separate the effects of competition from learning.We find that domestic firms are affected by strong negative competition effects when foreign firms produce in the same four-digit sector. We use a sector-level measure of "technological closeness,"
based on the extent to which patents citations cluster in similar technologies, to show that positive knowledge
spillovers to domestic firms disproportionately occur when domestic and foreign firms operate in sectors
that are technologically close. On average, positive knowledge spillovers from foreign firms explain
45 percent of the total factor productivity improvement.
Do Tax Incentives for Research Increase Firm Innovation? An RD Design for R&D
Abstract
We present evidence of a causal impact of research and development (R&D) tax incentives on innovation. We exploit a change in the asset-based size thresholds for eligibility for R&D tax subsidies and implement a Regression Discontinuity Design using administrative tax data on UK firms. There are statistically and economically significant effects of the tax change on both R&D and patenting (even when quality-adjusted). R&D tax price elasticities are large, consistent with the fact that the treated group is drawn from a sub-population of smaller firms likely subject to financial constraints. We estimate that over the 2006-11 period aggregate business R&D would be around 10% lower in the absence of the tax relief scheme. We also show that the R&D generated by the tax policy seems to create positive spillovers on the innovations of technologically related firmsDiscussant(s)
Felipe Saffie
,
University of Maryland
Philippe Aghion
,
Harvard University
Ann Harrison
,
University of Pennsylvania
Sina T. Ates
,
Federal Reserve Board
JEL Classifications
- O3 - Innovation; Research and Development; Technological Change; Intellectual Property Rights
- F2 - International Factor Movements and International Business