Direction Of Technical Change Research Articles

Factor prices and induced technical change in the industrial revolution

AbstractUsing historical data for the 1700–1914 period, this paper analyses the nature and direction of technical change in Britain. The evidence in this paper indicates that, over this long period, labour‐saving technology adoption was a major response to changes in relative factor prices, thus supporting the hypothesis that ‘induced innovation’ was a major driver of technical change during the British industrial revolution. Labour saving was made possible and sustained by capital‐augmenting and energy‐augmenting technical change coupled with continuous capital accumulation and abundant energy supplies. This process placed the British economy on a higher capital–labour ratio equilibrium, and was the primary force driving sustained productivity growth, which further raised wages and living standards.

Organizational Learning and Search Track: Scientific and Technical Knowledge: Search, Diffusion, and Impact

Both innovation and entrepreneurship crucially rely on scientific and technical knowledge. Scientific and engineering principles can be applied to processes of creative search to resolve technical problems, increase useful innovation, and create new business opportunities. Yet, recent years have seen dramatic changes in how knowledge is generated and diffused, with still limited evidence on how these changes are impacting innovation. The emergence of big data and computational capabilities might provide “automated” ways to generate knowledge in the form of predictive statements. What are their effects on the innovation search process and on the rate and the direction of technical change? Furthermore, these trends are magnified by the diffusion of the internet and digital modes of exchanging information. How important is the human component for the diffusion of knowledge? Is the diffusion and impact of knowledge still dependent on localized interactions, despite the widespread availability of ICT and the internet? This panel symposium will assemble four papers on the topics of search, diffusion, and impact of technical knowledge. It will discuss 1) the role of data in the search for innovation, 2) the directional consequences of data availability on the accumulation and diffusion of technical knowledge, and 3) the localization of knowledge and how physical proximity of scientists and inventors influence knowledge flows and company creation. These questions are important to craft strategy processes for managers and the allocation of resources for policymakers.

Technical change and the Common Agricultural Policy

This paper adopts an alternative method for the analysis of the CAP’s impact on farms’ productivity based on a system of equations derived from a non-nested three-factors CES production function. With this method, we estimate the elasticity of substitution between labour, capital, and land in the EU agricultural sector, the magnitude and direction of technical change, and the impact of the CAP subsidies. The system of equations is estimated using the GMM estimator on a farm-level panel dataset covering 117,179 farms from all EU MS for the period from 2004 to 2015. Our results suggest that land, labour, and capital in EU farms are complementary production factors characterised by a slow decline or stagnation in the land-, labour-, and capital-augmented technical change. Higher levels of Pillar I and Pillar II CAP payments as percentage of total agricultural income have negative or no impact on farms’ technical change, but higher nominal amounts of Pillar I decoupled subsidies, Pillar II investment and LFA subsidies have a positive impact. Moreover, the larger the share of subsidies in total agricultural income the stronger is the negative impact of the CAP on agricultural technical change.

Dynamic Threshold Effect of Directed Technical Change Suppress on Urban Carbon Footprint in China

Promoting technical change is an important driving force for promoting the sustainable development of urban economy and ecology; however, the technical change is not always neutral and technical change may has a certain direction. This paper uses the DEA-Malmquist index to measure the directed technical change of 280 cities in China from 2009 to 2019, and uses the DMSP/OLS night light data to characterize the urban economic development level. It uses the dynamic threshold regression model to analyze the impact of directed technical change on urban carbon footprint under different economic development levels. The results show that: (1) during the study period, the carbon footprint of Chinese cities has a positive spatial correlation, and the direction of technical change is towards capital-saving overall. (2) The impact of capital-saving technical change on urban carbon footprint presents a negative double-threshold characteristic in China, and the inhibition of capital-saving technical change on the urban carbon footprint becomes stronger with the increasing economic development level. (3) The inhibitory effect of capital-saving technical change on carbon footprint has regional heterogeneity, and the inhibitory effect of capital-saving technical change on carbon footprint is stronger in eastern China than other regions. (4) Industrial structure, energy structure and innovation efficiency are mediating variables of the inhibitory effect of capital-saving technical change on carbon footprint except for population density.

The ties that bind and transform: knowledge remittances, relatedness and the direction of technical change

AbstractThis study investigates whether high-skilled migration in a sample of OECD countries fosters technological diversification in the migrants’ countries of origin. We focus on migrant inventors and study their role as vectors of knowledge remittances. Further, we particularly analyze whether migrants spark related or unrelated diversification back home. To account for the uneven distribution of knowledge and migrants within the host countries, we break down the analysis at the metropolitan area level. Our results suggest that migrant inventors have a positive effect on the home countries’ technological diversification, particularly for developing countries and technologies with less related activities around—thus fostering unrelated diversification.

Financing Energy Innovation: Internal Finance and the Direction of Technical Change

AbstractAchieving the goals of the Paris Agreement and of climate neutrality by 2050 in the European Union will require mobilizing financial investments towards clean energy innovation. This study examines the role of internal finance (cash flows and cash holdings) and financing constraints for innovation in energy technologies. We construct a dataset for 1,300 European firms combining balance-sheet information and patenting activities in renewable (REN) and fossil-fuel (FF) technologies and estimate the sensitivity of patenting activities to firms’ internal finance. We use count estimation techniques and control for a large set of firm-specific characteristics and market developments in REN and FF technologies. We find that patenting activities of firms specialized in REN innovation are significantly more sensitive to a shock in cash flows than firms specializing in FF innovation. Hence, our results emphasize that innovative firms in clean energy may be particularly vulnerable to financing constraints. We discuss the implications of these results for energy transition policies aiming to redirect finance towards clean energy R&D.

An empirical study on the endogeneity of directed technical change in China

Research on the endogeneity of directed technical change is very interesting and meaningful. If the direction of technical change is endogenous, policy makers can adjust the technical change value of factors according to specific purpose. We establish a theoretical model of the direction of technical change, relative price of factors and international trade under nested and non-nested CES production functions. We use mature measurement methods such as the unit root test and cointegration analysis to test the theoretical model in practice. We find that the direction of technical change is endogenous in China. The change in the relative price of factors in China causes a technical change in the same direction. Meanwhile, international trade intensifies and accelerates the labour augmenting technical change, but blocks the pace of capital augmenting technical change. Under a substitution elasticity of less than one, technical change is biased toward energy and capital in China, and this bias is brought about by the decrease in their relative price and international trade.

The impact of carbon emissions trading on the directed technical change in China

This paper focuses on whether carbon emissions trading (CET) has different impacts on the heterogeneous low-carbon innovation, and how CET affects the direction of technical change. Taking six CET pilot regions in China as research objectives, we set two types of technology as the clean and the gray with CPC-Y02 patent codes, and use the synthetic control method (SCM) in quasi-natural experiment. Moreover, this paper analyzes how CET moderates the effects of other three factors, that is, control-and-command environment regulation, foreign capital inflow and industry structure, with different innovations. The results show that the effects of CET on the direction of technical change are different across regions. CET successfully induces technical change to the clean direction and restrains the gray direction in Beijing and Shanghai, while promoting both innovations in Tianjin and Hubei, only intensifying the gray in Guangdong and Chongqing. These results indicate CET has a significant impact on both innovations, but its impact on the direction of technical change seems to be neutral, depending more on the balance between the new regulation and existing dependence on technological path in each region. Further research finds that CET amplifies the positive effect of industry structure upgrading on both kinds of innovations, but the response of the clean is more sensitive than that of the gray. Moreover, foreign capital inflow can promote the clean in the current period and inhibit the gray with lags, and the significant interaction between CET and foreign capital inflow can not be found. However, the policy mixed CET with control-and-command regulation leads to more gray innovation. The further analyses imply that CET can be a useful instrument leading to the right direction of technical change under certain backgrounds, where industry structure is upgrading, more open for foreign investment with less control-and-command regulations.

GREEN TRANSITIONS AND THE PREVENTION OF ENVIRONMENTAL DISASTERS: MARKET-BASED VS. COMMAND-AND-CONTROL POLICIES

The paper compares the effects of market-based (M-B) and command-and-control (C&C) climate policies on the direction of technical change and the prevention of environmental disasters. Drawing on a model of endogenous growth and directed technical change, we show that M-B policies (carbon taxes and subsidies toward clean sectors) suffer from path dependence and exhibit bounded window of opportunities: delays in their implementation make them ineffective both in redirecting technical change, (i.e. triggering a transition toward clean energy) and in avoiding environmental catastrophes. On the contrary, we find that C&C interventions are favored by path dependence and guarantee policy effectiveness irrespectively of the timing of their introduction. As the hypothesis of path dependence in technological change has received vast empirical support and it is a key feature of many models of growth, we argue that C&C policies should be seen as a valuable and non-equivalent alternative to M-B interventions.

The Effects of Labor Scarcity on the Rate and Direction of Technical Change: Evidence from a Natural Experiment

In 1964, around 11% of agricultural workers in America were prevented from entering the labor force. Using a text-search algorithm allocating patents to crops, I show that a negative labor-supply shock induced a sharp increase in innovation in technologies related to more affected crops. The effect is stronger for technology related to labor-intensive production tasks.

Environmental Policy and the Direction of Technical Change

AbstractShould governments direct research and development (R&D) away from “dirty” technologies towards “clean” ones? How important is this compared to carbon pricing? We address these questions with the introduction of two model features to the literature on directed technological change and the environment. We introduce decreasing returns to R&D, and allow future carbon taxes to influence current R&D decisions. Our results suggest that governments should prioritize clean R&D. Dealing with major environmental problems requires an R&D shift towards clean technology. However, in the case where most researchers are working with clean technology, both productivity spillovers and the risks of future replacement increase. Consequently, the gap between the private and social values of an innovation is greatest for clean technologies.

Identifying Comprehensive Key Criteria of Sustainable Development for Traditional Manufacturing in Taiwan

The traditional manufacturing industry has suffered from changing global demands and rapid technology upgrades. It is critical to incorporate innovation into contemporary manufacturing for sustainable development. A comprehensive interpretation of the determinants and directions of technical change is greatly needed. Therefore, this study aims to explore innovative applications that can enhance the value of manufacturing and examine the key factors associated with these innovations. In this paper, three traditional manufacturing industries are analyzed using the research methodologies analytic hierarchy processing (AHP) and Decision Making Trial and Evaluation Laboratory (DEMATEL), resulting in a set of six key criteria for innovative manufacturing. The causal relationships considering the six criteria in three industries are analyzed. The main contribution of this study is to establish a new framework for the sustainable development of traditional manufacturing industries. This could help to support conceptual innovation in these industries and establish a pragmatic approach to increase sustainable development. From the research results, the following suggestions can be made. The traditional manufacturing industries in Taiwan should focus on design and innovation. This can enhance the value-added and international competitiveness of industrial chains, enterprises, and products. Ultimately, it can lead to the sustainable development of Taiwan’s traditional industries.

From less promising to green? Technological opportunities and their role in (green) ICT innovation

ABSTRACTThis article aims to shed light on the role of technological opportunities for green innovation by studying the case of Green ICT innovation. We test whether firms active in low-opportunity technological areas are less likely to be innovative and whether they are more likely to change their direction of technical change. To do so, we construct a firm-level panel data set for the years 1992–2009 combining patent data from the European Patent Office with firm-level data from the German Innovation Panel (Mannheim Innovation Panel). The results are based on dynamic count data estimation models applying General Methods of Moments estimators. Our results support our hypotheses: firms active in low-opportunity technological areas are less innovative but are more likely to switch from pure ICT innovation to Green ICT innovation.

From Less Promising to Green? Technological Opportunities and Their Role in (Green) ICT Innovation

This paper aims to shed light on the role of technological opportunities for green innovation by studying the case of Green ICT innovation. We test two hypotheses: (1) Firms active in low-opportunity technological areas are less innovative; (2) Firms active in low-opportunity technological areas are more likely to change their direction of technical change. To do so, we construct a firm-level panel data set for the years 1992-2009 combining patent data from the European Patent Office with firm-level data from the German Innovation Panel (Mannheim Innovation Panel). The results are based on dynamic count data estimation models applying General Methods of Moments estimators. Our results support our hypotheses: firms active in low-opportunity technological areas are less innovative but are more likely to switch from pure ICT innovation to Green ICT innovation.

The Cost of Research Tools and the Direction of Innovation: Evidence from Computer Science and Electrical Engineering

Understanding the factors that affect the rate and direction of technical change has been a central aim of research in the study of science and innovation for more than a half-century. Although substantial evidence exists regarding the policies and institutions that affect the rate of knowledge accumulation, substantially less is known about factors that affect the direction of inventive activity. We examine how a change in the cost of access to knowledge influences the direction of inventive activity by exploiting the hack of Microsoft Kinect as an exogenous event that resulted in a sudden, unexpected, and substantial reduction in the cost of motion-sensing research technology. To estimate whether this shock induces changes in scientists’ research trajectories, we employ novel measures based on machine learning (topic modeling) techniques as well as traditional measures based on bibliometric indicators of knowledge accumulation Our analysis demonstrates that the Kinect shock increases the diversity of research of both incumbents and entrants in motion-sensing and that the effect is greater for entrants than for incumbents. Importantly, the increase in diversification of entrants is not fully explained by diversification into motion-sensing. Rather, entrants diversify their research even in projects that do not directly use motion-sensing. Our results paint a picture in which a reduction in the cost of research tools increases the breadth of research activity, expanding the trajectories of scholars both inside and outside of the affected area.

Technological Paradigms and Technological Trajectories : A Suggested Interpretation of the Determinants and the Directions of Technical Change : Research Policy

Technological Paradigms and Technological Trajectories : A Suggested Interpretation of the Determinants and the Directions of Technical Change : Research Policy

Variation in the dynamics and performance of industrial innovation: what can we learn from vaccines and HIV vaccines?

This article examines contingencies and constraints in problem-solving processes underlying technological change and industry evolution. It shows how learning through practice can help drive technical change but, when this is impeded, the ability to make use of models and engage in experimental learning becomes even more pertinent for explaining variation in the rate and direction of technical change. The article explores HIV as an example of vaccine innovation, and vaccines as an example of medical innovation. I find the absence of these two variables (ability to learn directly in humans, and ability to learn vicariously through animal models) not only make up a large part of how I would characterize “difficulty” in the HIV R&D process, but they also seem to go a long way toward explaining why 33 other diseases have—or have not—had vaccines developed for them. Implications for theory and policy are discussed.

Directed Technical Change with Human Capital and Natural Resources

This paper investigates the effect of human capital accumulation on the direction of technical Change in a framework with natural resources and environmental externalities. The model simulates that an increasing knowledge stock of worker tends to direct technical change in favour of intangible goods under some mild economic conditions. If tangible and intangible goods are just weak Substitutes the paper further shows that economic growth in the clean sector cannot be too strong if absolute decoupling of economic growth from natural resources should be achieved.

Production Theory: Accounting for Firm Heterogeneity and Technical Change

The paper presents a new framework to assess firm level heterogeneity and to study the rate and direction of technical change. Building on the analysis of revealed short‐run production functions by Hildenbrand (), we propose the (normalized) volume of the zonotope composed by vectors‐firms as indicator of inter‐firm heterogeneity. Moreover, the angles that the zonotope's main diagonal form with the axes provide a measure of the rates and directions of productivity change. The proposed framework also accounts for n‐inputs and m‐outputs and, crucially, the measures of heterogeneity and technical change do not require many of the standard assumptions from production theory.

Preventing Environmental Disasters: Market-Based vs. Command-and-Control Policies

The paper compares the effects of market-based and command-and-control climate policies on the direction of technical change and the prevention of environmental disasters. Drawing on the model proposed in Acemoglu et al. (2012, American Economic Review), we show that market-based policies (carbon taxes and subsidies towards clean sectors) exhibit bounded window of opportunities: delays in their implementation make them completely ineffective both in redirecting technical change and in avoiding environmental catastrophes. On the contrary, we find that command-and-control interventions guarantee policy effectiveness irrespectively on the timing of their introduction. As command-and-control policies are always able to direct technical change toward green technologies and to prevent climate disasters, they constitute a valuable alternative to market-based interventions.