Global Technological Frontier Research Articles

Technology adoption in autocratic economies: The role of fiscal capacity

AbstractWhat determines technology in autocratic regimes? In this paper, I assume that a rent‐extracting regime can adopt technology from the global technology frontier, tax‐paying citizens can oust the regime, and technology can decrease the ousting cost. I show that a lack of fiscal capacity can increase technology by preventing the ousting constraint from binding. Consistent with this prediction, tax collections and total factor productivity are negatively related in autocratic regimes. Extensions show that natural resources can divorce fiscal revenues from technology, which can encourage technology blocking. However, if technology adoption is socially costly, autocratic regimes can adopt too much technology.

Domestic deployment in the formative phase of the Chinese Electric Vehicles Sector: evolution of the policy-regimes and windows of opportunity

ABSTRACT China has been able to deploy electric vehicles at an unprecedented speed and scale. This paper explores the underlying policies during six years of sector formation, and it identifies a change in policy-regime after three years. The analysis of evolution of the policy-regimes indicates that creating, transferring, and sharing knowledge among the principal actors was key to catching up. The changing policy-regime enabled a minimum threshold of technology development required for deployment. Nevertheless, it was insufficient for pushing the sector to the global technology frontier. Key to the sector’s relative success was the government’s responsiveness to sectoral development and its ability to address production, demand, and knowledge issues simultaneously. In addition, it created synergies between policies designed to address environmental concerns and foster economic development concurrently. However, fast deployment required heavy subsidies and important policy initiatives came with potential pitfalls that may hamper international competitiveness of the sector.

R&D and Foreign Subsidiary Performance at or Below the Technology Frontier

We examine the effect of R&D on foreign subsidiaries’ productivity performance. We argue that both local R&D expenditures in the subsidiary and R&D conducted in the wider network of the multinational enterprise (MNE) for the subsidiary improve productivity but that their respective roles depend on whether the host country of the subsidiary is at or below the global technology frontier. Local R&D is more effective if the host country is at the frontier, while R&D conducted in the MNE network is more effective if the host country is behind the frontier. In the latter case, both types of R&D are complementary and reinforce each other’s effect on productivity performance. We test hypotheses on fine-grained longitudinal micro data on affiliate productivity and R&D investments. We estimate dynamic productivity models controlling for endogeneity and allowing for declining returns to R&D and productivity convergence.

DEA METHOD AS A TOOL FOR COMPARATIVE ANALYSIS OF THE EFFICIENCY OF NATIONAL ECONOMIES

The paper deals with the theory of comparative analysis of the efficiency of national economies using the nonparametric method of data envelopment analysis (DEA).
 The main works on the use of data envelopment analysis are studied. In order to develop the ideas of F. Caselli, W. J. Coleman II., J. Growiec it is proposed to take into account that the goal of producers in modern economy is not only to increase technical efficiency, which is expressed in reducing stock and labor intensity, but also to increase economic (in a narrow sense) efficiency that is reduction of the real prices of the used production factors. The subject of the research is an adequate representation of the interdependence of these "competing" goals in the theory of the efficiency frontiers. In the study, all efficiency frontiers were constructed in a purely nonparametric way reflecting a single period (in a standard form – a year). The goal is to solve the problem of incompleteness of a purely technological approach to the world efficiency frontiers that is to supplement the classical DEA model in a way to make it possible to build the boundaries of technical and economic efficiency using both methods – the envelopments of the actual states (points) of the countries and the envelopments of their national functions of the product distribution and its price. In accordance with the content of the proposed model of Paired Efficiency Frontier Model (PEF model), the geometric method is chosen as the main method for studying and interpreting the results obtained. Therefore, it is proven that it is possible to display a frontier using the envelopment method of functions distribution (straight lines) in one coordinate system as an envelopmentl of actual states (points) in an alternative system. This, in turn, significantly simplifies the range estimation to these borders.
 In the course of the research, the following goals are set: to determine the algebraic forms of linear programming problems that adequately represent the frontiers of technical and economic efficiency; to outline the main points of view regarding the construction of a global technological frontier and to justify the feasibility of complementing it with a global economic frontier.
 The proposed model contains four efficiency frontiers – technological and economic frontiers constructed using the envelopment method of the actual states, and similar frontiers representing the envelopments of the functions of the product distribution and its price. In accordance with the content of the proposed model, the geometric method is chosen as the main method for studying the frontiers of efficiency and interpreting the results obtained. Hence, it is possible to display a frontier using the envelopment method of functions distribution (straight lines) in one coordinate system as an envelopmentl of actual states (points) in an alternative system.

Correction to: The global technology frontier: productivity growth and the relevance of Kirznerian and Schumpeterian entrepreneurship

Correction to: The global technology frontier: productivity growth and the relevance of Kirznerian and Schumpeterian entrepreneurship

Moderate Innovator Trap—Does the Convergence of Innovation Performance Occur in the World Economy?

Based on β and σ convergence analysis, we find a high persistence of innovation gaps for international innovation indices reported by the European Commission. Our research confirms the diverging scientific potential across the analyzed economies. Estimation provides evidence of convergence in the case of R&D expenses and the relative position on the global technological frontier. We propose a simple fixed effect panel regression measuring relative innovativeness potential. Our model suggests that current ranking leaders, i.e., Nordic countries (Sweden, Denmark, and Finland) and Germany, are likely to further outpace the United States. Central and Eastern European countries are achieving the greatest relative gains but are unlikely to exceed 70% of US potential. Peripheral European countries, South Africa, Turkey, and Russia are projected to further lose their innovativeness position despite their weaker initial position.

Learning from Technologically Successful Peers: The Convergence of Asian Laggards to the Technology Frontier

This paper investigates whether firms from developing countries that lag the global technological frontier can learn from technologically successful peers as a means of closing the technological gap with leaders from developed countries. We define technologically successful peers as those that hail from similar home countries, operate in the same industry, and have achieved a certain degree of success in closing the gap with the global technological frontier. We argue that technologically successful peers represent an important reference group for lagging firms and, as such, offer opportunities for lagging firms from developing countries to hasten technological development. We find that lagging firms from developing countries that build upon the knowledge of technologically successful peers achieve higher rates of technological improvement. Moreover, learning from technologically proximal successful peers helps even further with technological improvement. However, there are limits to such learning, with diminishing marginal returns to lagging firms that over rely on successful peers.

Секторальные особенности интеграции российской экономики в глобальные цепочки добавленной стоимости и следствия для структурной политики

Features of the country's integration into global production today best reflect its competitive advantages and growth prospects. This paper provides an analysis of long-term trends in the features of integration of the Russian economy into global value chains (GVCs). Three cases of industrial upgrading in forestry, food and chemical industries are analyzed. In the case of a significant lag in the industry from the global technological frontier, attracting foreign investment and importing technology is the easiest way to integrate the economy into GVCs. For end-user-oriented sub-sectors, this means quick adaptation of organizational and marketing innovations, satisfaction of changing consumer preferences, and the formation of new markets and market niches. Moreover, based on the best practices of Russian and foreign companies, the technological level of lagging domestic companies may advance. For sub-sectors focused on intermediate goods, the introduction of technologies can determine an increase in the depth of redistribution in the sector and the subsequent increase in the production capacities of domestic companies based on the best practices of foreign companies.

Markets for Technology in Europe – Mapping Demand and its Drivers

Functioning markets for technology are an important determinant for the type, scope and distribution of innovation activities in an economy. However, markets for technology are often underdeveloped or inefficient. Existing theory attributes such imperfections to the supply side or differences in market designs. We know comparatively little, though, about the structural forces that shape the demand side of markets for technology. In this study, we reason that demand depends on the sectoral pattern of innovation and the distance of a country’s industry to the global technological frontier. We explore these dimensions based on longitudinal industry-level data from the Community Innovation Survey. We find that the demand on markets for technology is particularly driven by science-based industries and to a lesser degree by scale-intensive industries. Demand decreases, though, the closer industries are to the technological frontier. These findings highlight sector specific opportunities and constraints for policies promoting markets for technology.

Life cycle energy consumption and greenhouse gas emissions of iron pelletizing process in China, a case study

The iron and steel industry in China is suffering from the burden of overcapacity, structural adjustment and upgrading. In order to analyse and improve the energy efficiency, the life cycle energy consumption and greenhouse gas (GHG) emissions of iron pelletizing are estimated in this work. The direct energy consumption is 793.4 MJ/t, with the largest energy demand being caused by pellets induration process. The equivalent carbon footprint for producing one ton iron pellet is 58.5 kg CO2, and 51.4% of which comes from the extraction, processing and transportation of raw materials, fuel and electricity. Compared with iron sintering, pelletizing process is more environmentally friendly with lower energy consumption and less GHG emissions. In addition, the SO2, NOx and dust emissions of pelletizing are ≤5% of sintering process. Efforts to further improve the pelletizing technologies are addressed to catch up the global technological frontier and to improve its competitiveness. This study not only provides solutions to China's iron and steel industry for energy saving and emission reduction, but also offers ways for self-innovation.

R&D offshoring and home industry productivity

Abstract Offshoring research and development (R&D) commonly invokes concerns regarding the loss of high value jobs and a hollowing out of technological capabilities, but it can also benefit domestic firms by enabling them to tap into the global technological frontier. We study the effect of R&D offshoring on industrial productivity in the home country using industry-level data for 18 OECD countries over a 26-year period. Simultaneity between productivity and R&D offshoring is addressed by using foreign tax policy as an instrument for offshored R&D. We show that R&D offshoring contributes positively to productivity in the home country, irrespective of the host country destination.

Dynamics and Inequalities in Energy Efficiency in China

As rapid economic growth in China in recent decades, the quality of economic growth through improvement of energy efficiency has attracted great attention. This paper evaluated energy efficiency of 29 provinces in China between 2000 and 2016 based on a global non-radial directional distance function. Moreover, the dynamics of energy efficiency were investigated using the non-radial global Malmquist-type efficiency index. The paper also sheds light on the evolution of inequalities in energy efficiency by decomposing interprovincial inequality into its within-region and between-region components. The findings of the study are as follows. First, the national energy efficiency was 0.49 in 2016, which indicated that 51% improvement could be made to reach the global technology frontier. Tianjin, Shanghai, Jiangsu, Shandong and Guangdong had the best energy efficiency in 2016, while Ningxia and Xinjiang had the lowest performance. Second, the national annual growth rate of energy efficiency was 3.4% between 2011 and 2016, which was a positive sign of energy efficiency improvement. Shandong made the biggest improvement in energy efficiency from 2011 to 2016, with 26.2% annual growth rate. Lastly, within-region inequality saw a decreasing trend after 2010 and was overtaken by between-region inequality in 2016.

Measuring the productivity evolution of Chinese regional thermal power industries using global Malmquist-Luenberger productivity index

PurposeThis paper aims to measure Chinese regional thermal industries’ evolution.Design/methodology/approachThis paper uses data envelopment analysis (DEA) and global Malmquist–Luenberger productivity (GMLP) index.FindingsThe results reveal that the development of Chinese thermal power industry varies significantly in different regions, and it is highly correlated with the level of local economic development. Although the change of technical efficiency and scale efficiency had different impacts on different regions from year to year, the overall GMLP index change shows a close relationship with the contemporaneous frontier shift.Practical implicationsThe results indicate that the Chinese Government should make efforts to promote its policy implementations and regulations in thermal industries so that the contemporaneous frontier will shift toward the global technology frontier with more desirable outputs and less undesirable outputs.Originality/valueAs an application, this study uses DEA and GMLP index to measure the productivity of Chinese thermal industries in 30 Chinese provinces from 2006 to 2013. The results have the meaningful policy implications for decision makers in charge of Chinese thermal industries.

Geographical clustering and firm growth: Differential growth performance among clustered firms

This paper investigates the effect of being located in a cluster on firm growth. In particular, it focuses on the differential growth effect of being located in a cluster, or a growth divide among clustered firms, based on the idea that, contrary to the conventional wisdom, advantages of geographical clustering are not randomly or equally available to clustered firms. Due to the intense competition among clustered firms for resources such as creative talent, firms who are more attractive to the resources are more likely to entice better resources and hence achieve higher growth. Our empirical analysis of firms in nine industries across six countries shows that being located in a cluster per se does not have a positive effect on firm growth and that domestic technological leaders with a sufficient technological distance to the global technological frontier show differentially higher growth due both to the attractiveness to promising resources and to the opportunity for incoming knowledge spillovers from global technological leaders.

International product life cycles, trade and development stages

In this paper we first propose a proxy for early stage activity in a country’s exports based on product life cycle theory. Employing a conditional latent class model, we then examine the relationship between this measure and economic growth for 93 countries during the period 1988–2005. We find that the impact of early stage activity differs across three clusters of countries. And we find that GDP levels can predict the cluster and the sign of the coefficient in a non-linear manner. In the richest countries, exporting products that are in an early stage of their product life cycle is associated with higher growth rates. In contrast, we find a cluster of middle income countries with high growth rates that grow faster by exporting more mature products that are in the later stages of their life cycle. Finally, early stage activity has no significant impact on growth in the cluster of the poorest, developing countries. Countries in early stages of development should focus on acquiring market share in mature markets with routine technologies whereas emerging economies face the challenge of at some point switching from copying mature to inventing new products as they approach the global technology frontier. At that frontier they must join the advanced economies who specialise in early stage innovative products to stay ahead of increasing competition from abroad.

Industrial policies for avoiding the middle-income trap: a new structural economics perspective

Economic development is a process of structural transformation with continuous technological innovation and industrial upgrading, which increases labor productivity, and accompanied improvements in infrastructure and institution, which reduces transaction costs. The middle-income trap is a result of a middle-income country’s failure to have a faster labor productivity growth through technological innovation and industrial upgrading than high-income countries. Industrial policy is essential for the government of a middle-income country to prioritize the use of its limited resources to facilitate technological innovation and industrial upgrading by overcoming inherent externality and coordination issues in structural transformation. The industries in a middle-income country may be classified into five different types, depending on their distance to the global technology frontier: catching-up industries, leading-edge industries, comparative advantage-losing industries, short innovation cycle industries, and comparative advantage-defying strategic industries. Industrial policy should be designed accordingly.

Post catch-up system transition failure: the case of ICT technology development in Korea

‘Emerging economies’ like Korea in the 2000s face major challenges as they make a transition from (a) a phase of economic development characterised by ‘catching up’ with the global technological frontier, involving technological ‘imitation’, to (b) a phase of continuing development based on the development of new knowledge for globally leading (post catchup) product and process innovation. That transition is about accumulating new narrowly defined ‘technological’ components of innovation capability and changing the broad organisational and institutional context within which the technological (and economic) process of innovation takes place. During the catch-up phase of technological and economic development in successful emerging economies, that institutional dimension of the innovation system evolves particular characteristics that are well adapted to achieving effectiveness in the catch-up mode of innovation. This paper suggests that (1) these institutional characteristics may be less effective with respect to post catch-up innovation and (2) the institutional context adapted for catch-up innovation may not evolve adequately rapidly into the new forms required for effectiveness in post catch-up innovation. Consequently, these rigidities may become a source of lock-in – so contributing an institution-centred source of ‘failure in system transition’ in the innovation system.

A framework for measuring global Malmquist–Luenberger productivity index with CO2 emissions on Chinese manufacturing industries

China has achieved significant progress in terms of economic and social developments since implementation of reform and open policy in 1978. However, the rapid speed of economic growth in China has also resulted in high energy consumption and serious environmental problems, which hindering the sustainability of China's economic growth. This paper provides a framework for measuring eco-efficiency with CO2 emissions in Chinese manufacturing industries. We introduce a global Malmquist-Luenberger productivity index (GMLPI) that can handle undesirable factors within Data Envelopment Analysis (DEA). This study suggested after regulations imposed by the Chinese government, in the last stage of the analysis, i.e. during 2011–2012, the contemporaneous frontier shifts towards the global technology frontier in the direction of more desirable outputs and less undesirable outputs, i.e. producing less CO2 emissions, but the GMLPI drops slightly. This is an indication that the Chinese government needs to implement more policy regulations in order to maintain productivity index while reducing CO2 emissions.

R&D Offshoring and Home Industry Productivity

Offshoring research and development (R&D) invokes concerns regarding the loss of high value jobs and a hollowing out of technological capabilities, but can also benefit domestic firms by enabling them to tap into the global technological frontier. We study the effect of R&D offshoring on industrial productivity in the home country using a patent-based indicator and industry-level data for 18 OECD countries over a 26-year period. Simultaneity is addressed by using foreign tax policy as an instrument for offshored R&D. The results show that R&D offshoring contributes positively to productivity in the home country, irrespective of the host country destination.

Connecting capabilities in highly unequal developing countries: The case of the Square Kilometre Array telescope in South Africa

ABSTRACTInnovation and skills development require interactive capabilities to function effectively. Interactive capabilities mediate between skills supply and skills demand actors in an innovation system, and in the knowledge economy more broadly. This article investigates such interactive capabilities, and the manner in which they facilitate labour market alignment. Within a case-study focus on the Square Kilometre Array (SKA) telescope in South Africa, we investigate how organisational capabilities, structures, and mechanisms facilitate or constrain interaction between the SKA and its network partners, including universities, firms, intermediaries, and a technical college. This illustrates how pockets of excellence within an unequal South African skills and innovation landscape were effectively connected in order to build a critical mass of skills and technologies that were highly competitive on the international stage. This shows how, in highly unequal developing countries, interactive capabilities form a lever for access to the global science and technology frontier.