High-tech Manufacturing Sector Research Articles

COMPETING FOR MANUFACTURING VALUE ADDED: HOW STRONG IS COMPETITIVE COST PRESSURE ON SECTORAL LEVEL?

Unit labour cost plays a pivotal role in shaping the regional distribution of manufacturing value added by influencing both export dynamics and business relocation decisions. Nonetheless, cost competitiveness is often regarded as playing a minor role in strategies promoting industrial upgrading. This perception stems from the belief that high-tech manufacturing sectors compete on the basis of quality rather than cost. This paper challenges this assumption and explores whether industries characterized by high levels of innovation and technological sophistication are indeed less reliant on competitive cost structures. In order to attain accurate estimations of sectoral value added elasticity in relation to cost, unit labour cost is conceptualised as a vertically integrated metric, accounting for the cost situation along the value chain. The analysis is centered on 18 manufacturing sectors across 28 European countries and covers the period from 1995 to 2018. The discrepancies in estimated cost elasticity across sectors appear to align more closely with their exposure to international markets and not with their degree of technological advancement. According to this sectoral-level evidence, cost competitiveness emerges as an essential prerequisite for industrial success.

Determinants of Labor Productivity of Turkish Manufacturing Sectors: The Role of Global Value Chain Participation

Purpose: This paper investigates the determinants of labor productivity of Turkish manufacturing sectors by taking into account both the global value chain (GVC) participation and the research and development (R&D) expenditure for the period of 1995-2018. Methodology: To analyze the determinants of labor productivity in Turkish manufacturing sectors, we specify the labor productivity model and estimate this empirical model by the Ordinary Least Squares (OLS) and Two-Stage Least Squares (2SLS) methods. Findings: Our estimation results indicate that while simple forward GVC participation enhances the labor productivity of Turkish high-tech manufacturing sectors if they trade with developing countries, complex forward GVC participation increases productivity regardless of trading partners. For low-tech sectors, there is no significant impact of GVCs or R&D on productivity. There is no significant impact of backward GVC participation and sectoral R&D intensity on labor productivity. These significant results provide strong evidence for the importance of deeper involvement of high-tech sectors in GVCs for higher sectoral productivity. Given the strong heterogeneity in terms of sectors and trading partners, specific policies should be targeted to benefit from the productivity gains of the global value chains. Originality: This study contributes to the current studies by focusing on disaggregated measures of GVC participation indices and enlarges the empirical analysis by considering the heterogeneity in trading partners (developed and developing trading partners).

AI patenting and employment: evidence from the world’s top R&D investors

For assessing the overall impact of Artificial Intelligence (AI), it is crucial to continuously monitor large corporations. This paper delves into the examination of 42 corporations that rank among the world's largest investors in R&D, accounting for over one-third of AI patents globally. The focus is on their post-patenting performance, specifically in terms of employment changes, and comparing it with the outcomes of 42 similar companies operating in the same sectors. The latter also recorded substantial levels of R&D expenditures but were not significantly involved in AI patenting. The key findings reveal that, in the medium – and high-tech manufacturing sectors, companies with the highest proportions of AI patents incurred in employment reductions. Conversely, IT services companies experienced substantial employment growth. Along with tentative explanations of these findings, advantages, limitations, and possible developments of this type of analysis are illustrated in the concluding section.

Digital transformation and its impact on inclusive growth: a four-decade experience in Indonesia

The debate over whether digital transformation benefits or harms inclusive growth continues. Existing evidence in the literature, on the other hand, is frequently based on short study periods, subjective measurement issues, and endogeneity issues, resulting in less credible findings in previous studies. To address this gap, this study draws on four decades of Indonesian experience spanning 1980 to 2021, with a focus on two primary objectives. First, this study utilises Principal Component Analysis (PCA) to assess the key factors forming the progress of digital transformation and inclusive growth. Second, the Two-Stage Least Square (2SLS) estimation method is applied in this study to investigate the endogenous impact of digital transformation on inclusive growth. The PCA results show that medium and high-tech manufacturing play a dominant role in representing digital transformation, while GDP per capita growth and poverty alleviation are the primary contributors to measuring inclusive growth. The 2SLS estimation shows that digital transformation significantly promotes inclusive growth in Indonesia, with its impact closely related to the previous year's digital transformation status. When these findings are considered jointly, it is clear that the beneficial effects of digital transformation are mainly explained by how medium and high-tech manufacturing sectors can stimulate inclusive growth in the context of increasing GDP per capita and reducing poverty in Indonesia.

Local market, central government support, and local governments’ homegrown development strategy in high-tech industries

Abstract The homegrown strategy (i.e. supporting domestic enterprises) in the high-tech manufacturing sector is very important for developing countries’ sustainable growth and economic security. In reality, only some local governments adopt the homegrown strategy in high-tech industries while others not. This paper attempts to explore factors affecting local governments’ adoption of the homegrown strategy in the high-tech sector. It argues that under the decentralized fiscal system and relative performance–based cadre evaluation system, local development strategy choices in a high-tech industry are significantly shaped by two factors: (1) the size of the local high-tech product market in the early stage of this industry’s development and (2) the support for domestic enterprises from the central government. Localities with a large local high-tech product market and support from the center are more likely to adopt the homegrown strategy. Case studies on eight Chinese sub-provincial localities’ chipmaking industries confirm these hypotheses.

Medium and high-tech manufacturing development and the connections to macroeconomic factors: Insights from a fast-growing market

The medium- and high-tech manufacturing (MHM) sector has played a crucial role in Vietnam's economic development. The purpose of this research is to identify the primary factors that contribute to the growth of the medium- and high-tech manufacturing sector in Vietnam. By applying the autoregressive distributed lag (ARDL) method to analyze annual data from 1990 to 2020, we discovered that different macroeconomic factors affect the short- and long-term development of the MHM sector in varying ways. Specifically, digitalization and human capital have a positive influence on the growth of the MHM sector over both the short and long terms. Trade openness and foreign direct investment, however, have a significant, negative long-term impact on the growth of the MHM sector. The effect of financial development on the MHM sector in Vietnam is significant and positive in the short term. Our study discloses that both the 2008–2009 global financial crisis and the Covid-19 pandemic positively impacted Vietnam's MHM sector, as global manufacturers diversified their supply chains and moved their production facilities to Vietnam during and after these events. From the empirical findings, our study offers valuable suggestions to the Vietnamese government, which will enable the country to unlock its full potential for MHM growth.

Tracing the regional dual value chains: Measurement on the production position and evidence from China

When there is insufficient internal and external impetus for developing countries’ economy, building a domestic and international dual circulation is conducive to promoting the regional industrial growth. On the basis of regional embedded international input-output tables, this paper extends the measurement framework of production position and proposes the concept of the dual value chain, which measure production position that unifies the national and global value chains from forward and backward industrial linkages. We decompose the national and global value chains into three categories and investigate the production position characteristics of China with a multi-dimensional perspective. Consistent evidence shows that a feasible path of technological progress in optimizing the production in value chains in which technological progress plays a crucial role on the pure national value chain across the high-tech manufacturing sector, the eastern and central regions. Their posterior probabilities are 0.96, 0.21and 0.86, respectively. Moreover, the impact on the dual production is nonnegligible that the posterior probability of technological progress on the eastern and central regions is 0.40 and 0.92. In addition, the impact of the Chinese economic stimulus program and technological progress on the economic crisis has a certain moderating effect. Our proposed evaluation framework sheds new light that national value chain production can boost economic growth，and further promote the coordinated of regional industries for developing countries.

Exploring the profile of innovative enterprises in high-tech manufacturing sectors: The case of the regions of Madrid and Catalonia in 2016

Exploring the profile of innovative enterprises in high-tech manufacturing sectors: The case of the regions of Madrid and Catalonia in 2016

The role of intangibles in firm-level productivity – evidence from Germany

ABSTRACT This paper analyses the impact of intangibles on firm-level productivity. Unlike previous studies we capture all dimensions of intangibles for both goods-producing and service industries. Based on data from the German part of the Community Innovation Survey (CIS) for the period 2006 to 2018, our results show that intangible capital investment is equal in size to investment in tangible capital since the early 2000s. We find a highly significant and positive relationship between intangible capital and output, with elasticities in line with previous findings for other large EU economies. This positive impact of intangibles on the firm-level productivity is driven by non-R&D intangibles, notably software & databases, training and advertising & marketing. While this finding holds for both goods and service sectors, we find that non-R&D intangibles impact firm-level productivity more strongly in the services. Investment in R&D affects productivity only in the high-tech manufacturing sector.

Firm R&D investment and export market exposure

We study differences in the returns to R&D investment between German manufacturing firms that sell in international markets and firms that only sell in the domestic market. Using firm-level data for five high-tech manufacturing sectors, we estimate a dynamic structural model of a firm's discrete decision to invest in R&D and use it to measure the difference in expected long-run benefit from R&D investment for exporting and domestic firms. The results show that R&D investment leads to higher rates of product and process innovation among exporting firms and these innovations have a larger economic return in export market sales than domestic market sales. As a result of this higher payoff to R&D investment, exporting firms invest in R&D more frequently than domestic firms, and this endogenously generates higher rates of productivity growth. We use the model to simulate the introduction of export and import tariffs on German exporters, and find that a 20 % export tariff reduces the long-run payoff to R&D by 24.2 to 46.9 % for the median firm across the five industries. Overall, export market sales contribute significantly to the firm's return on R&D investment which, in turn, raises future firm value, providing a source of dynamic gains from trade.

Spatial analysis connects excess water pollution discharge, industrial production, and consumption at the sectoral level

Linking of ‘consumption-industrial production-surface water deterioration’ is essential for industrialised economies to understand the mechanism of industrial water pollution. However, such a connection may mislead policy decisions if sectoral details are lacking. This study investigated excess pollution discharge from 11,094 industrial enterprises comprising 22 economic sectors through setting discharge thresholds on 1338 water function zones in Jiangsu Province, the most industrialised province in China. We further evaluated the contribution of final consumption in Chinese provinces to excess pollution discharge in Jiangsu via a national multi-region input–output table. Notably, despite typically heavy polluting sectors contributing the maximum excess pollution discharge, high-tech manufacturing sectors had a higher level of risk for excess pollution discharge. This was attributed to the spatial agglomeration of these sectors, with enterprises typically located in industrial parks. The increasing final consumption of specific sectors in both Jiangsu and other provinces may further drive excess pollution discharge in Jiangsu.

Institutional support for High-tech manufacturing sectors

Currently, a large-scale reform of the development institutions of the Russian Federation is planned and has begun to be implemented. The end result of the reform should be a fundamentally new ecosystem of investment support for technological growth processes. One of the important goals of a such ecosystem formation is to ensure the high competitiveness of the domestic world’s economy, as well as the compliance of the goals, strategies and policies of the development institutions in accordance with the Unifed Plan for achieving National Goals until 2030*. The authors of the paper concluded that today there were only general features of the reform of development institutions and were not defned such features as: future algorithms for institutions functioning, mechanisms of functioning, project selection mechanisms, project management mechanisms for monitoring the effectiveness of development institutions.

Reevaluation of the carbon emissions embodied in global value chains based on an inter-country input-output model with multinational enterprises

Multinational enterprises actively participate in global production networks. However, the current global value chain accounting framework fails to consider the emissions originating from the production activities of multinational enterprises in the host country and may underestimate the carbon emissions embodied in global value chain activities. This paper proposed an Inter-Country Input-Output decomposition framework that can distinguish domestic firms and multinational enterprises and recalculated global value chain emissions including emissions embodied in international trade (trade-related GVC emissions), foreign direct investment (FDI-related GVC emissions), and both (trade and FDI related GVC emissions). We found that 1) the carbon emissions originating from global value chain activities were underestimated by about 13.8 percentage points under the original framework in 2016, and a large part was classified as emissions stemming from pure domestic production activities; 2) the FDI-related GVC emissions were notable in high-income economies and high-tech manufacturing sectors; 3) foreign direct investment mainly drove the emissions of upstream domestic firms through the joint domestic production linkage between domestic firms and multinational enterprises, especially in upper-middle-income countries; 4) from 2005 to 2016, the FDI-related GVC emissions increased by approximately 704.6 million tons, which was mainly attributed to the scale effect, whereas the carbon intensity effect caused a reduction. The results of this study exhibit a potential significance for the correct identification of the environmental impacts of global production fragmentation, and support policy decisions on national emission responsibilities and quotas determination, differentiated foreign investment decisions, and cleaner production development.

Do foreign direct investment and environmental regulation improve green technology innovation? An empirical analysis based on panel data from the Chinese manufacturing industry.

The environmental regulation and foreign direct investment (FDI) inflow have an important impact on the progress of green technology. This study analyzes the impacts of environmental regulation and FDI on green technology innovation (GTI) based on the panel data of 13 Chinese manufacturing sectors. The results of static panel regression show that the environmental regulation has a positive impact on GTI, while the FDI has a negative impact. The results of the panel threshold model reveal that the effect of environmental regulation on GTI presents a nonlinear shape. The negative effect of FDI on GTI is strengthened when the environmental regulation exceeds its threshold. Increasing FDI inflow can inhibit the effect of environmental regulation. Meanwhile, a strict environmental regulation can enhance the inhibiting effect of FDI on GTI. The FDI inflow into high-tech manufacturing sectors has a less negative impact on GTI than the FDI inflow into low-tech sectors in the case of the enhancement of environmental regulation. This study provides some implications for the formulation of environmental regulation and the FDI inflow into China to improve the GTI.

Effect of International Technology Transfer on the Technical Efficiency of High-Tech Manufacturing in China: A RAGA-PP-SFA Analysis

The sustainable development of China’s high-tech manufacturing (HTM) sector is restricted by dependence on technology introduction and foreign direct investment (FDI), low input-output efficiency, and environmental pollution. This study aimed to examine the roles of technology introduction and FDI in improving the technical efficiency of Chinese HTM from an environmental perspective. By integrating stochastic frontier analysis (SFA) and projection pursuit (PP) based on the real-coded accelerated genetic algorithm (RAGA), this study constructed a RAGA-PP-SFA model that considers undesirable outputs. This model includes various outputs, including environmental pollution, in the production function to improve estimation accuracy. Moreover, to verify the robustness of the estimation results, the results were provided when environmental pollutants were taken as input factors. The results showed that technology introduction could significantly promote HTM’s technical efficiency, while FDI had no significant positive effect. By comparing the estimated results with those that did not consider environmental pollution, this study not only reveals different roles of technology introduction and FDI in improving HTM’s technical efficiency but also confirms that ignoring environmental pollution will overestimate their roles (especially the role of FDI) in such improvement.

The influence of workforce agility on high-growth firms: The mediating role of innovation

An agile workforce refers to a workforce that is proactive, flexible and resilient in dealing with non-routine and unpredictable circumstances. Even though past research suggests that agility could have a positive effect on firm performance, there is hardly any empirical evidence on whether agility matters for high-growth firms (HGFs). The purpose of this research is therefore to investigate the extent to which workforce agility increases the likelihood of firms becoming HGFs in the high-tech manufacturing sector of a developing economy, and whether the relationship is mediated by new product innovation. We develop a theoretical framework that explains how and why a firm that has an agile workforce that is proactive in creating new products, flexible in responding to changing environment, and resilient in turbulent times, is more likely to create innovative products, and thus secure temporary monopoly, which increases the likelihood of the firm becoming a HGF. Then, utilizing firm-level data from high-tech manufacturing sector of a developing country, Iran, we test several hypotheses using logistic regressions. We find that workforce agility significantly increases the probability of high-tech manufacturing firms becoming HGFs, but that this relationship is mediated by new product innovation. Implications are drawn for theory and practice.

The relationship between new universities and new firms: evidence from a quasi-natural experiment in Spain

ABSTRACT We examine whether establishing a new university (or faculty) in a region affects new firm creation within that given region. We identified a quasi-experimental design based on Spain’s 1983 University Reform Act, which opened the door to founding new universities at the regional level. We use a generalized difference-in-difference model to estimate this relationship. The results indicate that establishing a new university has a significant positive effect on new firm creation. We then introduce an analysis by the field of knowledge of the created university/faculty and the creation of firms in different categories of sectors defined according to their research and development intensity. In this case, the results show that creating a new university/faculty has a significant positive effect on firm formation in medium-high- and medium-low-technology manufacturing as well as in knowledge-intensive market and financial services. Moreover, creating a health faculty has a significant positive effect on new firm formation in the high-tech manufacturing sector. Finally, the results indicate ambiguous results from different sources of agglomeration economies.

Investment Potential of the Manufacturing Industry

The article considers investment in fixed assets of the manufacturing industry as one of the main factors of its development. The manufacturing industry is shown to be the growth driver of national economy for developed and developing countries. The analysis of exports and imports of the first 15 countries in the ranking in terms of gross domestic product calculated at purchasing power parity (GDP at PPP) shows the leading role of the manufacturing industry in the global economy. At the same time, competitiveness in the global market is determined by high-tech products. Therefore, for the sustainable development of the Russian economy, it is necessary to create investment conditions for the advanced development of high-tech segments of the manufacturing industry. However, the current structure of investments in fixed assets contributes to the development of such services sector segments as “Transportation and storage”, “Real estate operations”. In the structure of investments in fixed assets, the largest share belongs to investments in buildings and structures, and intellectual property items account for no more than 10%. It is shown that the lack of investment resources is the main reason for the reduction (by 1.5 times) of the contribution to the value added of the manufacturing industry in Russia, production of machinery and equipment. This leads to an increase in dependence on imports, a fall in the share of products from high-tech sectors. To analyze the development potential of manufacturing industries, the authors introduced an indicator of investment intensity per 100 rubles of shipped industrial products. It was determined that enterprises with a joint Russian and foreign form of ownership lead in terms of investment intensity. At the same time, private enterprises, leading in terms of output, demonstrate weak investment activity. The low investment attractiveness of high-tech manufacturing sectors is shown. The regional structure of the manufacturing industry was analyzed. There is a high level of regional concentration of the manufacturing industry in Russia. At the same time, the authors show its relatively weak significance in the structure of the gross regional product in the majority of the constituent entities of the Russian Federation. It has been proposed to develop a program at the federal level for the advanced development of production in the high-tech and medium-technology high-level sectors for 10–15 years. It is proposed to create a supradepartmental executive authority to manage this program.

“Quantifying spatiotemporal impacts of the interaction of water scarcity and water use by the global semiconductor manufacturing industry”

The high-tech semiconductor manufacturing sector is integral to the international electronics industry and was valued at over $400 billion USD in 2017. Intensive water use by this industry is well-documented and this work provides a spatially explicitly assessment of water use impacts by nearly 100% of global semiconductor manufacturing capacity. Both direct manufacturing water use and water use from electricity were considered as part of a facility’s total withdrawal. Manufacturing water withdrawals were estimated by using technology-specific water and electricity use data, reported at the semiconductor chip or wafer level from the life cycle literature and industry estimates. Electricity water use intensity (WUI) factors were gleaned from the literature and regional electricity WUI factors were derived for China and the U.S. Geolocation of semiconductor manufacturing facilities allowed for summation of water withdrawals at various spatial extents (i.e. watershed, country, and globally). This data was combined with calculated regional or country-level electricity water use factors to estimate total water withdrawals by a facility. Geolocation of data also allowed for calculation of watershed specific scarcity-weighted withdrawals. Scarcity-weighted withdrawals were ascertained by multiplying facility water withdrawal data by the AWaRE water scarcity characterization factor available for each of 202 watersheds associated with semiconductor manufacturing facilities. These data were used to identify and map hotspots of industry water use, which is especially important for areas of industry growth such as China. This analysis is useful as a benchmark for global semiconductor industry water withdrawals and may assist OEMs in decisions about supply chain sourcing. This could also guide semiconductor manufacturers in prioritizing locations and time periods to implement water-saving technologies or employ less water intensive electricity sources. Additionally, the spatially explicit water use data for the semiconductor sector can be used to improve existing databases of national and regional sector-specific water use coefficients that are often applied in LCA input-output studies.

Do stakeholder capabilities promote sustainable business innovation in small and medium-sized enterprises? Evidence from Italy

Sustainable innovation and its management have become fundamental forces for change in business and society. Paradoxically, little attention has been given to how small and medium-sized enterprises (SMEs) manage sustainable innovation in the current knowledge-intensive context. By studying 80 SMEs from the high-tech manufacturing sector in Italy, this research has found that, when combined with stakeholder engagement, sustainable innovation management becomes a pivotal phenomenon for new and established SMEs. Stakeholders proved instrumental in generating the sense of environmental responsibility in SMEs. As a pioneer combination of stakeholder theory and innovation management theory, our research found that stakeholder-related capabilities, both tangible and intangible, influence the firm's orientation towards sustainable innovation, its environmental responsibility and related capabilities. Our research assists the sustainability, adaptation, innovation and growth orientation of SMEs in a knowledge-intensive environment by recommending that, in their relationship with stakeholders, SMEs become more open to co-create, share and reuse environmental knowledge.