Technology-intensive Sectors Research Articles

The Global Dynamics of Technology-Intensive Sectors: Are we Seeing Hypercompetition?

We test whether global technology-intensive sectors have become hypercompetitive over the 1980-2018 period. This is what numerous scholars have suggested, yet few have tested. Based on data from the United States, Europe, Japan, and China, we find no indication of a generalized increase in business performance volatility across regions. We instead find regional differences, such as a declining stability in the performance of Japanese firms over the study period, and in US firms leading up to the burst of the dotcom bubble. A structural break analysis helps us identify that hypercompetition is a “local” phenomenon in both location, time, and industry. We conclude that there is a lack of evidence supporting assumptions of widespread hypercompetition in technology-intensive sectors.

The impact of Chinese Outward Foreign Direct Investment on the comparative advantage of the Belt and Road countries

The present study investigates the impact of Chinese outward foreign direct investment (OFDI) on the comparative advantage (CA) of the Belt and Road countries (BRCs). This study uses the national-level panel data of Chinese OFDI flowing into 62 BRCs and disaggregated sectoral data from BRCs categorised by factor intensity from 2003 to 2017 and applies dynamic system generalised method-of-moments (GMM) estimators with instrument variables. The findings suggest that Chinese OFDI has a strong positive effect on the CA of BRCs in natural resource-intensive industries, a relatively weak positive effect on the CA of BRCs in labour-intensive textile, garment and footwear sectors, and a negative effect on the CA of BRCs in other labour-intensive sectors. Additionally, Chinese OFDI has a negative effect on the CA of BRCs in capital- and technology-intensive sectors, but the impact is positive in high-income BRCs. In contrast, non-Chinese OFDI shows a negative effect on the CA of BRCs in the natural resource industry, while non-Chinese OFDI significantly promotes labour-intensive industry and capital technology-intensive industry. Under the Belt and Road Initiative, BRCs are required to facilitate or prioritize Chinese investment in sectors complying with their own development strategies and resource endowments.

Global Value Chains, Trade and Technology: Evidence from European Countries

The paper investigates the effects of global value chains (GVCs) and technological innovation on exports. The paper builds a new dataset from two database, the EORA and the OECD stan database. Using a pooled OLS and a two-stage quantile regression technique on a sample of 8 OECD countries, the results suggest that the effects of GVCs participation are heterogeneous across countries. We find that at the aggregate level, GVCs and forward participation are negatively associated with exports growth. However, we only find evidence of a positive effect of backward participation on exports in the case of France and Germany. At the disaggregated level, we find that: (a) an increase in GVCs participation in low technology intensive sectors is positively associated with exports’growth; (b) an increase in GVCs participation in high technology intensive sector is negatively correlated with exports’growth. The findings stress the importance of GVCs as a driving channel for subdue economic growth in low technological sectors.

Has Open Innovation Taken Root in India? Evidence from Startups Working in Food Value Chains

Open innovation represents a paradigm shift in the technology development process in the New Millennium with potential positive implications for helping the food system in addressing grand challenges formalized through the SDGs. Though evidenced mainly in technology-intensive sectors of developed countries, several ‘erosion factors’ and their interplay catalyse open innovation in relatively traditional sectors of developing countries. The rise of startups with supplementary venture capital industry is hypothesized to play this role in the Indian food system. Our paper examines this hypothesis by leveraging a large database of startups. Several types of startups have come up in the last decade and are introducing innovations, apart from filling the gaps in the food value chains in infrastructure-deficit regions. It classifies the startups working in food value chains based on the main purpose of each of its functioning, though there can be several interventions at different nodes of the value chain and overlap of functions. The interconnections between startups themselves and their business partnerships with input companies, processors, aggregators, traders, hotels and restaurants, supermarkets, e-commerce companies, research organizations, various governments, international institutions like the World Bank and various crop associations like the tea growers association constitute a complex web. The knowledge flows are both outbound from the startups to the companies and other actors and sometimes in the opposite direction as well as bi-directional. These fast expanding knowledge flows have brought several innovations that could not be imagined just a few years back in developing countries. The emergence of open innovation bodes well to food value chain flows and to harness the higher level of technologies. There is a need to internalize these innovations in the national food policy for addressing issues of inclusion. The paradigm shift also calls for rigorous research on the business models and collaboration and licensing agreements between companies, universities, and governmental agencies.

Artificial intelligence and energy intensity in China’s industrial sector: Effect and transmission channel

The continued development of artificial intelligence (AI) has changed production methods but may also pose challenges related to energy consumption; in addition, the effectiveness of AI differs across industries. Thus, to develop efficient policies, it is necessary to discuss the effect of AI adoption on energy intensity and to identify industries that are more significantly affected. Using data on industrial robots installed in 16 Chinese industrial subsectors from 2006 to 2016, this paper investigates both the effect of AI on energy intensity and the channel through which this effect is transmitted. The empirical results show, first, that boosting applications of AI can significantly reduce energy intensity by both increasing output value and reducing energy consumption, especially for energy intensities at high quantiles. Second, compared with the impacts in capital-intensive sectors (e.g., basic metals, pharmaceuticals, and cosmetics), the negative impacts of AI on energy intensity in labor-intensive sectors (e.g., textiles and paper) and technology-intensive sectors (e.g., industrial machinery and transportation equipment) are more pronounced. Finally, the impact of AI on energy intensity is primarily achieved through its facilitation of technological progress; this accounts for 78.3% of the total effect. To reduce energy intensity, the Chinese government should effectively promote the development of AI and its use in industry, especially in labor-intensive and technology-intensive sectors.

Financing the Development of Science and Innovation in the Republic of Belarus

The strategic priority for the innovative development of Belarus is the formation of a technology intensive sector based on the V and VI technological modes in addition to the traditional sectors of the national economy. However, the scientific and technical potential of the Republic of Belarus is currently not fully utilized. There is a risk of technological lagging against the increasing level of knowledge-intensive GDP in the world. The improvement of the financing of scientific, technical and innovative activity can become an important factor for the development and efficiency of the national innovation system (NIS) and Belarusian economy as a whole. The purpose of the article is to assess and identify current trends in the financing of science and innovation in the Republic of Belarus. The analysis of the dynamics and structure of domestic costs for research and development (R&D) in the Republic of Belarus by industry, type of cost and type of work, source of funding is carried out. The following conclusions are made as a result of the analysis: the costs of research and development tend to increase; the largest share of R&D costs is concentrated in the business sector; the current costs for R&D significantly increased; the current costs are directed mainly to experimental development; the budget fund is the main source of funding for science and innovation in the Republic of Belarus; there are reserves for the expansion of financing of innovative activities through own funds of organizations, foreign investors, money from extra budgetary funds and other organizations.

Sustainability-Related Implications of Competitive Advantages in Agricultural Value Chains: Evidence from Central Asia—China Trade and Investment

More stable value chains in agriculture allow countries to take the best advantage of their factor endowments and thus achieve the UN Sustainable Development Goal on ending hunger. It is, however, difficult to interpret such advantages properly due to the multivariate effects of natural, technological, and economic variables on agricultural output and food supply. The authors attempt to tackle this challenge by developing the approach to the identification of competitive advantages and matching them with the production capabilities of agricultural sectors in Central Asia. The application of Revealed Comparative Advantage (RCA), Relative Trade Advantage (RTA), Lafay Competitive Advantage (LI), and Domestic Resource Costs (DRC) indexes to the array of 37 products results in the revealing of comparative, trade, competitive, and production advantages of five Central Asian economies for labor-intensive horticultural products and grains. Capital and technology-intensive sectors of animal husbandry and food processing are recognized as low competitive. Taking Central Asia–China collaboration as a model, the authors elaborate policy measures aimed at support, promotion, or establishment of competitive advantages. The application of the measures facilitates the concentration of the resources toward competitive and conditionally competitive products, allows to protect fragile advantages in marginally competitive sectors, and contributes to the overall improvement of stakeholders’ performance across agricultural value chains in the region.

Persistence of profitability in top firms: does it vary across sectors?

PurposeThe purpose of this paper is to analyze variations in the degree of persistence of profitability across diverse economic sectors and industry groups over the time period of 1990-2014 for a sample of top publically listed firms belonging to a selected set of developed and developing economies.Design/methodology/approachDegree of profit persistence has been estimated using Mueller’s (1990) autoregressive methodology. Firms were classified into different economic sectors and industry groups as per the Global Industry Classification Standard (GICS). The examination of inter-sectoral variations in profit persistence has been performed by comparing mean values of estimated short-run and long-run profit persistence parameter for all firms and between firms belonging to the developed and developing countries, respectively.FindingsFirms in consumer staples, consumer discretionary and health care enjoy persistent above the norm returns, unlike firms in traditional industries, utilities and energy sectors, which are characterized by low persistence and below the norm returns. A high degree of profit persistence is observed in health care and idea- and technology-intensive sector in the developed countries; however, in the developing countries, profits persist higher in consumer discretionary and capital-intensive telecommunication services sectors.Originality/valueThe study provides a holistic examination of inter-sectoral variations in profit persistence of top firms in developed and developing economies using a uniform methodology and data set. It can serve as an aid to the competition commissions and anti-trust regulatory authorities to formulate policies for curtailing anti-competitive activities in certain sectors.

Energy, Environment, and Social Development: The Technology Arm of Sustainability

President's column The oil and gas industry faces three key questions with regard to sustainability. Can we transform oil and gas into a cleaner, efficient source of energy with minimum or zero-net CO2 emissions? How do we use technology to transform our industry to a low-carbon-intensity industry to help in addressing the global climate change challenge, while extending the economic and social benefits of oil and gas to improve human lifestyle on earth? Can we scientifically and globally measure the sustainability performance of our industry with respect to the following four pillars: environmental impact, economic growth, social development, and lifestyle improvements? These are very challenging questions facing our industry. Without addressing the environmental concerns related to our industry, we risk our ability to operate globally and hinder our ability to attract talent. I believe that with the best practices, the right strategy, adequate R&D investment, and the right technology deployment, our industry can and will achieve these goals. I have spoken in prior columns about the fact oil and gas will be part of the energy mix well into the future, and about the significant economic and social development our industry produces. Given global opinion, we have no choice except to develop and use technology to transform our industry to be a low-carbon industry with minimum environmental impact across the entire oil and gas value chain. As I have met with oil ministers, CEOs, and executives around the world, I believe our industry is on the right track toward establishing the required infrastructure to achieve these goals in the mid-to-long term. If we look at our industry across the upstream, midstream, and downstream sectors, we see hundreds of best practices and advanced technologies that can be linked directly to our sustainability performance and its four pillars mentioned above. My February column focused on how technology was helping our transformation on the supply side. In this column I would like to look at how R&D and technology are improving our environmental performance. The upstream sector (exploration, drilling, and production) requires large amounts of energy to extract oil and gas from reservoirs and transport it to surface facilities through subsurface tubing and gathering lines, often going through harsh environments, including subsea. This provides many opportunities for improved energy efficiency, which reduces costs and is therefore good business practice. Upstream is also a technology-intensive sector, where new technologies have been deployed, helping the sector to be more sustainable.

University spin-offs and triple helix dynamics in regional innovation ecosystems: a comparison of technology intensive start-ups in Sweden

This study offers novel insights into how university spin-offs contribute to triple helix dynamics and the evolutionary processes of industrial renewal in regional innovation ecosystems. We analyse three groups of technology intensive start-ups: university spin-offs, corporate spin-offs, and independent technology start-ups. We compare and analyse various characteristics, functions, and processes among the three groups using primary data from a questionnaire survey conducted at 341 young firms operating in two technology intensive sectors in Sweden. Our findings suggest that university spin-offs differ from the other two groups with respect to their contribution to triple helix dynamics in regional innovation ecosystems. University spin-offs cooperate more closely with universities, conduct more in-house R&D, purchase more R&D services, and offer more innovative products/services in the introduction stage of their industry life cycles.

University spin-offs and triple helix dynamics in regional innovation ecosystems: a comparison of technology intensive start-ups in Sweden

This study offers novel insights into how university spin-offs contribute to triple helix dynamics and the evolutionary processes of industrial renewal in regional innovation ecosystems. We analyse three groups of technology intensive start-ups: university spin-offs, corporate spin-offs, and independent technology start-ups. We compare and analyse various characteristics, functions, and processes among the three groups using primary data from a questionnaire survey conducted at 341 young firms operating in two technology intensive sectors in Sweden. Our findings suggest that university spin-offs differ from the other two groups with respect to their contribution to triple helix dynamics in regional innovation ecosystems. University spin-offs cooperate more closely with universities, conduct more in-house R&D, purchase more R&D services, and offer more innovative products/services in the introduction stage of their industry life cycles.

Post-crisis India’s Merchandise Export Growth: What Has Changed?

This article comprehensively examines the growth and pattern of India’s merchandise exports during and following the financial crisis period (2007–08 to 2016–17) using Directorate General of Commercial Intelligence and Statistics and United Nations Commodity Trade/World Integrated Trade Solution trade data. The entire analysis is based on leading trade indices and indicators and the results confirm that significant change in India’s trading structure is associated with the fast growth of foreign trade. The composition of exports has undergone changes overtime, bearing a strong influence of factor endowments and technology in favour of both human capital intensive and technology intensive sectors. The magnitude of product diversification shows that India’s export basket is poorly diversified but more diversified than BRICS countries except China. India’s export destinations showed a major shift from the developed countries market to the emerging markets in Asia and Africa. However, India holds more increased trade intensity with USA and Hong Kong. Dynamism in labour-intensive manufacturing sector is vital to promote India’s exports of agricultural value-added products and enable more competitive at the world. Also, the development of new markets should be viewed as part of a wider effort to enlarge the India’s foreign trade. JEL Code: F10, F14, F19

Complexity as an Antecedent for External Collaboration in New Product Development Projects

This study examines how project complexity in low technology-intensive small- and medium-sized enterprises (SMEs) contribute in implementation of open innovation practices, during their new product development projects. The main focus of this paper is to investigate the critical role of complexity in the project level to identifying the compatibility of those external sources involved in NPD. The low technology-intensive sector in Spain were chosen as a target context, there were many innovative SMEs operating in these industries and because these sectors were going through significant changes. Four external knowledge sources, Universities, suppliers, customers and competitors and four open innovation practices, Community, Platform, Partnership and seller-buyer agreement, in the new product development were identified. The study shows that in SMEs, project complexity plays an important role in selecting the external source and implementation of open innovation practices. The main conclusion of the study is that the external collaboration in new product development projects is determined by different dimensions of project complexities and in projects with different type of complexity, the SMEs follow different external knowledge sources and open innovation practices. The study results imply that SMEs benefit from opening up their innovation process in the new product development projects. The firms in this study employed a blend of strategies that is more compatible with dimensions of project complexity. They collaborated actively with different external knowledge source and different modes of collaboration, when they have determination of different dimensions of project complexity. Also, the study extends understanding of the strategic use of open innovation in SMEs by demonstrating how SMEs balance the risk of project complexity built on new product development and the benefit of creating a wider capability base with partnerships.

O Plano de Metas e a estrutura empresarial e financeira da indústria de máquinas e equipamentos no Brasil: Dedini e Romi, 1955-1961

Resumo O Plano de Metas foi fundamental para a mudança estrutural produtiva do Brasil no final dos anos 1950, aumentando a participação relativa da indústria na economia e encadeando o desenvolvimento industrial para setores mais complexos e intensivos em tecnologia. Uma questão importante é como o Plano de Metas influenciou setores industriais específicos, como o de máquinas e equipamentos. O objetivo do artigo é examinar a evolução da estrutura empresarial e financeira da indústria de máquinas e equipamentos no Brasil, por meio da análise de balanços e registros de documentos na Junta Comercial da Romi e Dedini, as maiores empresas nacionais produtoras de máquinas-ferramentas e equipamentos agrícolas, respectivamente, diante das políticas econômicas derivadas do Plano de Metas, no período de 1955 a 1961. As principais conclusões foram que as políticas do período impactaram positivamente no investimento e negativamente na rentabilidade dessas empresas nacionais de máquinas e equipamentos.

Directing the technology intelligence activity: An ‘information needs’ template for initiating the search

In technology-intensive sectors, strategic planning requires relevant and timely information about new/emerging technologies – this is a critical input. Therefore, technology intelligence activities should be directed to capture and deliver pertinent technological information. However, there is a distinct lack of tools for helping organizations to determine what constitutes useful/appropriate information for their needs. To address this issue, an ‘information needs’ template has been developed to support the process of eliciting and articulating meaningful search queries to guide those who will conduct and provide the necessary intelligence. The use of the template also acts as a means of priming the technology intelligence as it identifies and points to potentially useful sources of knowledge. It covers the spectrum of sources from leveraging internal information, through spanning organizational boundaries to access external sources across the specific industry and neighboring industries, to more distant fields of knowledge. Additionally, the template has sections for distinguishing ‘who to watch’ versus ‘who to talk to’. The deployment of the template can be integrated with roadmapping, using the roadmap landscape to feed hotspots/themes/gaps/white spaces into the template, which are then unpacked to determine the information needs of the organization.

Changes in industrial structure and potential: the case of Lithuania

The core aim of the research paper is to analyze the changes in the structure and potential of Lithuanian manufacturing industry, affected by the long process of economic transformation experienced since 1991. The purpose of this paper is to disclose how Lithuanian industrial structure has been moving towards the level of advanced industries, to analyze which sectors have the potential to contribute to the development of the overall manufacturing industry, and to explore how the contribution of individual manufacturing industries has changed over the researched period. The study provides the analysis of several key indicators, which enable to estimate the potential of Lithuanian industrial structure in accordance with quantitative particulars and revise the alteration of the contribution of individual manufacturing industries to the overall potential of Lithuanian manufacturing industry. This paper intends to present the estimations of the changes in Lithuanian industrial structure and its potential during the period of 2000-2014 on the basis of the composite Index of the Long Run Income Potential of Industrial Structure. The empirical analysis has revealed the signifi cance of medium-high and low-tech industries and disclosed the variance of the contribution of individual manufacturing industries to the overall potential of Lithuanian manufacturing industry. The empirical study has disclosed that Lithuanian industrial structure shows a very modest potential of growth and development, and the potential of Lithuanian industrial structure remains a controversial issue. The evident shift into high-value added manufacturing industries, where knowledge and technology intensive sectors play the central role, has not been confi rmed.

How does information and communication technology affect China's energy intensity? A three-tier structural decomposition analysis

The continuous diffusion of information and communication technology (ICT) has exerted growing influences on the production process and energy use. This paper analyzes the major drivers behind changes in China's energy intensity with emphasis on ICT and production structure using a three-tier structural decomposition analysis (SDA) approach. This approach could thoroughly quantify the various effects of ICT on energy intensity and investigate the mechanisms of ICT input change through which it affects sectoral energy consumption. The main results indicate that: (a) production structure exerted a rising negative effect on China's energy intensity change from 2002 to 2012; (b) ICT contributed to a 4.54% increment in energy intensity, yet ICT input substitution was conducive to reduce energy use in production; (c) the ICT effects were more significant in the service sector and technology-intensive sectors. The study suggests that the Chinese government should formulate measures for adjusting production structure, promoting sustainable development of ICT and harmonizing inter-sectoral ICT input level.

The impact of the patent system on the social welfare: A critical view

Purpose: This article offers a critical view of the impact of patents on economic activity.Design/methodology/approach: We develop two analytic innovation models. They help us to understand how the strength of the patent system affects 1) the industry profits 2) the social welfare.Findings: The strengthening of patent systems could cause a decline in the activities of imitation and, therefore, a decrease in competition, a reduction in the production and assimilation of new technologies and could create barriers to entry into technology-intensive sectors, increasing the costs of production. We will show that a lower strength patent system and an increase in the activities of imitation can i) increase the benefits to industry as a whole ii) lead to greater social surplus.Originality/value and social implications: Much of the literature on innovation has traditionally seen imitation processes as harmful to the development of new technologies, and detrimental to the welfare of consumers, producers and society at large. That is why policies aimed at strengthening the patent system and discouraging imitation processes are associated with improvements in social welfare, —fostering innovation, trade, foreign investment and technology transfer—. However, our findings should lead us to rethink how optimal innovation policy should be designed. The problems associated with restrictions on the free market involve costs that outweigh the social benefits that patents can provide. Market mechanisms can effectively reward innovators for being the first to bring a product into the market, without the need to grant a monopoly.

Regenerative Medicine Ecosystems and the Built Environment at Entrepreneurial Universities

In some technology-intensive sectors, high discovery costs, specialized knowledge requirements and long time frames favor research centralization around research universities. In the case of regenerative medicine, uncertainty about downstream market potential and regulatory frameworks has limited entrepreneurial activity. We use a mixed method comparative analysis of entrepreneurial ecosystems to study the role of the built environment and cultural conditioning at The University of Wisconsin-Madison and The University of Edinburgh. We combine computer-aided text analysis of facility planning documents with qualitative coding of interviews from ecosystem informants. Institutional policies and special-purpose facilities encourage efforts to translate innovation from the lab to new ventures. Yet, when uncertainty is high, cultural artifacts and preferred coping strategies are key factors in the evolution of entrepreneurial ecosystems.

Information and technology intensive sectors

Purpose- The aim of this study is to analyse the impact of qualified labour force in information and technology intensive sectors both on inequality and growth at the regional level. Methodology- The impact of employment in the knowledge and technology intensive sectors on regional growth and regional inequality is analysed with fixed effect model. Data range is between 2008 and 2015 at level 1 for Turkey Findings- According to the results of the analysis, technology-oriented human capital is positively influencing growth. In addition, there is a positive correlation between public spending and employment rates and growth. There is no significant relationship between migration, import-export data and growth. In relation to human capital and inequality, human capital increases regional inequalities. But public expenditures reduce regional disparities. On the other hand there is no statistically significant relation between export and import data and regional inequality. Conclusion- The results of the study show that qualified labour force in the information and technology intensive sectors increases both regional growth and regional inequality.