Business cycles, technology and exports

Abstract

This article shows-on both conceptual and empirical grounds-the importance of business cycles in affecting key relationships between innovation and international performance. While periods of upswing are characterised by a well documented "virtuous circle" between innovation inputs, new products and export success, during downswings most of the positive relationships and feedbacks tend to break down. The findings of Guarascio et al. (2014) on the long-term relationships between R&D, new products and exports are confirmed and qualified with major novelties. But when the period of analysis is split between periods of upswing and downswing-following Lucchese and Pianta (2012)-significantly different relationships emerge. These results are obtained through an approach that combines several complementary perspectives. A Schumpeterian view on the diversity of technological change allows to disentangle the specificities and effects of innovation inputs and outputs, and of new products and new processes. A structural change perspective on the role of demand as a driver of innovation and on the importance of open economies allows to link industries" dynamics with international competitiveness. A business cycle perspective crossing the two previous appraoches sheds new light on the fragility of key economic relationships and on the long term damage that recessions may cause to the "virtuous circle" of innovation and performance. The model we propose links exports, R&D and innovation success in a system of three simultaneous equations allowing for the presence of feedbacks loops among key variables. The empirical test is carried out for the period 1995-2010 at the industry level, on 21 manufacturing and 17 service sectors; country coverage includes Germany, France, Italy, Spain, the Netherlands and the United Kingdom, representing a very large part of the European economy.

Technology and Occupations in Business Cycles

“…In several studies on the employment impact of technology, demand-proxied by value added and by its components-has emerged as a key driver [83][84][85][86][87]; in particular, an expanding demand at the industry level is a necessary condition for allowing the job creation effects of product innovation to emerge.…”

“…We then compare the resulting coefficients in order to understand how the business cycle affects the relationships documented above, following the approach proposed in [93]; see also [84]. Table 5 shows the results.…”

Non-standard work and innovation: evidence from European industries

“…This sectoral classification extends the Pavitt's (1984) taxonomy to service industries, allowing us to appropriately distinguish between high-tech and low-tech industries according to the structure of the market and the nature, sources and appropriability of knowledge. On this basis, we classify Science based and Specialised supplier industries as high-tech sectors, while Scale and information intensive and Supplier dominated industries are included in the low-tech sectoral cluster (Bramucci et al 2017;Coveri and Pianta 2019;Guarascio et al 2015;Guarascio and Pianta 2016;Reljic et al 2019). 3 Once stated our technology-based classification of sectors and took stock of the extant conceptual and empirical literature on technological regimes, we finally have all the ingredients to formulate our second hypothesis:…”

“…In this context, it is just worth noting the inclusion of the variable related to the foreign sourcing of high-tech intermediate inputs, which allows to account for the modern international fragmentation of production (Milberg and Winkler 2013) while also capturing its technological dimension. In particular, we took advantage of the offshoring indicator proposed by Feenstra and Hanson (1996) as amended by Guarascio et al (2015) to discriminate imported intermediate inputs according to their technological content. By exploiting the World Input-Output Tables (WIOT) provided by WIOD (Timmer et al 2015), we thus built this indicator by computing the ratio between the sum of the expenditure devoted by each industry to the acquisition of intermediate inputs from foreign high-tech industries over the expenditure for the total (domestically produced and foreign) intermediate inputs used for production by each sector.…”

The demand-pull effect of public procurement on innovation and industrial renewal

“…The specification in (3) constitutes an enhancement with respect to the previous models exploring the determinants of innovation in industries. In particular, we follow the contributions examining jointly the impact on industries' innovative performance in technology-push and demand-pull factorssee, among the others, Crespi and Pianta (2007), Guarascio et al (2015 and , by adding variables that explicitly account for PP and import penetration of PP.…”