Economics of Innovation - PUBP8803-AF

 

Instructor: Andrea Fernández-Ribas

Class Meetings: Tuesdays & Thursdays at 9:35pm-10:55pm, DM Smith Building 107

Office Hours: After class or by appointment.

Course web site: http://www.prism.gatech.edu/~af128

Course discussion list: eco-inno@lists.gatech.edu

 

Course Description

 

The goal of this course is to do a critical and in-depth analysis of influential contributions in the economics of science and technology. The course is organized into five main sections. The first section reviews assumptions and propositions of neoclassical, evolutionary and systemic approaches. Section Two examines data and indicators used by social scientist to measure knowledge, invention, science, technology and innovation. Section Three explores innovation from a firm point of view. We look at theoretical and empirical evidence on major topics in the field, including the relationship between market structure and innovation; the impact of innovation on a firm’s performance; advantages and disadvantages of research partnerships; invention protection strategies; learning and technology diffusion models. Section Four addresses the economic rationale for public intervention in science and technology. The last section focuses on the international dimension of innovation.

 

Some questions explored in this course include:

 

- How does R&D affect long-term productivity?

- Why are some countries more innovative than others?

- Does innovation and technical change increase inequalities across countries?

- Why do some firms explicitly decide not to innovate?

- Why do some firms freely choose not to protect their inventions?

- How can we measure technological spillovers?

- What are the advantages and disadvantages of harmonizing patent policies worldwide?

- What factors do firms consider when choosing between equity agreements and research partnerships?

- Why do governments give public support to private R&D?

- What are the advantages and disadvantages of hosting MNEs?

- Are concerns about brain-drain justified?

 

After completing this course students should be able to think critically about current issues related to science, technology, and innovation, using an economic analysis perspective.

 

Format

 

The format of the class is both lecture and discussion. Students are expected to read suggested readings, be prepared to ask questions and take part in class discussions. Intensive reading, critical thinking and active participation are crucial for success in this course.

 

Reading

 

Required readings (R) are complemented with optional theoretical and empirical articles. Some key journals that are used during the course are: Research Policy, Journal of Economic Perspectives, American Economic Review, Journal of Economic Literature, Rand Journal of Economics, Journal of Economic Surveys and the National Bureau of Economic Research (NBER) Working Paper Series. These journals are available on line through the Georgia Tech library, JSTOR & Elsevier. Electronic copies of articles marked with a star (*) are available through ILLIAD (https://illiad.library.gatech.edu/), alternatively (and only in some cases) there is a hard copy at the GT library.

 

Credits: 3

 

Course requirements

 

 Grading Policy:

  • Regular attendance and active participation in discussions (15%);
  • one referee report (20%);
  • one conceptual quiz at the end of the course (25%); and
  • one final paper and a short presentation (40%);

 

Referee Paper: The suggested length of your referee paper is about 3 pages and the proposed due date is November 28.

 

Final Paper: Topic is of your choice. A short statement (1 page) should be due by October 19. The paper should be approximately 10 pages in length, plus references. Paper due will be last day of class. You will defend your proposal for about 15-minutes during class time and your peers will also evaluate you.

 

Conceptual Quiz: At the end of the course there will be a multiple-choice quiz.

 

q       Notice that all written assignments should be submitted in hard copy.

q       Grades will be based on the Georgia Tech grading system: http://www.registrar.gatech.edu/students/gradingsystem.php

q       Enrollment in this course implies that you have read and accepted the Georgia Tech Honor Code: http://www.deanofstudents.gatech.edu/Honor/

 

Prerequisites

 

None; but some previous exposure to microeconomics and statistics/econometrics will help you with the readings.

 

Students with disabilities

 

If you are a student with a disability and need some special accommodation, please contact me to do special arrangements at the beginning of the course. You can also refer to the Georgia Tech Accessible Disabled Assistance Program for Tech Students (ADAPTS) at http://www.adapts.gatech.edu 

 

Course links

 

·     Course Calendar

·     Course Schedule

·     Class List

·     Presentation Schedule

·     Class Assignments

·     Guidelines Final Papers

·     Referee Instructions

·     Student Information

·     Course Mid-term Evaluation

 

Course Feedback

 

Feel free to give feedback regarding the course material. Your comments are very valuable!

 

Syllabus

 

I. INTRODUCTION

  • Course overview and course requirements.
  • The “taking off” of economic prosperity
  • What is innovation and how does it affect economic growth?
  • The process of creative destruction
  • Other definitions in the literature: science, technology, invention.

 

Reading

 

Jeffrey D. Sachs (2005), The end of poverty, Chapter 2 The spread of economic prosperity, pp.26-50 (R) (*)

Simon Kuznets (1973), Modern economic growth: findings and reflections, American Economic Review 63(3), pp.247-258 (R)

Robert W. Fogel (1999), Catching up with the economy, American Economic Review 89(1), pp.1-21 (R)

Richard A. Easterlin (2000), The worldwide standard of living since 1800, Journal of Economic Perspectives 14(1), pp.7-26 (R)

David B. Audretsch et.al. (2002), The economics of science and technology, Journal of Technology Transfer 27(2), pp.155-203 (R)

Joseph A. Schumpeter (1942), Capitalism, socialism and democracy, Chapter 7 Creative Destruction, pp.81-86 (R) (*)

William J. Baumol (2002), The free-market innovation machine: analyzing the growth miracle of capitalism. Introduction. Princeton University Press (*)

Vania Sena (2004), The Return of the Prince of Denmark: A Survey on Recent Developments in the Economics of Innovation, Economic Journal 114 (496), pp.312-32 (*)

Daniel Lederman and Laura Saenz (2005), Innovation and Development around the world, 1960-2000, World Bank WP 3774

Robert J. Barro and Xavier Sala-i Martin (1999). Economic Growth. MIT Press. Chapter 1, pp.14-58 (e-book)

 

Media Articles

 

q       The growth machine, The Economist, May 18, 2002.

q       The road to riches, The Economist, Millennium Special Edition, December 31, 1999.

q       Survey on technology and innovation The Economist, November 10, 2001. Including: Getting better all the time, Feeding the five billion, Brains v bugs, Fishermen on the net, Wired schools, wired nations, How countries go high-tech, Keep it simple, Fewer buffaloes.

q       Catch the wave, The Economist, February 20, 1999.

q       Industry gets religion, The Economist, February 20, 1999.

  

II. MAJOR THEORETICAL FRAMEWORKS ON INNOVATION

 

2.1 Neoclassical Perspectives

  • Early hypothesis: the view of classical economics.
  • Solow’s residual and the production function.
  • Endogenous growth models. Romer’s contribution.

 

Reading

 

Gene Grossman and Elhanan Helpman (1994), Endogenous Innovation in the Theory of Growth, Journal of Economic Perspectives 8(1), pp.23-44 (R)

Zvi Griliches (1996), The Discovery of the Residual: A Historical Note, Journal of Economic Literature 34(3), pp.1324-30 (R)

Robert Solow (1957),Technical change and the aggregate production function, Review of Economic and Statistics 39(3), pp.312-320

Nicholas Kaldor (1957), A model of economic growth, Economic Journal 67, pp.591-624

Paul M. Romer (1994), The Origins of Endogenous Growth, Journal of Economic Perspectives 8(1), pp.3-22

Paul M. Romer (1990), Endogenous Technological Change, Journal of Political Economy 98 (5), pp.71-102

 

Media Articles

 

q       The growth of growth theory, The Economist, May 18, 2006.

 

2.2 The Evolutionary School

  • Learning and uncertainties.
  • The role of routines and organizational memory.
  • The searching process.
  • Natural selection and the idea of evolution.

 

Reading

 

Christopher Freeman (1994), The Economics of Technical Change, Cambridge Journal of Economics 18 (5), pp.463-514 (R) (*)

Richard R. Nelson and Sidney G. Winter (2002), Evolutionary Theorizing in Economics, Journal of Economic Perspectives 16(1,2), pp.23-46 (R)

Giovanni Dosi (1988), Sources, Procedures and Microeconomic Effects of Innovation, Journal of Economic Literature 26(3), pp.1120-1171

Richard R. Nelson and Sidney G. Winter (1982), An evolutionary theory of technical change. Belknap Press (*)

 

2.3 The Systemic Approach

  • The lineal model of innovation versus the chained-linked model.
  • User-producer relationships.
  • Innovation systems and knowledge economy.
  • Comparing innovation systems.
  • Regional and. national innovation systems.

 

Reading

 

Charles Edquist (2006), Systems of innovation, perspectives and challenges, in The Oxford Handbook of Innovation, Jan Fagerberg, David C. Mowery and Richard R. Nelson (eds.), Oxford University Press, pp.181-208 (R) (*)

Science, The Endless Frontier, A report to the President by Vannevar Bush, July 1945 http://www.nsf.gov/od/lpa/nsf50/vbush1945.htm

Pari Patel and Keith Pavitt (1994), National innovation systems: why they are important, and how they may be measured and compared, Economics of Innovation and New Technology 3 (1), pp.77-95. (*)

Steven Kline and Nathan Rosenberg (1986), An Overview of Innovation, in The Positive Sum Strategy, Ralph Landau and Nathan Rosenberg, Washington: National Academy Press, pp. 275-305. (*)

Phil Cooke, Introduction: Regional innovation systems, an evolutionary approach, in Regional Innovation Systems, Philip Cooke, Martin Heidenreich and Hans-Joachim Braczyk (eds.). Routledge. (*)

Bengt-Åke Lundvall (1992), National Systems of Innovation: Towards a Theory of Innovation and Interactive Learning, London: Pinter. (*)

Richard R. Nelson (1993), National Systems of Innovation: A Comparative Study, Oxford University Press. (*)

Phil Cooke, Mikel Gomez Uranga and Etxebaria (1998), Regional systems of innovation: and evolutionary perspective. Environment and Planning 30, pp. 1563-1583. (*)

 

Recommended Websites

 

q       Lecture by Nathan Rosenberg on double causality relationship between science and technology http://video.haas.berkeley.edu:24874/ramgen/media-services/Rosenberg.rm

q       Network of Innovation Regions in Europe: http://www.innovating-regions.org/

q       Innovation Systems Research Network: http://www.utoronto.ca/isrn/

q       Swedish Governmental Agency for Innovation Systems: http://www.vinnova.se/

 

Media Articles

 

q       Out of the dusty labs, The Economist, March 2007

 

III. MEASURING ISSUES

 

3.1. Commonly used measures in Knowledge and Innovation

  • Census data, growth accounting and total factor productivity measurement.
  • Types of spillovers measures: vertical relationships, technological distance & geographic proximity.

 

Reading

 

Ishaq Nadiri (1993), Innovation and technological spillovers, NBER WP 4423 (R)

Adam B. Jaffe (1986), Technological Opportunity and Spillovers of R&D: Evidence from Firms' Patents, Profits, and Market Value, American Economic Review 76 (5) pp.984-1001.

Adam B. Jaffe, Manuel Trajtenberg and Rebecca Henderson (1993), Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations Quarterly Journal of Economics 108 (3) pp.577-598.

 

3.2 Patents, patent citations and blibliometric indicators

  • Ways to protect inventions.
  • The market value of a patent. Ways to measure it.
  • Other patent indicators: originality, generality.
  • Differences across sectors. University and corporate patents.
  • Impacts of patents on firms performance.

 

Reading 

 

Zvi Griliches (1990), Patent Statistics as Economic Indicators: A Survey, Journal of Economic Literature 28(4), pp. 1661-1707 (R)

Bjorn L. Basberg (1987), Patents and the measurement of technological change: A survey of the literature, Research Policy 16 (2,4), pp.131-141 (R)

Nancy T. Gallini (2002), The Economics of Patents: Lessons from Recent U.S. Patent Reform, Journal of Economic Perspectives 16 (2), pp.131-154

Adam B. Jaffe and Josh Lerner (2001), Reinventing Public R&D: Patent Policy and the Commercialization of National Laboratory Technologies, Rand Journal of Economics 32, pp.167-198

Hal R. Varian (2005), Copying and Copyright, Journal of Economic Perspectives 19 (2), pp.121-138

Stanley M. Besen and Leo J. Raskind (1991), An Introduction to the Law and Economics of Intellectual Property, Journal of Economic Perspectives 5(1), pp. 3-27.

Zvi Griliches (1995), R&D and Productivity: Econometric Results and Measurement Issues, in Handbook of the Economics of Innovation and Technological Change, Paul Stoneman, ed. pp.52-89. (*)

Manuel Trajtenberg (2002), A Penny for Your Quotes: Patent Citations and the Value of Innovations, in Patents, citations and innovation a window on the knowledge economy, Adam B. Jaffe and Manuel Trajtenberg The MIT Press. (*)

Manuel Trajtenberg, Rebeca Henderson and Adam B. Jaffe (2002), University versus Corporate Patents: A Window on the Basicness of Invention, in Patents, Citations and innovation a window on the knowledge economy, Adam B. Jaffe and Manuel Trajtenberg The MIT Press. (*)

Josh Lerner (2002), Patent protection and innovation over 150 years. NBER working paper No. 8977.

Mariko Sakakibara and Branstetter (2001), Do stronger patents induce more innovation? Evidence from the 1998 Japanese patent law reforms, Rand Journal of Economics 32, pp.77-100.

Bronwyn H. Hall and R.H. Ziedonis (2001), The patent paradox revisited: an empirical study of patenting in the US Semiconductor industry, 1979-1995, Rand Journal of Economics 32, pp.101-128.

Wesley M. Cohen, Richard R. Nelson R., and John P. Walsh (2000), Protecting Their Intellectual Assets: Appropriability Conditions and Why US Manufacturing Firms Patent (or Not), NBER WP 7552

 

Media Articles

 

q       Twist and shout, The Economist, June 11, 2005.

q       Survey on patents, The Economist, October 22, 2005. Including: A market for ideas, An open secret, Patent sense, The liquidity of innovation, Thinking for themselves, Voracious venture.

q       Free ideas, The Economist, October 15, 2005.

q       Monopolies of the mind, The Economist, November 13, 2004.

q       Scientific publishing, the paperless library, The Economist, September 24, 2005.

q       Robert M. May (1997), The Scientific Wealth of Nations, Science 7 February 1997, Vol. 275. no. 5301, pp. 793 – 796.

 

Recommended Websites

 

q       Center for Economic Studies, US Census Bureau http://www.ces.census.gov

q       Science and Engineering Statistics, National Science Foundation http://www.nsf.gov/statistics/

q       World Intellectual Property Organization http://www.wipo.int

q       US Patent Office http://www.uspto.gov/

q       European Patent Office http://www.european-patent-office.org/index.en.php 

q       Japan Patent Office http://www.jpo.go.jp/

q       The Science Citation Index http://www.isinet.com/products/citation/sci/

q       NBER Patent Database http://www.nber.org/patents/

q       Totally Absurd Inventions http://totallyabsurd.com/archive.htm

 

 Other free patent databases

 

q       www.patentstorm.us (by category, by inventor’s name and by date)

q       www.freepatentsonline.com

q       www.patentdebate.com

q       www.freshpatents.com

 

3.3 Innovation Surveys

  • Innovation surveys and their relationship with evolutionary and systemic approaches.
  • Innovation measurement in the service sector: trends and future.
  • Strengths and weaknesses of qualitative indicators.
  • Sectoral taxonomies, Pavitt vs. the OECD classification 

 

Reading

 

Daniele Archibugi and Mario Pianta (1996), Measuring technological change through patents and innovation surveys, Technovation, 16(9) pp.451-468 (R)

John A. Hansen (1999), Technology Innovation Indicators: A Survey of Historical Development and Current Practice, Mimeo (R)

Matteo Richiardi (2000), Learning from the CIS-2: methodological recommendations, and research and policy implications, Mimeo

Keith Pavitt (1984), Sectoral Patterns of Technical Change: Towards a Taxonomy and a Theory, Research Policy 13 (6), pp.343-73 (*)

Ian Miles (2006), Innovation in Services, in The Oxford Handbook of Innovation, pp.433-458. (*)

Mónica Salazar and Adam Holbrook (2003), A debate on innovation surveys, Mimeo.

OECD (2005), The Oslo Manual.3rd Edition at www.oecd.org/dataoecd/35/61/2367580.pdf

 

Recommended Websites

 

q       Community Innovation Survey: http://cordis.europa.eu/innovation-smes/src/cis.htm

q       Georgia Manufacturing Survey: http://www.cherry.gatech.edu/survey/

q       Malaysia Knowledge Content Survey: http://www.cherry.gatech.edu/myke-team/documents/MyKe-survey-2003-05-30.doc

q       The South African Innovation Survey: http://www.up.ac.za/up/web/resources/academic/engineering_and_technology_management/downloads/sais2001/index.htm

q       Korean R&D survey: http://www.kistep.re.kr/index.jsp

  

IV. MICROECONOMICS OF INNOVATION. THEORY AND EVIDENCE.

 

4.1 The Innovative Firm

  • Innovation strategies.
  • Learning by doing and learning by using.
  • Relationship between experience and efficiency: learning curves.
  • Demand-pull vs. technology-push theories.
  • R&D and the idea of absorptive capacity. Tacit knowledge vs codified knowledge.

 

Reading

 

Christopher Freeman and Luc Soete (1997), The Economics of Industrial Innovation, 3rd ed., The MIT Press, Chapter 11 Innovation and the Strategy of the Firm (R) (*)

Kenneth J. Arrow (1962), The Economic implications of learning by doing, Review of Economic Studies 29 (2), pp.155-173 (R)

Nathan Rosenberg (1982), Inside the Black Box, Cambridge University Press, Chapter 6 Learning by using, pp.120-140 (OnLine e-book)

David Teece (1986), Profiting from Technological Innovation: Implications for Integration, Collaboration, Licensing and Public Policy, Research Policy 15 (6), pp.285-305 (*)

Nathan Rosenberg (1990), Why Do Firms Do Basic Research (with Their Own Money)?, Research Policy 19 (2) pp.165-174 (*)

Wesley M. Cohen and Daniel A. Levinthal (1990), Absorptive Capacity: A New Perspective on Learning and Innovation. Administrative Science Quarterly 35(1), pp.128-52 (*)

Edith Penrose (1995), The Theory of the Growth of the Firm. Third Edition (*)

 

Recommended Websites

 

q       Innobarometer: opinions of European managers on their needs in innovation and performance: http://cordis.europa.eu/innovation-smes/src/innobarometer.htm

q       The World's Most Innovative Companies according to BUSINESS WEEK

 

4.2 Market Structure and the Incentives to Innovate

  • The relationship between a firm size and innovation.
  • Innovation, market structure and competition.
  • The industry-specific argument.
  • Early and late Schumpeter: the role of entrepreneurs.

 

Reading

 

Wesley M. Cohen and Richard C. Levin (1989), Empirical studies of innovation and market structure, in Handbook of Industrial Organization, Volume II, Edited by R. Schmalensee and R.D. Willig, Elsevier Science Publishers (R) (*)

Chris Freeman and Luc Soete (1997), The Economics of Industrial Innovation, 3rd ed., The MIT Press. Chapter 9 Innovation and the Size of the Firm (R) (*)

Zoltan J. Acs and David B. Audretsch (1988), Innovation in large and small firms: an empirical analysis, American Economic Review 78(4), pp. 678-690.

Joseph A. Schumpeter (1942), Capitalism, Socialism and Democracy, Chapter VIII, pp. 87-106. (*)

 

Media Articles

 

q       S&T, The Economist, Millennium Special Edition, 1999.

q       Searching for the invisible man, The Economist, March 11, 2006.

 

4.3 The Impact of Innovation on a Firm’s Performance

  • Measures of firms’ performance.
  • Basic theoretical and microeconometric models.
  • Empirical evidence.

 

Reading

 

Zvi Griliches (1995), R & D and Productivity: Econometric Results and Econometric and Measurement Issues, Handbook of the Economics of Innovation and Technological Change, Paul Stoneman (Harvard University) (R)  (*)

Crépon, Duguet and Mairesse (1998), Research, innovation and productivity: an econometric analysis at the firm level. NBER Working Paper 6696(R)

David J. Teece (1996), Firm organization, industrial structure, and technological innovation, Journal of Economic Behavior & Organization 31 (2), pp.193-224

Hans Lööf and Almas Heshmati  (2006), On the relationship between innovation and performance: A sensitivity analysis, Economics of Innovation and New Technology, Volume 15, Number 4-5 / June / July 2006 , pp. 317 -344 (*)

 

Media Articles

 

q       Slackers or pace-setters?, The Economist, May 22, 2004.

q       The new ‘new economy’, The Economist, September 2003.

 

4.4 Funding Innovation

Guest Lecture. Maria Hill, financial advisor EDI. Minority Business Development Center.

 

Required readings

TBA

 

Media Articles

 

q       Innovation in industry: Silicon envy, The Economist, February 20, 1999.

 

4.5 Innovation Partnerships

  • Types of partnerships.
  • Evolution of research partnerships.
  • Advantages and disadvantages of cooperative agreements.
  • Welfare effects of cooperation.
  • Subsidized programs: The Advanced Technology Program. SEMATCH. EU Framework Programs.
  • Empirical findings: Who cooperates in R&D?. Effects of cooperation on firm’s performance.

 

Reading

 

John Hagedoorn (1993), Understanding the rationale of strategic partnerships. Interorganizational modes of cooperation and sectoral differences. Strategic Management Journal 14, pp. 371-385 (R)

Yannis Caloghirou, Stavros Ioannides, and Nicolas Vonortas (2003), Research Joint Ventures, Journal of Economic Surveys 7 (4), pp.541-570 (R)

David B. Audretsch and Maryann P. Feldman (2003), Small-Firm Strategic Research Partnerships: The Case of Biotechnology, Technology Analysis & Strategic Management 15(2), pp.273-288

Michael R. Darby, Lynne G. Zucker and Andrew Wang (2003), Universities, joint ventures and success in the Advanced Technology Program, NBER WP9463

Stephen Martin (2003), The Evaluation of Strategic Research Partnerships, Technology Analysis & Strategic Management 15 (2) pp. 159-176

D’Aspremont and Jacquemin (1988), Cooperative and noncooperative R&D in a duopoly with spillovers, American Economic Review 78, pp. 1133-1138

Kamien, Muller, and Zang. (1992), Research joint ventures and R&D cartels, American Economic Review 82, pp. 1293-1307

Nicolas Carayol (2003), Objectives, agreements and matching in science-industry collaborations: reassembling the pieces of the puzzle Research Policy 32, pp. 887-908

John Hagedoorn, Albert N. Link and Nicholas S. Vonortas (2000), Research partnerships, Research Policy 29 (4-5), pp.435-678

Bruno Cassiman and Reinhilde Veugelers (2002),R&D cooperation and spillovers: some empirical evidence from Belgium, American Economic Review 92(4), pp.1169-1184

Alfred Kleinknecht and Jeronen Reijnen (1992), Why do firms cooperate on R&D? An empirical study. Research Policy 21, pp. 347-360 (*)

Roberto Hernán , Pedro L. Marín and Georges Siotis (2003), An Empirical Evaluation of the Determinants of Research Joint Venture Formation, Journal of Industrial Economics 1, pp.55-89

 

Media Articles

 

q       Out of the dusty labs, The Economist, March 2007

q       An open secret, The Economist, October 22, 2005.

q       Merky Waters, The Economist, April 24, 1997.

 

4.6 Technology Diffusion Models

  • Why is technology adoption important?
  • Griliches model of adoption and diffusion of hybrid corn.
  • Epidemic, rank and duration models.

 

Reading

 

Bronwyn H. Hall (2004), Innovation and Diffusion, NBER Working Paper No. 10212 (R)

Karshenas and Stoneman (1995), Technological Diffusion, in Paul Stoneman (ed.), Handbook of the Economics of Innovation and Technological Change, Blackwell, Oxford, pp. 265-29 (R) (*)

Zvi Griliches (1957), Hybrid corn: an exploration in the economics of technological change, Econometrica 25, 4 pp 501-522 (*)

Rogers (1995), Diffusion of Innovations, 4th edition. New York. (*)

Paul A. Geroski (2000), Models of technology diffusion, Research Policy 29 (4/5), pp. 603-25.

Nathan Rosenberg (1976), Factors Affecting the Diffusion of Technology. Perspectives on Technology.Cambridge University Press: 189-212 (*)

Paul David (1990), The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox, American Economic Review 80 (2), pp. 355-361

  

V. INNOVATION AND PUBLIC POLICY

 

5.1 Economic Rationale for Public Intervention

·         Market failures in innovation.

·         Rationale public support to innovation.

·         Microeconomic model on the effects of R&D subsidies.

·         Perverse incentives and crowding-out. Reasons to crowd-out public money.

·         Empirical evidence on the impact of R&D subsidies.

·         Mansfield and the computation of social and private rates of return.

 

Reading

 

Richard R. Nelson (1959), The simple economics of basic scientific research, The Journal of Political Economy 67, pp. 297-306 (R)

Edwin Mansfield, John Rapoport, Anthony Romeo, Samuel Wagner and George Beardsley (1977), Social and Private Rates of Return from Industrial Innovations, The Quarterly Journal of Economics 91(2), pp. 221-240 (R)

Stan Metcalfe (1995), The economic foundations of technology policy: equilibrium and evolutionary perspectives, in Handbook of the Economics of Innovation and Technological Change, Paul Stoneman (ed.), Oxford, UK: Blackwell, pp. 410-512 (*)

David Mowery (1995), The practice of technology, in Handbook of the Economics of Innovation and Technological Change, Paul Stoneman (ed.), Oxford, UK: Blackwell, pp. 513-563 (*)

Kenneth Arrow (1962), Economic welfare and the allocation of resources for invention, in The rate and direction of inventive activity, Nelson R.R. (ed.), Princeton University Press, pp. 609-625 (*)

 

5.2 Evaluation of Science and Technology Policies

  • Traditional vs evolutionary and systemic approaches.
  • Additionality and counterfactuals.
  • Behavioral additionality.
  • Evidence from microeconometric analysis.

 

Reading

 

Paul A. David, Bronwyn H. Hall and Andrew A.Toole (2000), Is public R&D a complement or a substitute for private R&D? A review of the econometric evidence, Research Policy 29, pp. 497-529 (R)

Buisseret, Cameron, and Georghiou (1995), What difference does it make? Additionality in the public support of R&D in large firms, International Journal of Technology Management 10, pp. 587-600 (R)  (*)

Isabel Busom and Andrea Fernández-Ribas (2006), The Impact of Firm Participation in R&D Programs on R&D partnerships. Summer School on Economics of Innovation «Zvi Griliches», Universidad Internacional Menéndez Pelayo (*)

Maryann P. Feldman, Government R&D subsidies, economic incentives and knowledge spillovers. Mimeo.

Josh Lerner (1996), The Government as Venture Capitalist: The Long-Run Impact of the SBIR Program, NBER WP No. W5753

Scott J. Wallsten (2000), Effects of Government-Industry R&D Programs on Private R&D: The Case of the Small Business Innovation Research Program. Rand Journal of Economics 31, pp. 82-100.

Saul Lach (2002), Do R&D subsidies stimulate or displace private R&D? Evidence from Israel, Journal of Industrial Economics 50, pp. 369-390

Bronwyn H. Hall and J. van Reenen (2000), How effective are fiscal incentives for R&D? A review of the evidence, Research Policy 29, pp. 449-469

Richard Blundell and Mónica Costa Dias (2002), Alternative approaches to evaluation in empirical microeconomics, The Institute for Fiscal Studies, Working paper CWP10/02

 

Recommended Webpages

 

q       Advance Technology Program (ATP): http://www.atp.nist.gov/

q       Also look at the ATP assessment and the Congress recommendation to terminate this program:  http://www.whitehouse.gov/omb/expectmore/detail.10000030.2005.html

q       ERAWATCH: project on benchmarking of institutions and innovation policies: http://erawatch.jrc.es/public/implementation.htm

 

VI. INNOVATION IN THE GLOBAL ECONOMY

 

6.1 The Role of Multinational Enterprises

  • Cost doctrine and market-based theories versus decentralized competence models.
  • Home-base exploiting and home-based augmenting R&D.
  • Knowledge accumulation and network of innovators.
  • Advantages and disadvantages of hosting MNCs.

 

Reading

 

Raymond Vernon (1966), International investment and international trade in the product cycle, Quarterly Journal of Economics 80(2), pp.190-207 (R)

Cantwell (1995), The globalisation of technology: what remains of the product cycle model, Cambridge Journal of Economics 19, pp. 155-174 (R) (*)

Antonello Zanfei (2000), Transnational Firms and the Changing Organisation of Innovative Activities, Cambridge Journal of Economics 24 (5), pp. 515-54 (R)

Kuemmerle, W. 1997. Building effective R&D capabilities abroad, Harvard Business Review, March-April, 61-69 (R)

Andrea Fernández-Ribas, Philip Shapira and Jan Youtie (2006), Innovation strategies of multinational enterprises in developing countries: some empirical evidence for Malaysia. Working Papers. School of Public Policy, Georgia Institute of Technology.

Yamin, M., and Otto, J. (2004), Patterns of knowledge flows and MNE innovative performance, Journal of International Management 10, pp. 239-258.

Pari Patel and Modesto Vega (1999), Patterns of internationalisation of corporate technology: location vs. home country advantages, Research Policy 28, pp.145-155.

Helene Blanc and Christophe Sierra (1999), The internalization of R&D by multinationals: a trade-off between external and internal proximity, Cambridge Journal of Economics 23 (2), pp.187-206.

Jerry Thursby and Marie Thursby (2006), Here or There?,  A Survey on the Factors in Multinational R&D Location, Report to the Government-University-Industry Research Roundtable. National Academies Press.

 

Media articles and policy reports

 

q       Scattering the seeds of invention: The globalisation of research and development. Economist Intelligence Unit September 2004.

q       UNCTAD (2005), The impact of FDI on Development: globalization of R&D by transnational corporations and implications for developing countries. http://www.unctad.org/en/docs/com2em16d2_en.pdf

q       Council on Competitiveness (2005), National Innovation Survey, (Washington, DC).

 

6.2 The International Diffusion of Innovation

  • Internationalisation of R&D: evidence and trends.
  • Factors facilitating the international diffusion of innovation.
  • Obstacles to international diffusion.

 

Reading

 

Wolfgang Keller (2001), International Technology Diffusion, NBER Working Paper 8573 (R)

OCDE (1998), Internationalisation of Industrial R&D, Patterns and Trends.

http://cdnet.stic.gov.tw/ebooks/OECD/26.pdf  (R)

OECD (2005), Measuring Globalisation: OECD Economic Globalisation Indicators. Paris

http://www.oecd.org/department/0,2688,en_2649_34443_1_1_1_1_1,00.html

Yasuyuki Todo and Koji Miyamoto (2006) Knowledge Spillovers from Foreign Direct Investment and the Role of Local R&D Activities: Evidence from Indonesia , Economic Development and Cultural Change, vol. 55, pp. 173–200 http://www.journals.uchicago.edu/

 

6.3 International Technology Policy

  • Policies to attract foreign resources from abroad.
  • Innovation and developing countries.
  • Promotion of international research linkages.
  • Brain gain policies.

 

Reading

 

Rajneesh Narula and Antonello Zanfei (2006), The international dimension of innovation, in The Oxford Handbook of Innovation, Jan Fagerberg, David C. Mowery and Richard R. Nelson (eds.), Oxford University Press (R) (*)

Moses Abramovitz (1986), Catching Up, Forging Ahead, or Falling Behind, Journal of Economic History 46(2), pp. 385-406 (R)

Douglas H. Brooks and Hal Hill (2004) Divergent Asian Views on Foreign Direct Investment and Its Governance, Asian Development Review vol. 21, no1, pp 1-36 http://www.adb.org/documents/periodicals/adr/default.asp

 

Media articles

 

q       Fruit that falls far from the tree, The Economist, November 3, 2005.

q       A new map of the world. The Economist, June 24, 2000.

q       Brain drain. The Economist, May 6, 2006.

q       The brain drain: Old myths, new realities, The OECD observer, May 2002.

 

 

Other recommended links

 

q       Resources provided by the American Economic Association: http://www.aeaweb.org/RFE/  (includes plenty of links to data mines, on-line dictionaries, new media, discussion lists, blogs, etc.)

q       Science and Engineering Indicators, National Science Foundation, 2006: http://www.nsf.gov/statistics/seind06/ . Includes statistics on education, industry and innovation, research and development, academic research..

q       ECONLIT, electronic database to track articles and books in economics: http://www.library.gatech.edu/search_locate/databases.php?/cats/databases