unionization and input flexibility in u s manufacturing 1973 1996 input flexibility as measured by the ability of firms to vary input demand in the face of changes in input prices is an important dimension of labor market flexibility using a new dataset the authors analyze the impact of unionization on input flexibility in u s manufacturing from 1973 to 1996 a period in which production was arguably becoming more flexible due to deep changes in the u s industrial relations system and in the broad macroeconomic environment the authors quantify the effects of unionization on input flexibility by estimating elasticities of substitution between a broad range of labor and non labor inputs controlling for unionization the pattern that emerges is more complex than that suggested by other research in particular low unionization apparently is associated with greater flexibility in the use of labor inputs but less flexibility in the use of non labor inputs

institutions and progress an insistent theme in richard nelson s work is that of capitalism as an engine of progress in this paper i explore this idea through a sequence of his writing distinguishing progress as outcome from progress as instituted process this leads to a deeper issue within this nelsonian theme namely the incompatibility between progress and equilibrium i argue that evolving systems are ordered and coordinated but they are never in equilibrium capitalism is restless it always generates change from within and the proximate source of this progressive tendency is the uneven accumulation of knowledge capitalism is restless because knowledge is restless copyright 2001 by oxford university press

competition cooperation and innovation organizational arrangements for regimes of rapid technological progress abstract discussions of the link between firm size and innovation are outmoded because the boundaries of the firm have become fuzzy in recent decades strategic alliances constellations of bilateral agreements among firms are increasingly necessary to support innovative activities such alliances can facilitate complex coordination beyond what the price system can accomplish while avoiding the dysfunctional properties sometimes associated with hierarchy antitrust law and competition policy need to recognize that these new organizational forms are often the functional antithesis of cartels though they may have certain structural similarities a more complete understanding of bilateral contracts and agreements ought to reveal when and how cooperation can support rather than impede innovation and competition

r d and technology policy in nics as learning processes abstract this paper presents a dynamic learning perspective to research and development activity and to policies promoting these activities and technological development more generally the basic idea is that successful penetration of research and development rd multidisciplinary learning both technoeconomic and managerial organizational and learning which is cumulative through time this is especially so at an early infant phase of diffusion of this process through the economy a dynamic view of externalities and market failures is presented one that provides the basis for a catalytic perspective of technological policy this perspective is based on the distinction between an infant and a mature phase of policy where massive flexible search oriented support in the early phase sets the base for endogenization routinization of r d in the economy and for the possibility of drastic reductions in government support for traditional forms of r d in the later phase

towards a capability theory of innovating firms implications for management and policy author s teece dj abstract the author 2017 business enterprises lie at the core of ecosystems that drive economic development and growth in market economies yet until recently mainstream economics has mostly treated firms like homogeneous black boxes run by opportunistic managers the field of strategic management has developed a more nuanced approach to the understanding of how firms are created organized and grow how they innovate and compete and how managers manage one of the leading paradigms in the field is the dynamic capabilities framework in this paper contrasts and complementarities are drawn between dynamic capabilities and economic theories of the firm including transaction cost economics and agency theory connections to the cambridge school are highlighted including the duality between keynes s animal spirits and the dynamic capabilities entrepreneurial owner manager leibenstein s x inefficiency is juxtaposed here with d ineffectiveness knowledge based theories of the firm consistent with cambridge conventions emerge intellectual exchange between strategic management and economics is encouraged to help improve the intuition behind models of firms and the economy

the impact of technology and structural change on export performance in nine developing countries summary this paper focuses on nine large developing countries structural decomposition analysis shows that they tend to concentrate innovative activities in industries stagnating at the world level international trends partly offset national improvements in patent shares the same occurs for world export shares although countries display greater adaptation to world demand econometric analysis suggests that technological activity is related to export gains in high technology sectors if a country expands in industries with increasing technological opportunities in medium technology sectors if it moves away from low opportunity sectors in low technology sectors if it is initially specialized in growing sectors in high tech and low tech sectors export performance is also affected by the growth of technical capabilities foreign direct investments productivity and the initial level of technical skills and in medium tech by the growth rates of foreign direct investments

state business relations and economic growth in sub saharan africa abstract this paper contributes to the literature on the determinants of economic growth in sub saharan africa by examining the effect of effective state business relations on economic growth for a panel of 19 sub saharan african countries for the period 1970 2004 we propose a measure that we argue captures the various dimensions of effective state business relations in sub saharan africa we then estimate standard growth regressions using dynamic panel data methods with this measure along with the more conventionally used measures of institutional quality such as degree of executive constraints the rule of law the degree of corruption and the quality of the bureaucracy our results show that effective state business relations contribute significantly to economic growth countries which have shown improvements in state business relations have witnessed higher economic growth controlling for other determinants of economic growth and independent of other measures of institutional quality

openness to international markets and the diffusion of standards compliance in latin america a multi level analysis abstract this study contributes to the debate on the role of openness to international markets for the diffusion of compliance with international standards in developing countries relying upon aggregated data for 1995 2005 as well as upon firm level and secondary data from the chilean salmon farming industry the determinants of iso 9000 and iso 14001 diffusion at country industry and firm level in latin american are analysed our evidence suggests that openness to international markets acts at different levels at both the country and industry level it creates awareness and access to new knowledge therefore providing economic incentives or penalisations for evaluating certification this effect competes and complements the deliberated efforts and policies in explaining diffusion of certification at firm level however openness to international markets alone does not provide sufficient opportunities to acquire the knowledge required to comply with these standards in this case standards compliance depends on firm s capability to use relational and search assets as well as on national and industrial efforts and policies to spread standards usage

public subsidies and the employment growth of high tech start ups assessing the impact of selective and automatic support schemes the aim of this article is to assess the impact of public subsidies on the employment growth of new technology based firms ntbfs contingent on i the type of policy scheme either selective or automatic and ii the age of the firms at the time of receipt of the subsidy for this purpose we analyze a sample composed of 536 italian independent ntbfs observed during a 10 year period 1994 2003 we estimate augmented gibrat law type dynamic panel data models using different techniques aimed at controlling for the potentially endogenous nature of public financing namely the generalized method of moments system fixed effect instrumental variable and inverse probability treatment weights estimators the results of the estimates show that selective support schemes had a larger impact on employment growth than automatic ones but only if they were awarded in the very early period of the recipient firms lives however selective subsidies awarded to young ntbfs are rare in italy calling into question the capability of the italian industrial policy to sustain the growth of the high tech entrepreneurial sector

managing technological development lessons from the newly industrializing countries this survey looks at the technological development of the newly industrializing countries to draw some important lessons for firms and governments in other developing countries first inventing products and processes is not at the center of the technological development needed for successful industrialization it is at the fringe what is at the center is acquiring the capabilities needed for efficient production and investment second some countries have overemphasized the drive for technological self sufficiency and paid a high price in poor productivity what makes the best economic sense is to combine foreign and local technological elements and to do this in a way that progressively develops local capabilities in areas where they can be more efficient third the acquisition of technological capability does not come merely from experience though experience is important fourth the economic environment through its influence on the technological efforts of firms is very important in determining the productivity of a country s resources

technological capabilities and industrialization abstract this paper reviews the implications for industrial strategy of recent research on technological capabilities at the firm and national levels after exploring the nature and determinants of microlevel technological development a simple framework for explaining the growth of national capabilities is set out based on the interplay of incentives capabilities and institutions each may suffer market failure and so require corrective intervention the experience of some industrializing countries is described to assess the validity of this framework it is concluded that interventions carefully and selectively applied are necessary for industrial success

a structuralist perspective on the role of technology in economic growth and development abstract this paper presents an integrated view of what is termed a structuralist perspective to economic growth and development that stands in contrast to the mainstream orthodox or neoclassical view in the structuralist view structural changes are causes of growth rather than outcomes of a process of capital accumulation and of rising per capita incomes moreover the growth process may be punctuated by periods of discrete shifts in resource allocation creative destruction and growth acceleration rather than being smooth throughout structural changes need not be automatic they require a skill specific infrastructure of new capabilities which when established generate new comparative advantages market failures may be pervasive due to problems of human capital accumulation critical mass and discrete choice among alternative growth paths thus in addition to creating a favorable environment for business and assuring through macroeconomic policy adequate investment successful growth may require an adequate industrial and technological policy particularly at nodes of structural change the paper surveys the structuralist insights appearing in the literature starting with the early postwar economic development literature and including recently developed formal models it also proposes a kinked or scalloped aggregate production function as a simple tool for structuralist analysis

innovation policy in an open economy a normative framework for strategic and tactical issues abstract in this paper we present a normative analysis of innovation policy grounded in traditional economic principles which responds to the schumpeterian critique of previous efforts in the neoclassical vein focusing directly on specific policy issues we pursue our analysis in two main directions investigating the role of government in developing an infrastructure for innovation and the optimal design of support schemes for r d projects the analysis suggests that while the structural and developmental issues stressed by the schumpeterian school are of fundamental importance identification of disparities between social and private gains the market failure approach provides an invaluable tool for understanding and formulating innovation policy focusing our attention on such factors as economics of scale the incidence of externalities and the supranormal profits offered by imperfectly competitive markets it provides a rational and realistic basis for anticipating where and how government intervention on behalf of industrial innovation is likely to be most effective we view our contribution as a step towards bridging the gap between the neoclassical mainstream of economic analysis and the practice of innovation policy

the limits of capital transcending the public financer private producer split in industrial r d abstract a near consensus has emerged supporting the public funding of industrial r d as a solution to a host of market failures however the common policy prescription urges government to go no further than minimal market enhancing intervention largely keeping the state to the role of financer of privately conducted r d by focusing on three general issues in the context of industrial r d trust coordination and motivation this article develops an argument for a more expansive government role two models of state intervention are at the center of the analysis public production of r d and state sponsorship of inter firm and inter organizational networks it is argued that both these models have distinct advantages as well as weaknesses in addressing common challenges to industrial r d production informed by the positive experiences of different states that have moved in recent years from high technology industries periphery to the center this article explains how the two models of state intervention address the various problems associated with pure private production it is concluded that while even advanced countries with well developed markets might find it advantageous to actively intervene in industrial r d the two models should especially be considered in cases of economies that suffer from weak market signals low retention of value added functions limited professional capacities and limited institutional thickness and networks

the value of operational flexibility in the presence of input and output price uncertainties with oil refining applications refining is indispensable to almost every natural resource based commodity industry it involves a series of complex processes that transform inputs with a wide range of quality characteristics into refined finished products sold to end markets in this paper we take the perspective of a profit maximizing refiner that considers upgrading its existing simple refinery to include intermediate conversion flexibility i e the capability of converting heavy intermediate components to light ones we present a stylized two stage stochastic programming model of a petroleum refinery to investigate the value drivers of conversion flexibility and the impact of input and output market conditions on its economic potential conversion flexibility adds value to refineries by either transforming a nonprofitable situation into a profitable one referred to as purchase benefit or improving profitability of an already profitable situation referred to as unit revenue benefit in a real data calibrated numerical study w

classifying technology policy from an evolutionary perspective abstract for the classification of technology policy in an evolutionary framework the taxonomy of mission and diffusion oriented policy design introduced by ergas ergas h 1987 the importance of technology policy in dasgupta p stoneman p eds economic policy and technological performance cambridge univ press cambridge is useful however ergas indirect method of identifying the respective policy style is only able to give a first and rough insight in the technology policy of a specific country to improve on that we developed a so called direct method aiming at a sound characterization of single policy measures and giving a more detailed picture about policy orientation to demonstrate the basic procedure of the suggested approach it is applied empirically on the german technology policy of the last 2 decades

parametric efficiency tests economies of scale and input demand in u s electric power generation duality theory has been applied increasingly in recent years to study the structure of production a major advantage of using duality theory is that systems of input demand equations can be derived by simple differentiation facilitating the use of flexible functional forms also use of duality theory makes it possible to choose a representation of the technology which has desirable properties for estimation such as exogeneity of the regressors however the use of a dual representation of production structure is appropriate only if the corresponding maintained hypothesis concerning economic behavior e g cost minimization or profit maximization is valid the perceived advantages of the dual approach to studying production structure have led to some applications in which the maintained hypothesis concerning economic behavior is unlikely to be appropriate for example neoclassical cost functions have been used to study the characteristics of production in regulated industries despite an extensive theoretical literature indicating that a profit maximizing regulated firm would not minimize costs subject to market prices 2 in this paper we propose a generalized cost function that retains the principal advantages of the neoclassical cost function but does not require that cost minimization subject to market prices be imposed as a maintained hypothesis in our model firms are assumed to base their production decisions on unobservable shadow prices which reflect the effects of regulation on the effective prices of inputs parametric tests for cost minimization are obtained by expressing shadow prices as functions of market prices the generalized cost function is estimated with data for regulated electric utilities the parametric restrictions corresponding to cost minimizing behavior subject to market prices are rejected implying that the use of a neoclassical cost function is not appropriate in this application 3

competitiveness indices and developing countries an economic evaluation of the global competitiveness report developing countries policy makers worry about national competitiveness and closely watch indices ranking international competitive performance this paper analyzes from a development economics perspective if competitiveness is a legitimate concern and if the leading indices deserve the attention they get it assesses the best known index the global competitiveness report of the world economic forum and finds deficiencies at several levels its definitions are too broad the approach biased and the methodology flawed many qualitative measures are vague redundant or wrong these weak theoretical and empirical foundations reduce the value of the indices for analytical or policy purposes

distribution sensitive innovation policies conceptualization and empirical examples abstract innovation is essential to economic growth however it appears that the ways in which we pursue innovation policies generate economic inequities in this paper we explore policies that could be devised and employed with the aim of increasing growth while taking into account economic distribution we call these policies distribution sensitive innovation policies dsip following an exploratory theoretical approach the paper focuses on a specific set of dsip which are focused on particular groups of disadvantaged producers and consumers we first categorize such programs into four types and then employ a comparative approach to analyze existing programs in terms of these types first in our primary case study israel and then using the united states germany and sweden as limited shadow cases to elaborate on the finding from our primary case we conclude by arguing that although these programs are currently driven primarily by a concern for economic efficiency and not distribution they show that our approach utilizing innovation policy to reach dual economic and social policy goals has potential for success

enterprise restructuring and embeddedness a policy and systems perspective this paper presents a dynamic analysis of technological and industrial policies directed to business sector restructuring in increasingly knowledge based economies it simultaneously considers policies which are aimed at promoting restructuring directly and policies aimed at influencing the facilitating structure of largely non business institutions and organizations this paper also offers an explicit analysis of the changing portfolio of policies recognizing the complementarity of both incentives and institutional development and the likelihood of having to adopt under a broad set of circumstances a changing portfolio of horizontal and target incentives policies programs copyright 2000 by oxford university press

teachers unions and wages in the 1970s unionism now pays this paper provides evidence that confirms the results of previous studies that teacher unionism produced relatively small wage gains during the early 1970s but it also shows that union gains increased substantially in the late 1970s the evidence is based on an application of two complementary research designs cross section wage level regressions and cross section wage change regressions to national samples of teacher data for 1974 75 and 1977 78 the authors conclude that the union nonunion wage differential among teachers reached 12 to 22 percent by the late 1970s and during the period 1974 78 the real wages of unionized teachers increased while those of nonunionized teachers declined they offer several possible explanations for these trends

resource flexibility with responsive pricing this article studies two types of flexibility used by firms to better respond to uncertain market conditions resource flexibility and responsive pricing we consider a situation in which a single flexible resource can be used to satisfy two distinct demand classes while the resource capacity must be decided based on uncertain demand functions the resource allocation as well as the pricing decision are made based on the realized demand functions we characterize the effects of two key drivers of flexibility demand variability and demand correlation assuming normally distributed demand curve intercepts demand variability creates opportunity costs and with fixed prices decreases the firm s profit we show that with the additional flexibility gained from responsive pricing the firm can maximize the benefits of favorable demand conditions and mitigate the effects of poor demand conditions ultimately profiting from variability positive demand correlation on the other hand remains undesirable under responsive pricing the optimal capacity of the flexible resource is always increasing in both demand variability and demand correlation this contrasts with the scenarios based on fixed prices highlighting the crucial difference that responsive pricing makes in the management of flexible resources we further quantify the value of flexibility for the firm and its customers by considering as a benchmark a firm relying on two dedicated resources the value of flexibility is most significant if the demand levels are highly variable and negatively correlated in such cases the firm benefits from demand variability due to responsive pricing while facing limited demand risk due to resource flexibility finally we endogenize the input price of the flexible resource by considering the pricing decision of the resource supplier

absorbing technological spillovers simulations in an evolutionary framework this paper offers a simulation analysis of firm strategies which differ by the degree of absorbing technical know how generated elsewhere it investigates the success of those firm strategies in a heterogeneous oligopoly setting in which firms compete by introducing new products and processes simulation results show that building up absorptive capacities tends to be a superior strategy in technologically heterogeneous environments reducing spillover effects leads to a slowdown of technological progress because cross fertilization effects are of minor relevance where markets competition is reduced the absorptive strategy tends to be only technologically superior copyright 1998 by oxford university press

exports of manufactures by developing countries emerging patterns of trade and location developing countries are rapidly increasing their shares of manufactured trade not just in labour intensive products but also in capital and skill intensive ones their shares are rising particularly rapidly in the high technology area however manufactured exports remain highly concentrated in the developing world with a few countries dominating all forms of export within the successful exporting countries there are significant differences in the technology content of exports these trends are difficult to explain with received trade theory even taking human capital into account or with reference to broad economic policies it is useful to bring in learning along with scale economies increasing returns and agglomeration as determinants of comparative advantage these factors imply market failures and so a role for policy in developing genuine comparative advantages this article suggests that emerging trade and location patterns in the developing work are explained by market imperfections and government policies to overcome them

union effects on productivity evidence from western u s sawmills the authors conjecture that previous studies have tended to overestimate the productivity of union firms relative to nonunion firms due to inadequate controls for output quality and input usage important omissions if the higher cost of unionized labor leads to less labor intensive products and techniques to avoid those problems this study examines a fairly standardized commodity lumber and controls for detailed product attributes and inputs an analysis of data from a survey administered by the authors shows that unionized sawmills were between 12 and 21 less productive than nonunionized mills in fiscal year 1986 as predicted when product quality and raw material usage are not included in the analysis the estimate of union productivity is biased upward

sectoral patterns of technical change towards a taxonomy and a theory abstract the purpose of the paper is to describe and explain sectoral patterns of technical change as revealed by data on about 2000 significant innovations in britain since 1945 most technological knowledge turns out not to be information that is generally applicable and easily reproducible but specific to firms and applications cumulative in development and varied amongst sectors in source and direction innovating firms principally in electronics and chemicals are relatively big and they develop innovations over a wide range of specific product groups within their principal sector but relatively few outside firms principally in mechanical and instrument engineering are relatively small and specialised and they exist in symbiosis with large firms in scale intensive sectors like metal manufacture and vehicles who make a significant contribution to their own process technology in textile firms on the other hand most process innovations come from suppliers these characteristics and variations can be classified in a three part taxonomy based on firms 1 supplier dominated 2 production intensive 3 science based they can be explained by sources of technology requirements of users and possibilities for appropriation this explanation has implications for our understanding of the sources and directions of technical change firms diversification behaviour the dynamic relationship between technology and industrial structure and the formation of technological skills and advantages at the level of the firm the region and the country

market stimulating technology policies in developing countries a framework with examples from east asia abstract this paper proposes an analytical framework for technology development based upon evolutionary approaches and drawing upon asian development strategies the analysis rests on the concept of market stimulating technology policies comprising a broad array of policies to promote industrial and technological development some market and others government determined these policies may be functional horizontal or vertical and can be analyzed at three levels national strategic and specific the paper suggests that strategic choices are involved at all stages that cannot be resolved entirely by recourse to free markets

optimal commodity trading with a capacitated storage asset this paper considers the so called warehouse problem with both space and injection withdrawal capacity limits this is a foundational problem in the merchant management of assets for the storage of commodities such as energy sources and natural resources when the commodity spot price evolves according to an exogenous markov process this work shows that the optimal inventory trading policy of a risk neutral merchant is characterized by two stage and spot price dependent basestock targets under some assumptions these targets are monotone in the spot price and partition the available inventory and spot price space in each stage into three regions where it is respectively optimal to buy and inject do nothing and withdraw and sell in some cases of practical importance one can easily compute the optimal basestock targets the structure of the optimal policy is nontrivial because in each stage the merchant s qualification of high selling and low buying commodity prices in general depends on the merchant s inventory availability this is a consequence of the interplay between the capacity and space limits of the storage asset and brings to light the nontrivial nature of the interface between trading and operations a computational analysis based on natural gas data shows that mismanaging this interface can yield significant value losses moreover adapting the merchant s optimal trading policy to the spot price stochastic evolution has substantial value this value can be almost entirely generated by reacting to the unfolding of price uncertainty that is by sequentially reoptimizing a model that ignores this source of uncertainty

public financing of innovation new questions economic theory justifies policy when there are concrete market failures the article shows how in the case of innovation successful policies that have led to radical innovations have been more about market shaping and creating through direct and pervasive public financing rather than market fixing the paper reviews and discusses evidence for this in three key areas i the presence of finance from public sources across the entire innovation chain ii the concept of mission oriented policies that have created new technological and industrial landscapes and iii the entrepreneurial and lead investor role of public actors willing and able to take on extreme risks independent of the business cycle we further illustrate these three characteristics for the case of clean technology and discuss how a market creating and shaping perspective may be useful for understanding the financing of transformative innovation needed for confronting contemporary societal challenges

knowledge and urban economic development an evolutionary perspective knowledge is considered as a main source of economic growth for nations and regions it is the basis for technological development and for increasing the productivity of capital and labour this pa

integrated optimization of procurement processing and trade of commodities we consider the integrated optimization problem of procurement processing and trade of commodities in a multiperiod setting motivated by the operations of a prominent commodity processing firm we model a firm that procures an input commodity and has processing capacity to convert the input into a processed commodity the processed commodity is sold using forward contracts while the input itself can be traded at the end of the horizon we solve this problem optimally and derive closed form expressions for the marginal value of input and output inventory we find that the optimal procurement and processing decisions are governed by price dependent inventory thresholds we use commodity markets data for the soybean complex to conduct numerical studies and find that approximating the joint price processes of multiple output commodities using a single composite output product and using the approximate price process to determine procurement and processing decisions is near optimal compared to a myopic spread option based heuristic the optimization based dynamic programming policy provides significant benefits under conditions of tight processing capacities and high price volatilities finally we propose an approximation procedure to compute heuristic policies and an upper bound to compare the heuristic against when commodity prices follow multifactor processes

did lower unionization in the united states result in more flexible industries do unions really impede manufacturers output flexibility if so in what ways the authors propose a methodology for quantifying george stigler s concept of output flexibility and for decomposing the effects of unionization on average cost differences between union and non union plants using a recently compiled data set on u s three digit manufacturing industries from 1973 to 1996 they adapt this methodology to simulate the effects of unionization on flexibility and average costs for average size plants simulation results indicate that higher unionization was associated with higher average costs and lower flexibility than low unionization higher average costs appear to have been primarily due to higher fixed costs such as higher benefits

work rules featherbedding and pareto optimal union management bargaining this article examines a model of semiefficient bargaining in which the union and the firm bargain over wages and various types of work rules the results are compared to the outcomes that are associated with fully efficient bargaining i e over wages and the level of employment and bargaining solely over wages

testing efficiency hypotheses in joint production a parametric approach n recent years a great deal of research has been directed to the modelling and measurement of technical and allocative efficiency in production with few exceptions this research has been restricted to single product firms however recent developments in duality theory have facilitated the extension of this research to multi product firms the main purpose of this paper is to develop a model of the multiproduct firm in which the possibilities of both technical and allocative inefficiency are incorporated in an econometrically useful way the first model we develop includes a nonneutral2 type of technical inefficiency and three distinguishable types of allocative inefficiency output mix input mix and scale each type of inefficiency is costly to the firm in the sense that each causes a reduction in profit beneath the maximum value attainable under full efficiency the cost of each type of inefficiency depends on the magnitude of the inefficiency and the structure of the underlying production technology in the second model we develop technical inefficiency remains nonneutral but allocative inefficiency is not generally decomposable into output mix input mix and scale components however both technical and allocative inefficiency remain costly to the firm the cost of each type of inefficiency depending on its magnitude and the structure of the underlying production technology we model the technology of a competitive profit maximizing multi product firm with the dual profit function this enables us to use hotelling s lemma to generate a system of profit maximizing output supply and input demand equations these equations are then modified to allow for the possibility of technical and three types of allocative inefficiency a virtue of using the profit function to represent production technology is that it permits a straightforward comparison of maximum profit under full efficiency with actual profit and with the profit that would result from any combination of the four types of inefficiency this enables us to allocate the cost of inefficiency to each of four components our model of inefficiency is parametric and is embedded in a generalized leontief profit function although any flexible specification of the profit function can be used the model is developed in sections ii iv estimation of the model is considered in section v an empirical example designed to illustrate the workings of the model is discussed in section vi section vii concludes

a catalytic and evolutionary approach to horizontal technology policies htps abstract this paper presents an evolutionary framework for horizontal technology policies htps especially market friendly ones involving project based incentives e g rd and they complement the more specific and well known selective and vertical policies aimed at individual sectors and technologies the analysis is conducted within a learning to innovate framework with emphasis on collective organizational learning search and market building the outcome is a technology policy cycle with distinct infant growth and mature phases proactive generation of a critical mass of projects for efficient learning and diffusion of innovation routines becomes the aim of the infant phase while the mature phase of the policy should focus on policy restructuring including drastic reductions in the support of routi projects and enhanced support of more complex types of innovation the paper also emphasizes the importance of a neutrality component in incentives in the infant phase of increasing selectivity and of building policy capabilities for efficient policy design and implementation

agency problem institutions and technology policy explaining taiwan s semiconductor industry development abstract taiwan has made significant progress in the semiconductor industry with government agencies and bureaucrats as the driving forces over the past 30 years taiwan s impressive achievement in the semiconductor industry clearly indicates that the government failures and agency problem usually associated with deep government involvement did not occur in taiwan why is that the case this paper proposes a principal agent framework for technology policy and applies the framework to discuss the institutional arrangements through which bureaucrats were controlled effectively in executing the semiconductor industry policies in taiwan by analyzing the institutional and organizational arrangements taiwanese leaders made to mitigate the agency problem this paper brings bureaucrats into the popular developmental state theory and emphasizes that the success of state intervention should not be taken for granted and it also brings politics into technology policy analysis and stresses the importance and complexity of agency problem in technology policy

the east asian miracle study does the bell toll for industrial strategy the world bank s east asian miracle study1 has been anticipated with considerable interest by the development community it was intended not least by the japanese government that financed it to be an objective re examination of the role of government interventions in economic particularly industrial development it reflected a widespread unease that the bank was too strongly committed to a neoliberal view of the development process 2 this approach evolved over the 1980s drawing mainly upon evidence from east asia and fuelled by a shift in mainstream economics and political perceptions in the leading developed countries it formed the basis of the bank s subsequent lending and policy advice and was at the core of the structural adjustment programs that have shaped policy in many developing countries this review confines itself to the study s analysis of industrial policy concentrating on the approach and the analysis of the established nies the four tigers

the transformation of competitive advantage in east asia an analysis of technological and trade specialisation summary in recent years there has been considerable interest in the relationship between a country s export competitiveness and the role played by technology in strengthening and maintaining competitive advantage a central feature of recent empirical work mainly focused on the oecd countries has rested on examining patterns of export and technological specialization between economies and sectors this paper moves attention away from the advanced industrialized economies to examine the trends for trade and technological specialization among the east asian developing economies in particular two aspects of specialization are examined first to what extent have patterns of competitive advantage changed over time and second to measure the relationship between patterns of trade and technological specialization important differences are found in the patterns of specialization and in the relationship between them among the advanced east asian economies and those catching up

differences between learning processes in small tigers and large dragons learning processes of two color tv ctv firms within china abstract the main purpose of this paper is to describe the firm level learning processes by indigenous firms in china identify the differences between learning processes in small tigers and large dragons such as china this paper first sketches the history of the china s color tv ctv industry in which learning processes take place to put the companies case studies into context then this paper examines closely the actual experience of two major chinese firms in their practice of technological learning finally this paper finds that the most significant difference between learning processes in chinese firms and these four other tigers firms is that firms from four other tigers usually rely almost exclusively on export markets but chinese firms are mostly local market focused a novel contribution of this paper is its analysis of the issue the two chinese firms have followed not an export growth path but an local market focused path which proved to be much less successful in countries such as india latin america africa and former soviet union the success of this process in china hinges on the five critical factors 1 a number of multinational firms are increasing their presence in china 2 there is vibrant competition among domestic firms 3 the huge domestic market is a key incentive for local firms to invest in technological learning 4 chinese central government takes a phased approach to liberalization of the domestic market 5 there have a number of risk taking entrepreneurs with strategic version who make investment decisions on learning these factors should not be easily available to other developing countries in this regard china s experience has limited application to other developing countries

optimal diversity increasing returns versus recombinant innovation abstract choices regarding diversity play an important role in economics and innovation management but often remain implicit once made explicit the objectives of efficiency and diversity are usually posed as in conflict as efficiency relates positively and diversity negatively to various increasing returns to scale in markets such a perspective however neglects the benefits of diversity in terms of realizing system improvements through recombinant innovation or spillovers the latter implies a contribution of diversity to long term efficiency dominant economic approaches that address diversity such as option value and real options theories regard benefits of diversity as exogenous this paper proposes a simple model of variable endogenous diversity to analyse the optimal balance between increasing returns to scale and recombinant innovation it is discussed under which conditions one of four solutions is optimal complete specialization regardless of which option complete specialization in one specific option symmetric diversity perfect balance and asymmetric diversity the results give rise to a number of policy insights

supply management in multiproduct firms with fixed proportions technology this paper studies the supply management of a primary input where this input gives rise to multiple products in fixed proportions my objective is twofold first i study fixed proportions technol

the functions of technology infrastructure in a competitive economy abstract governments of industrialized nations play varied but important roles in providing the diverse technology infrastructure that supports a modern competitive economy an understanding of the structure and impacts of these roles as well as efficiency differences among alternative implementation schemes is particularly important at this time as competing industrialized nations are revamping their technology infrastructures in response to major shifts in thescope as well as the content of their growth strategies these shifts in scope can be described as evolutionary changes from single stage to multi stage strategies in that several modes of technology based competition are simultaneously pursued that is whereas an economy may have focused on innovation manufacturing high volume or niche markets etc most if not all of these must be pursued together in the future in order to diversify risk and achieve economies of scope effective implementation of the more complex multi stage growth strategy requires a consensus model of the appropriate functions for infrastructure and its institutions such a consensus model is necessary to efficiently guide strategic planning in both industry and government in particular a conceptual basis is needed for defining the critical interfaces between the government and industry roles including effective long range planning communication and cooperation the required technology infrastructure policy model is derived from a microeconomic model of the typical technology based industry existing national strategies have demonstrated the importance of efficiency at the production and market development stages as well as at the r d stage but the trend is towards promoting simultaneous efficiency at all these stages that is the model and the derived infrastructure functions must cover all stages and interfaces in the technology and related product life cycles

the effectiveness of tax incentives for r d i in developing countries the case of argentina abstract there is increasing interest in developing countries in granting tax incentives in order to encourage private investment in research development and innovation r d i however evidence on the effectiveness of such schemes in achieving policy goals in weak innovation systems contexts is still very scarce this paper aims at narrowing this knowledge gap by focusing on the effects of a tax credit scheme for promoting firm level innovation investment in argentina the analysis applies dynamic panel data techniques to a novel dataset merging several waves of the national innovation survey collected by the national institute of statistics and censuses the results suggest that the elasticity of r d i investment to its user cost of capital is a greater than 1 in absolute terms which implies that the intervention has been effective in increasing firms innovation efforts however effects vary depending on the type of innovation investment being subsidized industrial sector and size of the firm moreover when innovation investment is divided into innovation related capital goods expenditures and only r d the results suggest that the absolute value of the elasticity for the r d component of the innovation investment is less than 1 these heterogeneous effects should be exploited for further policy design

evidence on the impact of state government on primary and secondary education and the equity efficiency trade off abstract state governments may affect the productivity of primary and secondary education in two ways first various regulations imposed on local school districts are expected to make schools less efficient second state efforts to reduce inequality in education spending make it more difficult for voters to increase school quality which should lead to less voter monitoring of schools and thus less efficient schools our empirical analysis of state scholastic aptitude test sat scores from 1987 to 1992 provides evidence on both effects the state s revenue share which captures state meddling in local decisions has the expected negative impact on school efficiency but our novel result is that state induced spending equalization also lowers average test scores but has had little if any effect on reducing the disparity in student achievement these results bring into question policy efforts designed to shift education responsibilities from local governments to state and federal governments

the nature and importance of economic competence this chapter takes on three tasks 1 to survey the study of economic competence as it appears in economic literature 2 to give a meaningful and operational definition of economic competence as one of the factors contributing to macroeconomic growth and 3 to suggest a methodology pursued in greater depth elsewhere to generalize and link economic competence as defined at the micro firm individual level to macroeconomic growth through simulation on the micro based macroeconomic model of the swedish economic system moses by introducing knowledge in the micro setting of firm organizational competence we arrive at a very different interpretation measured at the macro industry level from that of standard neoclassical theory

is co invention expediting technological catch up a study of collaboration between emerging country firms and eu inventors firms from emerging countries are going global and europe is attracting around one third of their direct outward investments growing internationalization constitutes an opportunity for technological catch up in this paper we analyze brazilian indian and chinese cross border inventions with european union eu 27 inventors during the period 1990 2012 our results suggest that these inventions represent an opportunity for emerging country firms to accumulate technological capabilities access frontier knowledge and appropriate the property rights of co inventions this paper contributes to understanding catching up by emerging country firms c 2015 elsevier ltd all rights reserved

coordination failures and government policy a model with applications to east asia and eastern europe abstract poor countries must specialize in standardized labor intensive commodities middle income countries may have a richer menu of options if their labor force is reasonably well educated and skilled the multiplicity of equilibria is due to a coordination problem inherent in activities that require specialized inputs if no intermediate inputs are presently produced there may be little incentive for any single firm to do so on its own the economy may get stuck in a low wage low tech equilibrium an investment subsidy or a minimum wage policy can enhance welfare by moving the economy to a superior equilibrium

the state and industrial strategy abstract the debate about the role of the state in promoting industrial growth in developing economies is reviewed we begin with the ideas of the early development economists of the 1950s and 1960s then take up two waves of neoclassical criticism respectively emphasizing the primacy of the market and the lack of autonomy and competence of the developmentalist state and sketch the elements of a countercritique the fact that all successfully developing economies apply industrial strategies incorporating institutional change is emphasized and boundary conditions and lessons from experience which delimit sensible strategic choices are pointed out

integrating long term and short term contracting in beef supply chains this paper analyzes the optimal procurement processing and production decisions of a meat processing company hereafter a packer in a beef supply chain the packer processes fed cattle to produce two beef products program premium boxed beef and commodity boxed beef in fixed proportions but with downward substitution of the premium product for the commodity product the packer can source input fed cattle from a contract market where long term contracts are signed in advance of the required delivery time and from a spot market on the spot day contract prices are taken to be of a general window form linear in the spot price but capped by upper and lower limits on realized contract price our analysis provides managerial insights on the interaction of window contract terms with processing options we show that the packer benefits from a low correlation between the spot price and product market uncertainties and this is independent of the form of the window contract although the expected revenues from processing increase in spot price variability the overall impact on profitability depends on the parameters of the window contract using a calibration based on the report by the gipsa grain inspection packers and stockyards administration 2007 gipsa livestock and meat marketing study vol 3 fed cattle and beef industries report u s department of agriculture washington dc this paper elucidates for the first time the value of long term contracting as a complement to spot sourcing in the beef supply chain our comparative statics results provide some rules of thumb for the packer for the strategic management of the procurement portfolio in particular we show that higher variability higher spot price variability product market variability and correlation increases the profits of the packer but decreases the reliance on the contract market relative to the spot market this paper was accepted by yossi aviv operations management

unionization and cost of production compensation productivity and factor use effects unionization affects cost of production through compensation premia technology shifts and deviations from the least cost combination of inputs the first two are familiar but the last is not this article distinguishes the three effects illustrates the factor use effect and suggests that it may resolve several apparent inconsistencies union induced cost effects appear larger than those implied by union compensation and productivity differentials union compensation and productivity differentials suggest a larger effect on labor intensity of output than is observed and employers complain that union work rules reduce productivity when there is little evidence that this is so

elements of a schumpeterian catalytic research and innovation policy in this article we take a fresh look at research and innovation r i hereinafter policy and define a new notion schumpeterian catalytic r i policy such policy style amends and enriches the new mission oriented framework for innovation policy by assigning more weight to the microeconomic dimension of private actors actions and by being more concerned with the temporary nature of interventions we relate our argument to recent empirical trends in productivity dynamics and innovative activities these suggest that an innovation slowdown is taking place and consequently that a renewed interest in the re direction rather than on the intensity of innovative activities is key to the design of r i policy capable to tackle current challenges we use the evidence to build a schematic theoretical framework to inform policy design and we outlined the defining features of our proposed policy style

commodity prices interest rates and the dollar this paper sheds light on recent fluctuations in commodity prices we investigate whether a decline in real interest rates and the us dollar contributes to higher commodity prices and whether commodity prices display overshooting behavior in response to changes in real interest rates we analyze the behavior of real prices of crude oil food metals and industrial raw materials the analysis is based on structural var models estimated on quarterly data over the period 1990q1 2007q4 our results suggest that commodity prices increase significantly in response to reductions in real interest rates moreover oil prices and prices of industrial raw materials tend to display overshooting behavior in response to such interest rate changes the evidence also suggests that a weaker dollar leads to higher commodity prices shocks to interest rates and the dollar are found to account for substantial shares of fluctuations in commodity prices

mapping public support for innovation a comparison of policy alignment in the uk and france this paper proposes and tests a three dimensional model of public support design as a framework to compare public incentives for innovation in firms through time and across countries and consequently to compare forms of policy alignment of innovation objectives in an economy using data on 149 french and british policy programmes from the early 1980s to 2002 this paper shows that policy makers implement programmes within a different three dimensional design space in order to align several distinctive objectives and consequently strengthen the impact of governmental measures moreover as the objectives of the national players and policy makers evolved the portfolio of innovation policies also evolved in their separate ways nevertheless some similar trends are also observed

innovative opportunity pursuit human capital and business ownership experience in an emerging region evidence from ghana this study explores whether an entrepreneur s ability to assemble and leverage human capital particularly specific human capital relating to prior business ownership experience is associated with seven types of product and work practices innovation in an emerging region namely ghana logistic regression estimation revealed that portfolio entrepreneurs were more likely than novice entrepreneurs to report innovation tried multinomial logistic regression analysis revealed that portfolio entrepreneurs were more likely than other entrepreneurs to report innovation tried and introduced if the goals of policy are to increase the quality of new business start ups and maximize investment returns there is a case to target assistance to portfolio entrepreneurs

policy mixes for sustainability transitions an extended concept and framework for analysis reaching a better understanding of the policies and politics of transitions presents a main agenda item in the emerging field of sustainability transitions one important requirement for these transitions such as the move towards a decarbonized energy system is the redirection and acceleration of technological change for which policies play a key role in this regard several studies have argued for the need to combine different policy instruments in so called policy mixes however existing policy mix studies often fall short of reflecting the complexity and dynamics of actual policy mixes the underlying politics and the evaluation of their impacts in this paper we take a first step towards an extended interdisciplinary policy mix concept based on a review of the bodies of literature on innovation studies environmental economics and policy analysis the concept introduces a clear terminology and consists of the three building blocks elements policy processes and characteristics which can be delineated by several dimensions based on this we discuss its application as analytical framework for empirical studies analyzing the impact of the policy mix on technological change throughout the paper we illustrate the proposed concept by using the example of the policy mix for fostering the transition of the german energy system to renewable power generation technologies finally we derive policy implications and suggest avenues for future research

recent evolutionary theorizing about economic change this famous passage from marshall s principles of economics it first appeared in the fifth edition which came out in 1907 nicely brings out two issues which are as germane to economics today as they were when marshall wrote the first is the heavy reliance by economists in their formal theorizing on the notion of equilibrium the other is the appeal that biological conceptions3x201d have for many economists particularly when their focus is on economic change

union effects on teacher productivity this paper examines the effect of collective bargaining on several factors known to be determinants of student achievement in the public schools particularly its effect on the teacher s allocation of time among various activities estimates based on a national survey show that bargaining appears to reduce time spent in instruction to increase the level of education of teachers and to increase the number of administrators all differences associated with lower student achievement on the other hand bargaining tends to increase the time teachers spend in class preparation the experience level of teachers and the teacher student ratio differences associated with higher student achievement the net effect of collective bargaining on teacher productivity is therefore not clear at this time

competitiveness and industrial policy from rationalities of failure towards the ability to evolve this article elaborates a dynamic rationale of industrial policy focusing on how to strengthen the socio economic system s ability to evolve i e how to achieve high real income together with qualitative change it highlights that the ubiquitous rationalities of failure be it of markets governments or systems are rooted in a peculiar habit of accepting hypothetical perfect states as normative benchmarks in contrast a dynamic logic of intervention should start from the question what the system aims to accomplish combining the structuralist ontology of micro meso and macro with the functional principles of evolutionary change the paper proposes a general typology of economic policies based on their respective contributions to the system s ability to evolve

on the contract curve a test of alternative models of collective bargaining the traditional model of collective bargaining confines unions to settlements constrained by the employer s labor demand curve but an alternative model places wage employment outcomes on a contract curve that extends beyond the labor demand curve this paper derives a multidimensional hedonic contract curve model in which employment security provisions are used to maintain efficient bargains outside the employer s demand curve and distinguishes empirically between the contract curve and demand constraint models using data for public school teachers in new york state estimates clearly support the contract curve model over the demand constraint model by linking the gap between compensation and the value of the marginal product to the strength of employment security provisions

optimal control and equilibrium behavior of production inventory systems the relationship between commodity inventory and short term price variations has received considerable attention but the understanding has been limited to single stage cross sectional relation in this paper we aim to deepen our understanding of the inventory price relationship in two dimensions across time and across production stages we first examine an individual firm controlling production and two stages of inventory under uncertain input and output prices and operating costs we next establish and characterize the rational expectations equilibrium for an economy in which competitive production firms link a raw material market and a finished goods market with uncertain and price sensitive supply and demand we characterize the dynamics of inventory market price and gross margin based on theoretical analysis simulation and empirical evidence from the petroleum industry we find that inventory fluctuations lag behind price variations and the length of the lags depend on how far the inventory is from the source of the supply or demand shocks we also find that shocks are both dampened and delayed when propagating through the production stages and that shocks have a prolonged effect on inventories and prices at both stages

unionized construction workers are more productive this paper presents evidence on the effect of unionism on productivity in construction the linkages are distinct from those studied previously in industrial settings apprenticeship training and hiring halls probably raise union productivity while jurisdictional disputes and restrictive work rules lower it using brown and medoff s methodology union productivity measured by value added per employee is 44 to 52 percent higher than nonunion the estimate declines to 17 to 22 percent when estimates of interarea construction price differences are used to deflate value added occupational mix differences and possibly apprenticeship training account for 15 to 27 percent of this difference

impacts of government incentives towards industrial innovation an analysis of the federal programme funding r d personnel in the federal republic of germany abstract against a background of deteriorating national and international economic conditions increasing importance is being attached by political administrations to the innovative capacities of small and medium sized firms with respect to the employment situation and to international competitiveness consequently government support of research development and innovation in these companies has taken a marked upward turn since the late seventies both in the federal republic of germany and in other industrialized western countries the actual impacts of some of these programmes are at present under study by the fraunhofer institut fur systemtechnik und innovationsforschung isi this paper is an outline of the results of a study of the largest current programme funding r d and innovation in small and medium sized firms by offering grants towards the costs of r d personnel the impact analysis is being conducted in two rounds the first round of studies which is the subject of this report took place in 1980 1981 and was designed to examine the discernible short term effects and characteristics of the programme the second round is planned for 1983 1984 as a summary of the impacts of the programme over the first five years of its term of effect the subjects of investigation are the quantitative and qualitative changes in r d activities caused by the programme in the firms under study and the contribution the programme can make to strengthen innovative and competitive capabilities the conditions underlying the programme are reviewed critically especially in order to see whether the barriers to innovation and the weak spots assumed did in fact exist in the firms examined the administrative management free rider effects and factors restricting impacts are investigated along with such questions as whether firms located in peripheral regions were reached by the programme to the same extent as firms in conurbation areas furthermore the reasons for non participation of firms are analyzed the example of the federal programme funding r d personnel thus is used in this impact analysis in an attempt to provide empirical data on the significance the range and the limits of such a government instrument promoting r d and innovation in small and medium sized firms

teacher unions and the cost of public education do teacher unions affect the cost of public education based upon data from two national surveys and holding measures of educational output and other factors constant the authors of this paper find that teacher unions raise costs by 7 to 15 percent the estimated differential is not reduced by treating unionization as endogenous by distinguishing between large and small districts or by distinguishing between districts in large and small cities the union effect on cost works through teacher compensation production technology and factor use and is borne primarily by taxpayers with little or no effect on average student achievement

the value of flexibility in make to order systems the effect of demand correlation we consider a manufacturer of mass customized modular products who orders components under demand uncertainty and sets prices produces to order and trades excess components in a secondary market after this uncertainty is resolved the sequence of events reflects in a parsimonious fashion the considerable reduction in demand uncertainty between the procurement stage and the selling season typical of industries with long supply lead times and short product life cycles we prove that in contrast to conventional wisdom the value of production flexibility and expected profit increase with demand correlation if and only if commonality between the corresponding products does not exceed a threshold we also prove that the value of flexibility and expected profit may each increase or decrease with demand variability depending on demand correlations and component commonalities across the entire product line finally we prove that when demand shocks are independent the optimal product prices are positively correlated if and only if the degree of commonality between the corresponding products exceeds a threshold

co production processes with random yields in the semiconductor industry a wide variety of manufacturing operations can be characterized as co production with substitutable demand that is there are many situations in which the availability of two or more items are related and because of randomness in either supply or demand it can be advantageous to substitute one of these items for another our research was motivated by the semiconductor industry where chips are produced in large batches because of the presence of randomness in the process individual chips in a given batch can perform differently because some customers have stricter specifications than others chips within the same batch can be classified and sold as different products according to their measurable performance we model the production and inventory problem as a stochastic dynamic program in which the objective is to minimize the costs of meeting contractual obligations after developing heuristic methods of solving the problem in practice we validate them against a lower bound on the cost of an optim

operational flexibility and financial hedging complements or substitutes we consider a firm that invests in capacity under demand uncertainty and thus faces two related but distinct types of risk mismatch between capacity and demand and profit variability whereas mismatch risk can be mitigated with greater operational flexibility profit variability can be reduced through financial hedging we show that the relationship between these two risk mitigating strategies depends on the type of flexibility product flexibility and financial hedging tend to be complements substitutes i e product flexibility tends to increase decrease the value of financial hedging and vice versa financial hedging tends to increase decrease the value of product flexibility when product demands are positively negatively correlated in contrast to product flexibility postponement flexibility is a substitute to financial hedging as intuitively expected although our analytical results assume perfect flexibility and perfect hedging and rely on a linear approximation of the value of hedging we validate their robustness in an extensive numerical study

pricing and operational recourse in coproduction systems coproduction systems in which multiple products are produced simultaneously in a single production run are prevalent in many industries such systems typically produce a random quantity of vertically differentiated products this product hierarchy enables the firm to fill demand for a lower quality product by converting a higher quality product in addition to the challenges presented by random yields and multiple products coproduction systems often serve multiple customer classes that differ in their product valuations furthermore the sizes of these classes are uncertain employing a utility maximizing customer model we investigate the production pricing downconversion and allocation decisions in a two class stochastic demand stochastic yield coproduction system for the single class case we establish that downconversion will not occur if prices are set optimally in contrast we show that downconversion can be optimal in the two class case even if prices are set optimally we consider the benefit of postponing certain operational decisions e g the pricing or allocation rule decisions until after uncertainties are resolved we use the term recourse to denote actions taken after uncertainties have been resolved we find that recourse pricing benefits the firm much more than either downconversion or recourse allocation do implying that recourse demand management is more valuable than recourse supply management special cases of our model include the single class and two class random yield newsvendor models