Ana Paula Cusolito

Faraway or nearby ? domestic and international spillovers in patenting and product innovation

The diffusion of knowledge plays a central role in endogenous growth theories. Simply put, in these models new knowledge can be generated from preexisting knowledge. In other words, existing knowledge is a pure public good, which can benefit any economic agent anywhere. More generally, endogenous growth theories rely on a broad set of assumptions that have not been tested sufficiently, especially for developing economies. The scope and nature of knowledge spillovers is, however, important for policy, because the presumed positive spillovers can justify government intervention (if the spillovers are localized) or laissez faire (if the spillovers are international). This paper empirically assesses the scope and direction of knowledge spillovers in national patenting and, separately, product innovation by firms. The first set of exercises tests whether the cumulative knowledge specifications of the knowledge production function can explain international patterns of patenting or whether own research and development is necessary to produce patents. The second set of exercises analyzes whether firm product-quality upgrading and the introduction of new products depend on product innovation within industries, within or across countries. The evidence supports the view that existing stocks of knowledge, domestic and foreign, enhance national innovation and entrepreneurship in the form of product innovation. More specifically, the evidence suggests that within-country and international knowledge spillovers are positive, but international spillovers can be negative for firms that are far from innovative firms in terms of productivity. The results depend on the concept of ?distance? between countries and firms.

The additionality impact of a matching grant program for small firms : experimental evidence from Yemen

ABSTRACT Matching grants are one of the most common types of private sector development programmes used in developing countries. But government subsidies to private firms can be controversial. A key question is that of additionality: do these programmes get firms to undertake innovative activities that they would not otherwise do, or merely subsidise activities that would take place anyway? Randomised controlled trials (RCTs) can provide the counterfactual needed to answer this question, but efforts to experiment with matching grant programmes have often failed. This article uses an RCT of a matching grant programme for firms in Yemen to demonstrate the feasibility of conducting experiments with well-designed programmes, and to measure the additionality impact. In the first year, the matching grant is found to have led to more product innovation, firms upgrading their accounting systems, marketing more, making more capital investments and being more likely to report their sales grew.

Technology Adoption and Factor Proportions in Open Economies: Theory and Evidence from the Global Computer Industry

Theories of international trade assume that all countries use similar and exogenous technologies in the production of any good. This paper relaxes this assumption. The marriage of literatures on biased technical change and trade yields a tractable theory, which predicts that differences in factor endowments and intellectual property rights bias technical change toward particular factor intensities, and thus unit factor input requirements can vary across economies. Using data on net exports of a single industry, computers, intellectual property rights and factor endowments for 73 countries during 1980-2000, the paper shows that once technological choices are considered, countries with different factor endowments can become net exporters of the same product.

Can Government Intervention Make Firms More Investment-Ready? A Randomized Experiment in the Western Balkans

Innovative start-ups and SMEs in developing and transition countries often have good ideas, but may not have these ideas fine-tuned to the stage where they can attract outside funding. This is the case in the Western Balkans, where there is a perceived lack of investment readiness of innovative start-ups to be in a position where they can compete for, and take on, outside equity.Investment Readiness Programs are a relatively new intervention that are intended to provide a comprehensive approach to overcoming the constraints to firms receiving outside investment through a mix of individualized training, mentoring and coaching, at an intensity that is sufficient to make firms more investment-ready, while maintaining a cost that is low enough to be scalable to large numbers of firms. These programs have now been used in the U.S. by the National Science Foundation, and by several government agencies in Europe (e.g. The UK Government’s Small Business Service and Enterprise Ireland), along with pilot programs in Romania and Malaysia. However, to date there is no causal evidence as to their effectiveness.

Corporate Governance and Public Corruption

Corporate governance in the private sector and corruption are important for economic development and private sector development. This paper investigates how corporate governance in private-sector media companies can affect public corruption. The analytical framework, based on models of corporate governance, identifies two channels through which media ownership concentration affects corruption: an owner effect, which discourages corruption and a competition-for-control effect that enhances it. When the ownership structure of a newspaper has a majority shareholder, the first effect dominates and corruption decreases as ownership becomes more concentrated in the hands of majority shareholders. Without majority shareholders, the competition-for-control effect dominates and corruption increases with the concentration of ownership of the media company. Thus, the paper shows that cases of intermediate media-ownership concentration are the worst at promoting public accountability, while extreme situations, where the ownership is completely concentrated or widely held, can result in similar and lower levels of corruption.