Claudio Fassio

Globalization and the Knowledge-Driven Economy

The study implements the Schumpeterian notion of creative reaction to articulate and test the hypothesis that the shift to the knowledge economy in advanced economies is the result of the creative reaction of firms, caught in out-of-equilibrium conditions by the fast globalization of product and factor markets since the last decade of the 20th century. Advanced countries specialized in the generation and exploitation of knowledge because of its relative abundance stemming from their sophisticated knowledge governance mechanisms and the large stock of knowledge. In turn, this had strong positive effects on total factor productivity. The empirical analysis confirms that in advanced economies the specialization in knowledge-based activities substituted for the previous specialization in mass manufacturing activities supporting the increase of total factor productivity. The new specialization in knowledge-intensive activities has been stronger in cases where patent activities have been more intense and the exposure to international trade and the revenue per capita have been larger.

How similar is innovation in German, Italian and Spanish medium-technology sectors? Implications for the sectoral systems of innovation and distance-to-the-frontier perspectives

This study analyzes innovation activities in medium-technology sectors in Germany, Italy and Spain and checks whether cross-country similarities or differences prevail. The results have important implications for the Sectoral Systems of Innovation and the Distance-to-the-Frontier frameworks. While the Sectoral Systems of Innovation predicts the existence of technology-related similarities in innovative patterns in the same sectors across countries, the Distance-to-the Frontier suggests the existence of relevant differences related with the level of technological development of each national sector. Using Community Innovation Survey data and adapting an econometric strategy first devised by Griffith, Huergo, Mairesse and Peters [Innovation and Productivity Across four European Countries, Oxford Review of Economic Policy, 22(4), 483–498, 2006], I test whether similarities or differences prevail across country in different features of innovation activity. The results show that relevant differences between the three countries exist in the intensity of R&D activities and in the economic impact of different types of innovations, providing support to the Distance-to-the-Frontier hypothesis. On the contrary, cross-country similarities emerge among the sources of knowledge used to develop innovations, in line with the Sectoral Systems of Innovation framework. The results highlight the importance to take into account both frameworks for a useful analysis of innovation within sectors and across countries.

The role of external knowledge(s) in the introduction of product and process innovations

This paper investigates the heterogeneity of the sources of external knowledge and their differentiated effects on process and product innovations respectively. The results of the empirical investigations show that the upstream vertical sources of external knowledge from suppliers exert a strong and positive role on the introduction of process innovations, whereas horizontal and downstream vertical sources stemming respectively from competitors and customers have stronger effects on the introduction of product innovations. These results support the hypothesis that the matching between sources of external knowledge and types of innovation is necessary to implement successful innovation strategies. The study suggests that the strategic decisions of R&D managers in innovation practices should take in greater consideration the availability of the differentiated sources of external knowledge in the system in which firms are embedded.

Human resources and innovation: total factor productivity and foreign human capital

The objective of this paper is to analyse the role of migrants in innovation in Europe. We use Total Factor Productivity as a measure of innovation and focus on the three largest European countries – France, Germany and the United Kingdom – in the years 1994-2007. Unlike previous research, which mainly employs a regional approach, we analyse the link between migration and innovation at the sectoral level. This allows us to measure the direct contribution of migrants in the sector in which they are actually employed. Moreover, it allows a distinction between the real contribution of migrants to innovation from possible inter-sectoral complementarities, which might as well foster innovation. We control for the different components of human-capital, such as age, education and diversity of origin. To address the possible endogeneity of migration we draw on an instrumental variable strategy originally devised by Card (2001) and adapt it at the sector level The results show that overall migrants are relevant in all sectors, but some important differences emerge across sectors: highly-educated migrants show a larger positive effect in the high-tech sectors, while middle- and low-educated ones are more relevant in manufacturing. The diversity of countries of origin contributes to innovation only in the services sectors, confirming that in empirical analyses at the regional or national level the diversity measure might capture the complementarity between sectors rather than the contribution of different national skills. This implies that the diversity should not guide the migration policy which instead should be linked to the specific demand for labour of firms and not to pursue a generic search for highly skilled migrants.

Do native and migrant workers contribute to innovation? : patents dynamic in France, Germany and the UK

This paper uses the French and the UK Labour Force Surveys and the German Microcensus to estimate the effects of different components of the labour force on innovation at the sectoral level between 1994 and 2005. The authors focus, in particular, on the contribution of migrant workers. We adopt a production function approach in which we control for the usual determinants of innovation, such as R&D investments, stock of patents and openness to trade. To address possible endogeneity of migrants we implement instrumental variable strategies using both two-stage least squares with external instruments and GMM-SYS with internal ones. In addition we also account for the possible endogeneity of native workers and instrument them accordingly. Our results show that highly-educated migrants have a positive effect on innovation even if the effect is smaller relative to the positive effect of educated natives. Moreover, this positive effect seems to be confined to the high-tech sectors and among highly-educated migrants from other European countries.

Chapter 2 Globalization and Innovation in Advanced Economies

Purpose – This chapter analyzes the effects that the international integration of product markets induced by globalization exerts on the direction of technological change at the industry level. Methodology/approach – In order to do so it elaborates an interpretative framework that complements the classical inducement hypotheses with the Schumpeterian literature and the localized technological change approach, putting forward the hypothesis that technological change is biased by the dynamics of both factor and product markets. We argue and show that not only the changing levels of input costs but also the changing prevalence of product and process innovations affect the direction of technological change: specifically when product innovations prevail technological change is skill-biased, while when process innovations play a major role innovation is capital intensive. Findings – Following this perspective we analyze the interindustrial variance of the output elasticities of labor of the main advanced economies in recent years and claim that such heterogeneity can be understood as the result of differentiated innovative reactions of firms to changes induced by the globalization of the markets: fast-growing sectors innovate mainly through (skilled) labor-augmenting technological change, while mature industries rely more on capital-enhancing innovations. The empirical evidence supports our hypotheses and shows that the variance of the output elasticity of labor in a panel data estimate across 17 manufacturing sectors in 16 OECD countries from 1995 to 2006, is significantly and positively associated with the rates of growth of employment, wage levels and their rates of increase, and R&D intensity. Originality/value of paper – By investigating the variance of output elasticities at the industry level the chapter provides new insights within the literature focused on the bias of technological change.