Mark A. Dutz

Competition policy implementation in transition economies: An empirical assessment

Abstract Between 1990 and 1996, competition laws have been adopted in 22 of the 26 transition economies of eastern Europe and the former Soviet Union. Yet there is very little systematic evidence about implementation experience, and none regarding its impact on intensity of economy-wide competition. The novelty of this paper is twofold. First, it defines a range of competition policy implementation criteria relevant for transition and developing economies along the three main dimensions of enforcement, competition advocacy and institutional effectiveness. These classification criteria go significantly beyond the traditional emphasis on abuse of dominance, agreement and merger cases. Second, it provides an assessment of the effectiveness of competition policy implementation across 18 countries along these criteria, based on data from each countrys competition authorities and supplemented with assessments by legal practitioners. The relationship between competition policy and intensity of competition is explored, with the latter captured by a measure of economy-wide enterprise mobility that reflects selection effects. We find a robust positive relationship between effective competition policy implementation and expansion of more efficient private firms.

Unleashing India's innovation : Toward sustainable and inclusive growth

Indias recent growth has been impressive, with real GDP rising by over eight percent a year since 2004 -- accompanied by a jump in innovative activities. Growth has been driven by rapid expansion in export-oriented, skill-intensive manufacturing and, especially, skill-intensive services. The book is structured as follows: Chapter 1 reviews the Indian context and enabling environment. Chapter 2 analyzes knowledge creation and commercialization. Chapter 3 discusses knowledge diffusion and absorption. Chapter 4 encourages inclusive, pro-poor innovation. Chapter 5 addresses the need for stronger skills and education for innovation. Chapter 6 examines ways of improving information infrastructure. Chapter 7 suggests approaches to enhance innovation finance.

Does More Intense Competition Lead to Higher Growth

The relationship between the intensity of competition in an economy and its long-run growth is an open question in economics. Theoretically, there is no clear-cut answer. Empirical evidence exists, however, that in some sectors more competition leads to more innovation, and accelerates productivity growth. To complement those findings, and capture economy-wide effects, the authors conduct a cross-country study. They examine the impact on growth of various measures having to do with intensity of domestic competition - beyond the effects of trade liberalization. Their results indicate a strong correlation between long-run growth, and effective enforcement of antitrust, and competition policy.

Entrepreneurship, access policy and economic development: Lessons from industrial organization

Abstract This paper explores some relationships between promotion of competition and economic development that arise from the impacts of entrepreneurial firms. In this respect, two sets of policies are critical for furthering economic development. First, to arrest the diversion of entrepreneurial talent towards non-productive activities, an increased emphasis on preserving rewards from productive innovation is needed – through the protection of commercial freedom, property rights and contracts. Second, given that essential local inputs are vulnerable to monopolization and foreclosure, fostering opportunities for grass-roots entrepreneurship becomes paramount – through a more activist supply-side competition policy emphasizing access to essential business services and other required local inputs. A key message is that the conventional sensitivity of policy concerns about the social welfare effects of foreclosure should be extended to a domain beyond the usual essential facilities of public utilities. It should include access to many other elements of the business infrastructure that are taken for granted in mature market economies, but that pose real barriers to productive entrepreneurship at the grass-roots level in the context of development. Additions to the incipient empirical work in this area could yield substantial policy dividends.

Green Growth, Technology and Innovation

The paper explores existing patterns of green innovation and presents an overview of green innovation policies for developing countries. The key findings from the empirical analysis are: (1) frontier green innovations are concentrated in high-income countries, few in developing countries but growing; (2) the most technologically-sophisticated developing countries are emerging as significant innovators but limited to a few technology fields; (3) there is very little South-South collaboration; (4) there is potential for expanding green production and trade; and (5) there has been little base-of-pyramid green innovation to meet the needs of poor consumers, and it is too early to draw conclusions about its scalability. To promote green innovation, technology and environmental policies work best in tandem, focusing on three complementary areas: (1) to promote frontier innovation, it is advisable to limit local technology-push support to countries with sufficient technological capabilities -- but there is also a need to provide global technology-push support for base-of-pyramid and neglected technologies including through a pool of long-term, stable funds supported by demand-pull mechanisms such as prizes; (2) to promote catch-up innovation, it is essential both to facilitate technology access and to stimulate technology absorption by firms -- with critical roles played by international trade and foreign direct investment, with firm demand spurred by public procurement, regulations and standards; and (3) to develop absorptive capacity, there is a need to strengthen skills and to improve the prevailing business environment for innovation -- to foster increased experimentation, global learning, and talent attraction and retention. There is still considerable progress to be made in ranking green innovation policies as most appropriate for different developing country contexts -- based on more impact evaluation studies of innovation policies targeted at green technologies.

Measuring intangible assets in an emerging market economy: an application to Brazil

This paper measures intangible investment in Brazil. It estimates that during 2000-2008, annual business spending on intangible assets or knowledge-based capital in Brazil averaged about 4 percent of gross domestic product. While this is significantly lower than comparable rates for the United States, Japan and the United Kingdom, which hover around 11 percent, it is not too far below estimates for other developed countries such as Italy and Spain. Of the total expenditure on intangible assets in 2006, about 23 percent was spent on computer software and databases, 43 percent on innovative property (predominantly research and development and new product development in financial services), and 34 percent on economic competencies (which comprises branding, employee training and organization improvement). Brazils share of spending on economic competencies is markedly lower than that observed in the United States and the United Kingdom, and the analysis finds it to be the slowest growing of the major intangible categories. Finally, having extended the intangible investment estimation methodology to produce more disaggregated (industry-level) estimates, the authors show that intangible investment is positively correlated with recent export growth and total factor productivity estimates across manufacturing industries. This suggests that intangible or knowledge-based capital, as measured here, can account for part of the hitherto unexplained component of productivity growth.

Marshall Plan productivity assistance: A unique program of mass technology transfer and a precedent for the former Soviet Union

Abstract The Productivity Program of the Marshall Plan made a major contribution to the increase in Western European productivity in the 1950s, well before there was significant policy liberalization, competition, or foreign investment in these countries. Prior to the program, European manufacturing and management practice was a generation behind the US, and productivity was one-third of US levels.The cost of this program over ten years was

Public and private investments in innovation capabilities : structural transformation in the Chilean wine industry

300 million, or only 1.5% of Marshall Plan capital assistance. Its 1500 study tours brought tens of thousands of people from European and Asian countries to the United States to observe management and production. On returning home, tour members vigorously spread new ideas throughout their countries, which also received a wide variety of follow-up technical services. Europes leaders supported national productivity drives out of fear of communism and social unrest, not in response to competitive market forces. The drives helped firms achieve almost immediate productivity gains with little new investment. This relatively inexpensive idea could increase incomes and improve the supply and variety of consumer goods in present-day Eastern Europe and the former Soviet Union.

The Jobs of Tomorrow

This paper assembles novel data on the Chilean wine industry to investigate the role of investments in knowledge capital on sales growth in domestic and international markets. The study uses archival data collected from the Government of Chile to compile and categorize public expenditures and programs supporting the Chilean wine industry over the period of 1990-2012 into investment in different types of knowledge capital. These spending categories are related to industry-level sales growth. The paper finds that the most important correlate is spending on research and development. The study also uses data from a new survey of Chilean wine firms to capture information on firm-specific investments in knowledge capital. The findings show that investments in collaboration capital, in particular hiring foreign consultants, as well as participation in international wine fairs are the strongest correlates of growth in export sales, while spending on aspects of branding (local advertising and brand design) are the strongest correlates of domestic market sales growth.

A Conceptual Framework

Policy makers throughout Latin America and the Caribbean (LAC) will like to understand how best to leverage recent and ongoing global, business-relevant technologies to support productivity upgrading with inclusion. This report discusses technology adoption and its impact on inclusive growth through productivity, jobs, types of skills, and wages in Latin America. The report focuses particularly on two dimensions of inclusive economic growth: overall job growth, and how less-skilled, less well-off workers can also benefit from technology adoption. The book’s focus on five middle-income countries - Argentina, Brazil, Chile, Colombia, and Mexico is dictated both by the availability of high-quality data and by the differentially paced penetration of digital technologies in the LAC region. The evidence and conclusions presented in this report are relevant for lower income countries in the LAC region and for helping to understand the impacts of the adoption of other types of technologies beyond information and communication technology (ICT) that reduce costs and expand firms’ sales opportunities. This report investigates three channels linking technology adoption with more inclusive growth: a sufficiently large firm-level output expansion effect, a market access effect that increases smaller firms’ relative demand for lower-skilled workers, and a worker mobility effect that lowers cross-sectoral and cross regional worker mobility costs through better Internet access. This report is organized around the following issues: chapter one gives introduction. Chapter two provides a succinct context underpinning the importance of fostering productivity with more inclusive growth through digital technology adoption. Chapter three lays out the core assumptions and implications of a conceptual framework for technology adoption that realistically assumes that both firms and workers are heterogeneous agents. Chapter four discusses new learning from the region on the impacts of technology adoption. Chapter five discusses the main policy implications related to improving the broadly defined business environment, including technology diffusion support policies, product market policies, and education, skills, and labor market policies. Chapter six concludes by summarizing the main findings and outlining some questions for further research.