Petr Hanel

Determinants of Innovative Activity in Canadian Manufacturing Firms

The topic of innovation has garnered the interest of a select group of economists from Schumpeter (1939) to Nelson and Winter (1982), who have stressed that it is the key to economic growth. However, until the advent of panel data sets, there was little empirical evidence to link the innovative stance of firms and their performance. Recent work that links dynamic panel datasets on the performance of firms, and special surveys on the strategies that are being pursued by firms, has demonstrated the importance of innovation to the growth of firms. Baldwin et al. (1994) demonstrate that in small and medium-sized Canadian firms, a measure of success that is based on growth, profitability and productivity is related strongly to the emphasis that firms place on innovation. Baldwin and Johnson (1999) use a sample of entrants to show that growth in new firms depends upon whether the firm innovates. Crepon et al. (1998) find that innovation in French firms increases productivity.

THE USE OF INTELLECTUAL PROPERTY RIGHTS AND INNOVATION BY MANUFACTURING FIRMS IN CANADA

The objective of the paper is to determine how the utilisation of intellectual property rights (IPRs) by Canadian manufacturing firms is related to their characteristics, activities, competitive strategies and industry sector in which they operate. The principal source of information used in this endeavour is the Statistics Canada Survey of Innovation 1999. The paper starts with an overview of other studies that looked at the use of intellectual property rights in Canada. Follows a conceptual framework presenting variables likely to explain the use specific IPRs by Canadian manufacturing firms. The use of IPRs is to a great extent correlated with basic economic characteristics of firms, their activities and industry environment. A series of estimated logit regressions predict the probability that a firm will use a specific IPR instrument. Also estimated is the contribution of the use of IPRs to the probability that a firm innovates. The decision of a firm to use IPRs is often not independent of the decision to innovate. To eliminate the potential endogeneity bias I estimate a two-stage logit model. A comparison of the single- and two-stage logit models shows that the nexus from the protection of intellectual property (patents) to innovation may be weaker than indicated by the single equation model.

Effects of R & D Spillovers on the Profitability of Firms

This cross-section study of a sample of 278 firms from the COMPUSTAT II database explores the relationship between a firms profitability and other variables, notably its own R & D capital, knowledge and market spillovers and appropriability. The proxy for knowledge spillovers is based on technological distance. Market spillovers are based on a patent input-output matrix. Both spillover proxies combine information on R & D expenditures and patent counts.The results do not reject the hypothesis that R & D has a direct, positive effect on profitability, especially in industries with effective patent protection. Information spillovers affect profits negatively, market spillovers positively.

Technology transfer to developing countries through engineering firms: The Canadian experience

Abstract This article presents the results of an empirical study conducted on some 50 major international projects conducted by the 36 largest Canadian consulting engineering firms in developing countries. The study concludes that — contrary to the neoclassical assumption of cost-free information adoption — technology transfer costs are positive and mostly concentrated in the area of training; it also finds that successful transfers involves a specific set of capabilities and are usually conducted through joint ventures between the transferor and the transferee, that successful transferees often conduct research and development, do not suffer from host-government restrictions, and are not usually located in Africa.

Interindustry flows of technology: an analysis of the Canadian patent matrix and input-output matrix for 1978–1989

Abstract The author suggests that innovatory development for one industry may have much wider applications in other industries, not necessarily related to the industry for which the innovation was developed. The mapping of interindustry flows of new technology greatly assists our understanding of technological change and its resultant economic impact. Policy decisions with regard to the funding of research and development are of importance once it is realized that the decisions may not be based on the industry which gains the most benefit from the innovation. The objectives of the paper are twofold: 1. To develop a model of interindustry technology flows based on Canadian industry between 1978 and 1989; to identify both sources and users of new technology and to examine their evolution over time. 2. To explore whether or not the rate of change in technology flows can be correlated with the rate of change in input-output flows of goods. Taking into account the interindustry flows increases our understanding of the sources of information for innovation and its diffusion, and also the effects of technological change on productivity. The author finally explores the relationship between changes over time in the technology matrix and the input-output matrix which includes an empirical test. It is suggested that the wealth of information from technology flow matrices indicates that these could become an important analytical tool for the study of technological change.

Appropriability and Public Support of R&D in Canada

This paper investigates the extent to which considerations of inappropriability, a form of market failure, guide federal support to private industrial R&D in Canada. Statistics of the overall allocation of subsidies between grants and tax credits show little evidence at an inappropriability rationale. Econometric analysis of grant distributions, using a recently proposed operational concept of inappropriability, supports this conclusion at an aggregate level, but gives different results when a particular grant program is probed.

The Pros and Cons of Central Europe's Joining the EU

The paper starts with an account of trade reorientation of Central and Eastern European countries (CEEC) from East to West. Composition and evolution of trade flows between CEEC and the EU, and their respective comparative advantages are then discussed. An overview of the EU trade barriers and the impact of their liberalization under the Europe Agreements on bilateral trade flows, suggests that the EUs concessions were least important in sectors where CEEC enjoy a comparative advantage. This is particularly apparent in agriculture and food products. The protective effect of the EUs Common Agriculture Policy led to a three-fold increase in CEECs imports of agriculture and food products from the EU while their exports to the EU increased only marginally. Integration of factor markets is progressing rapidly through foreign direct and portfolio investment, mostly from EU countries, however, the regions share of global FDI still remains relatively low. In order to increase needed inflows of foreign investment, CEEC have to further develop their capital markets and improve the business climate in order to make investment there not significantly more risky than in the EU. Except for small border areas, labor mobility is, and will likely remain, quite restricted owing to the large wage differences between the EU and CEEC. In exchange for membership in the European Union, CEEC will have to surrender a significant part of their autonomy in economic policy making. Some of the rules they will have to accept will not be in their best economic interest. This is unlikely to curb their resolve to enter the EU because the main reasons for integration are political.