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German Regional Disparities in the Mirror of Technology Policy
Abstract
The theoretical and empirical basis of the study is that there is a strong relationship between economic growth and technological progress. The innovation gap between the European Union and its two main competitors, the US and Japan, has grown despite the increased spending on Research and Development. The international comparisons related to Science and Technology Policy permanently emphasize that in Europe there is much room for improvement in order to eliminate the differences and the inappropriate achievements which are reflected in the economic growth too. The purpose of the study is to answer why Germany lags behind in term of economic growth despite its innovation-leader role and in what extent regional differences appear in the country's innovation performance. The long term general priority of Germany - corresponding to the European Union - is that economic growth and development have to be facilitated in every region. In order to eliminate regional disparities it is essential to improve competitiveness, employment, education and to boost R&D activities. It can be easily observed that the financial support of education and R&D beyond stimulating economic growth can be an opportunity for the alleviation of regional disparities. It is a puzzling question why convergence between East and West Germany has stopped in spite of the numerous government activities to promote economic growth and innovation.
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This paper presents an empirical analysis of the determinants of research cooperation between firms and Public research organisations (PROs) for a sample of innovating small and medium-sized enterprises (SMEs). The econometric analysis is based on the results of the KNOW survey carried out in seven EU countries during 2000. In contrast to earlier works that provide information about the importance of PROs' research, we know the number of firm/PRO collaborative research and development (R&D) projects. This allows us to study the determinants of firm collaboration with PROs in terms of both the propensity of a firm to undertake R&D projects with a university (do they cooperate or not) and the extent of this collaboration (number of R&D projects). Two questions are addressed. Which firms cooperated with PROs? And what are the firm characteristics that might explain the number of R&D projects with PROs? The results of our analysis point to two major phenomena. First, the propensity to forge an agreement with an academic partner depends on the 'absolute size' of the industrial partner. Second the openness of firms to the external environment, as measured by their willingness to search, screen and signal, significantly affects the development of R&D projects with PROs. Our findings suggest that acquiring knowledge through the screening of publications and involvement in public policies positively affects the probability of signing an agreement with a PRO, but not the number of R&D projects developed. In fact, firms that outsource research and development, and patent to protect innovation and to signal competencies show higher levels of collaboration.
The relationship between the economic structure of a country and its productivity growth has received a lot of attention in recent decades. For instance, several theoretical models in this area now suggest that countries that specialize in technologically progressive industries will enjoy high rates of growth compared to other countries. This paper focuses on the impact of specialization and structural changes on productivity growth in manufacturing in recent decades, using a sample of 39 countries and 24 industries between 1973 and 1990. The results show that while structural change on average has not been conducive to productivity growth, countries that have managed to increase their presence in the technologically most progressive industry of this period (electronics), have experienced higher productivity growth than other countries.. The work on this paper has benefited from economic support from the European Union's TSER program, for which I am grateful. A preliminary version was presented at the Economic Dynamics and Structural Change workshop, Eindhoven, October 3-4, 1999. I wish to thank Tao Zhang for research assistance, and the participants at the workshop for comments and suggestions, retaining sole responsibility for remaining errors and omissions. Note: A revised and shortened version of this working-paper has been published as Fagerberg, Jan, 2000. "Technological progress, structural change and productivity growth: a comparative study," Structural Change and Economic Dynamics, Elsevier, vol. 11(4), pages 393-411, December. 2
There has recently been a resurgence of interest in how institutions affect economic performance. A review of this literature reveals that the concept of an “institution” means different things to different scholars, both within economics and across the social sciences. We discuss what factors unify the different definitions of institutions, and develop a concept of institutions useful for the analysis of economic performance, and economic growth in particular. Specifically, we develop the notion of institutions as standard “social technologies”. Economic growth results from the co-evolution of physical and social technologies.
This paper compares the role innovation plays in productivity across four European countries, France, Germany, Spain, and
the UK, using firm-level data from the internationally harmonized Community Innovation Surveys (CIS3). Despite a considerable
number of national firm-level studies analysing this relationship, cross-country comparisons using micro data are still rare.
We apply a structural model that describes the link between R&D expenditure, innovation output, and productivity (CDM model).
Our econometric results suggest that overall the systems driving innovation and productivity are remarkably similar across
these four countries, although we also find interesting differences, particularly in the variation in productivity that is
associated with more or less innovative activities.
"Können Deutschlands nationale institutionelle Rahmenbedingungen so verändert werden, daß radikale Innovationen in forschungsintensiven Industrien möglich werden? Der Beitrag untersucht die Entwicklung marktorientierter Technologien für Unternehmensneugründungen im Biotechnologie-Sektor in Deutschland. In den 80er und frühen 90er Jahre blockierte eine ungeeignete institutionelle Infrastruktur fast alle Versuche unternehmerischer Biotechnologie-Neugründungen in Deutschland. Die meisten großen deutschen Pharma-Konzerne investierten demzufolge in internationale Verbindungen mit Biotechnologie-Firmen und universitären Forschungslaboren in den USA. Der Beitrag zeigt die Wechselwirkung zwischen der schwachen Leistungsfähigkeit der deutschen Biotechnologie-Industrie mit den institutionellen Hindernisse in der deutschen Volkswirtschaft. Zu den angesprochenen Problemen gehören unzureichende Leistungsanreize in den deutschen Unternehmen, mangelnde Flexibilität auf dem Arbeitsmarkt für Wissenschaftler und Manager und Beschränkungen im Angebot von Wagniskapital, bedingt durch die weitgehend bankzentrierten deutsche Kapitalmärkte. Weil diese institutionellen Gegebenheiten große Vorzüge für viele Unternehmen in der verarbeitenden Industrien bieten, wird hier die These vertreten, daß grundlegende institutionelle Reformen zur besseren Unterstützung forschungsintensiver Industrien wie Biotechnologie unwahrscheinlich sind. Dennoch ist angesichts des jüngsten Aufschwungs in der deutschen Biotechnologie- Industrie vorstellbar, daß sektor-spezifische Maßnahmen dazu beitragen können, daß zahlreiche Unternehmensgründungen in jenen schnell wachsenden Marktsegmenten der Biotechnologie-Branche erfolgen, in denen die finanziellen und technologischen Risiken niedriger sind als in der reinen Therapeutika-Forschung." (Autorenreferat) "Can German national institutional frameworks be reconfigured to allow radical innovation in science-based industries? This paper examines the development of commercial technologies for entrepreneurial biotechnology start-up firms in Germany. During the 1980s and early 1990s an inadequate institutional infrastructure stifled virtually all attempts to organize entrepreneurial biotech start-up firms within Germany, while most large German pharmaceutical firms quickly invested in international alliances with US biotechnology companies and university research labs. The paper links the poor performance of the German biotech industry with a variety of institutional disincentives created by the broad institutional orientation of the German economy. Problems discussed include inadequate performance incentives within German firms, rigidities within the labor market for scientists and managers, and constraints an the provision of venture capital created by the broadly bankcentered orientation of German capital markets. Because these institutional arrangements strongly advantage a large coalition of German firms in a wide variety of engineering intensive industries, the paper argues that fundamental institutional reforms to better support science-based industries like biotechnology are unlikely. However, noting the recent upswing in the German biotechnology industry, the paper suggests that sector-specific policies may create an atmosphere conducive to largescale entry into some quickly growing market segments of biotechnology in which the financial and technological risks are lower than in pure therapeutics research." (author's abstract)
The hypothesis that distance matters but that in recent years geographical proximity has become less important for research collaboration was tested. We have chosen a sample--authors at German immunological institutes--that is relatively homogeneous with regard to research field, language and culture, which beside distance are other possible factors influencing the willingness to co-operate. We analyse yearly distributions of co-authorship links between institutes and compare them with the yearly distributions of distances of all institutes producing papers in journals indexed in the Science Citation Index, editions 1992 till 2002. We weight both types of distributions properly with paper numbers.
One interesting result is that place matters but if a researcher has to leave the home town to find a collaborator distance does not matter any longer. This result holds for all years considered, but is statistically most significant in 2002. The tendency to leave the own town for collaborators has slightly increased in the sample. In addition, yearly productivity distributions of institutes have been found to be lognormal.
The Internet did not change much the collaboration patterns between German immunological institutes.
Time and value are related concepts that influence human behaviour. Although classical topics in human thinking throughout the ages, few environmental economic non-market valuation studies have attempted to link the two concepts. Economists have estimated non-market environmental values in monetary terms for over 30 years. This history of valuation provides an opportunity to compare value estimates and how valuation techniques have changed over time. This research aims to compare value estimates of benefits of a protected natural area. In 1978, Nadgee Nature Reserve on the far south coast of New South Wales was the focus of the first application of the contingent valuation method in Australia. This research aims to replicate that study using both the original 1978 contingent valuation method questionnaire and sampling technique, as well as state of the art non-market valuation tools. This replication will provide insights into the extent and direction of changes in environmental values over time. It will also highlight the impact on value estimates of methodological evolution. These insights will help make allocating resources more efficient.
The paper concentrates on the question whether the low level of productivity in East Germany can be explained by deficits in the stock of human capital. It is shown that figures on “formal” qualifications yield a too optimistic view on human capital endowments; in fact, the effective stock on human capital in East Germany is lower than in West Germany when differences in job activities are taken into account. One reason is the dominance of non human capitalintensive industries as a consequence of locational decisions in the past. Another reason is a low human capital intensity within the different branches which is a consequence of specialization within affiliated firms. In the next years human capital endowment of the East German economy will further deteriorate as a result of selective migration and unfavorable educational attendance of the younger cohorts. This impedes a fast convergence in productivity between East and West Germany.
Europe is perceived to be lagging behind the US in converting its academic results into economic outcomes. Using new survey data on European and US technology transfer offices (TTOs), we find that differences in academic research, TTO staff and experience explain to a great extent the gap between the US and Europe in terms of the number of license agreements concluded. However, these factors account for only part of the difference in license income. We relate the difference in licensing income to differences in the organization and staffing of TTOs. Our analysis reveals that US TTOs do not attach more importance to generating revenue as an objective than their European counterparts. However, they employ more staff with experience in industry which explains some of the remaining differential in license income performance.
This book gives important new insight in current European policy making by transcending the borderlines between social science and practical policy making. Starting with the Lisbon process of 2000 it sketches the most recent European attempts to integrate social considerations with competitiveness. Maria Rodrigues has given us a strongly needed guide (including website addresses) to the many recent policy documents covering labour market, education, social policy, innovation and industrial policy coming from Brussels and from Ministerial meetings.'
We observe that research joint ventures (RIVs) with university members are distinctly larger than those without. We seek to explain this observation by stressing that net gains are greater for industry participants in RIVs with a large number of members since the loss in appropriable information from the university's involvement decreases as the RJV's size increases. Further, universities show a preference for more costly projects to absorb overhead administrative costs associated with externally-contracted research.
The economic, and in part political, transition failures in East Germany, based on institutional path dependencies and politicians begging for the median voter, form the background of this analysis. Although there are plentiful data to compare developments in East Germany and West Germany after unification in 1990, East German developments are rarely explicitly contrasted with those in the eight new East European member states of the European Union. Such comparisons are vital in highlighting the long-term drawbacks and catastrophic failures committed in the East German case. Acknowledging that much more empirically guided theoretical research lies ahead, this article aims at being more than a mere "think piece".
В статье производится анализ агрегированной производственной функции, вводится аппарат, позволяющий различать движение вдоль такой функции от ее сдвигов. На основании сделанных в статье предположений делаются выводы о характере технического прогресса и технологических изменений. Существенное внимание уделяется вариантам применения концепции агрегированной производственной функции.
Examines the role that institutions, defined as the humanly devised constraints that shape human interaction, play in economic performance and how those institutions change and how a model of dynamic institutions explains the differential performance of economies through time. Institutions are separate from organizations, which are assemblages of people directed to strategically operating within institutional constraints. Institutions affect the economy by influencing, together with technology, transaction and production costs. They do this by reducing uncertainty in human interaction, albeit not always efficiently. Entrepreneurs accomplish incremental changes in institutions by perceiving opportunities to do better through altering the institutional framework of political and economic organizations. Importantly, the ability to perceive these opportunities depends on both the completeness of information and the mental constructs used to process that information. Thus, institutions and entrepreneurs stand in a symbiotic relationship where each gives feedback to the other. Neoclassical economics suggests that inefficient institutions ought to be rapidly replaced. This symbiotic relationship helps explain why this theoretical consequence is often not observed: while this relationship allows growth, it also allows inefficient institutions to persist. The author identifies changes in relative prices and prevailing ideas as the source of institutional alterations. Transaction costs, however, may keep relative price changes from being fully exploited. Transaction costs are influenced by institutions and institutional development is accordingly path-dependent. (CAR)
The Japanese economy, which was once admired in the world, is now suffering after the big success of the "Catch-up Model". It is already often pointed out and well agreed that Japan badly needs to transform from the "Do things better" p a r a d i g m t o " Do d ifferent things" paradigm. The emerging R&D spin-off start-ups in Japan will take the key role of the long waited paradigm change. In this paper, the missions and the effects of the emerging R&D spin-off start-ups in Japan are examined from the micro, macro and regional transformation view points, showing some of the implications to corporate strategy, industry strategy, and national R&D policies. In the micro level, Corporate Venturing is focused to overcome the "Innovators Dilemma". In the macro level, new Japanese business model, replacing the catch-up business model, is shown in relation to the spin-off start-ups. And in the regional level, the necessary change from the old style industry agglomeration to organic cluster with R&D start-ups is stated.
The process of economic unification has been more complex than most observers had predicted in 1989/90. This article develops the thesis that three main themes are central to the success or failure of economic unification: (1) fiscal policies; (2) employment policies; and (3) perceptions of a divergence of living standards in East and West Germany. We conclude that (1) financial transfers were less efficient than expected; (2) the unemployment problem has not been solved; and (3) though standards of living have converged in some respects, the prevailing perception in the East is still one of discrimination.
It is a commonly held view that differences in national histories, cultures, political contexts, and the timing of a country’s entry into the industrialization process are reflected as diversity among countries in their goals, priorities, boundaries, directions, ranges, instruments and also in the performance of science and technology policy. This article, which examines development processes of Finnish science and technology policy, concludes that instead of divergence there is such startling convergence of organizational forms and practices. Finland has largely adopted its policy doctrines and instruments from the countries, which from the Finnish perspective, have been considered legitimate and successful.
In this chapter we argue that the endogenous growth model with quality-improving innovations provides a framework for analyzing the determinants of long-run growth and convergence that is versatile, simple and empirically useful. Versatile, as the same framework can be used to analyze how growth interacts with development and cross-country convergence and divergence, how it interacts with industrial organization and in particular market structure, and how it interacts with organizations and institutional change. Simple, since all these aspects can be analyzed using the same elementary model. Empirically useful, as the framework generates a whole range of new microeconomic and macroeconomic predictions while it addresses empirical criticisms raised by other endogenous growth models in the literature.
This paper explores Paul N. Rosenstein-Rodan's idea that simultaneous industrialization of many sectors of the economy can be profitable for them all even when no sector can break even industrializing alone. The authors analyze this idea in the context of an imperfectly-competitive economy with aggregate demand spillovers, and interpret the big push into industrialization as a move from a bad to a good equilibrium. They present three mechanisms for generating a big push and discuss their relevance for less-developed countries. Copyright 1989 by University of Chicago Press.
Based on a survey of European universities, this policy brief states that despite the good performance of some countries, Europe as a whole trails the US by a wide margin. The reason is two-fold. First, Europe invests too little in higher education. Second, European universities suffer from poor governance, insufficient autonomy and often perverse incentives. If Europe is to be a leader in the global knowledge economy, comprehensive reform of higher education is the order of the day. Most countries should invest an extra one percent in higher education each year, and universities should be given more autonomy in budgets, hiring and remuneration.
Like in Central East European countries and other catching-up economies, it is expected in East Germany that modern equipped foreign (West German) investors increase productivity, which in East Germany still lags clearly behind the Western part of the country and constitutes an ongoing developing problem. Thereby it is not only the transfer of technology from the parent company to the subsidiary but also the hope that subsidiaries build a source of technology spillovers in favor of local firms. These expectations raise the question of technological capability of foreign (West German) investors. Are external investors in East Germany really characterized by technological superiority compared to pure East German firms? Do they innovate more? Are they stronger involved in R&D (if at all)? Do they finally perform better in terms of productivity? These and further aspects will be dealt with in this paper. In the following, there will be an overview about the development of FDI in East Germany based on official data provided by the Federal Bank of Germany. The investigation will also include a comparison to Central East European countries. But the focus of the paper will be the analysis of a representative enterprise survey, the IAB-establishment panel, which provides a number of variables on the technological capability of (majority) foreign, West German, and East German owned firms.
This paper offers a theory of development that links the degree of market incompleteness to capital accumulation and growth. Because sectoral indivisibilities limit the extent of diversification, poor economies suffer higher volatility of growth and endogenously lower productivity. As the economy develops, agents hold more balanced portfolios and can take better advantage of high-return production opportunities. Although all agents are price takers and there are no technological spillovers, the decentralized equilibrium is inefficient because individuals do not internalize the impact of their investment decisions on others' diversification opportunities. The results generalize to economies with international capital flows. Copyright 1997 by the University of Chicago.
A model of endogenous growth is developed in which growth is driven by vertical innovations that involve creative destruction. Equilibrium is determined by a forward-looking difference equation, according to which the amount of research in any period depends negatively upon the amount expected next period. The paper analyzes positive and normative properties of stationary equilibria, and shows conditions for the existence of cyclical equilibria and no-growth traps. The growth rate may be more or less than optimal because a business-stealing effect counteracts the usual spillover and appropriability effects. In addition, innovations tend to be too small. Copyright 1992 by The Econometric Society.
Are firms with strong market positions powerful engines of technological progress? Joseph Schumpeter thought so, but his hypothesis has proved difficult to verify empirically. This article highlights Schumpeterian market-power and creative-destruction effects in a sample of early-twentieth-century U.S. industrial firms; his contention that an efficiently functioning capital market has a positive effect on the rate of innovation is also confirmed. Despite market power abuses by incumbents, the extent of innovation stands out: 21 percent of patents assigned to the firms sampled between 1920 and 1928 are cited in patents granted between 1976 and 2002.
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