Measuring knowledge intensity in manufacturing industries: a new approach

This article presents the methodology and results for measuring the knowledge intensity of manufacturing industries based on the knowledge-related characteristics of their workforce. The measures link information from the Occupational Information Network project (from the US Department of Labor) and the Occupational Employment Statistics (from the Bureau of Labor Statistics) to produce industry-specific knowledge intensity measures. The new measures overcome the main issues posed by the industry-average R&D share in total sales variable, often used as a proxy for knowledge intensity in the literature.     

Estimation of R&D depreciation rates: a suggested methodology and preliminary application

Abstract The 2008 version of the SNA has recommended capitalization of R&D expenditures. To implement this recommendation, we need to determine the depreciation rate of R&D capital. In this paper, we develop a simple model, based on a production function method that allows for monopolistic competition, to estimate the annual depreciation rate of R&D capital. We treat R&D capital as a technology shifter instead of as an explicit input factor. Both the R&D stock and the time variable are used to capture technological progress. Estimated R&D depreciation rates and markup factors are presented for the U.S. manufacturing sector and four U.S. knowledge‐intensive industries.     

Skill premium in Portuguese manufacturing industries

The debate between the skill-biased technological change (SBTC) approach and the international trade (IT) explanation to obtain the best explanation for the wage gap between skilled and unskilled workers continues. In this article, we divide the Portuguese manufacturing industries into high-tech and low-tech and study the approach that best justifies the wage gap, for the period between 2007 and 2014. The results point out that the SBTC approach is the main explanation to the formation the wage gap between the labour force with tertiary education (skilled) and with secondary and primary education (unskilled).     

Industrial concentration and competition in Malaysian manufacturing

Industrial concentration is the most widely studied area among various elements of market structure in the industrial organization literature. This paper is a first attempt to analyse the determinants of changes in industry concentration over time in the case of Malaysia. Using a partial adjustment model, a cross-sectional analysis is carried out against a sample of manufacturing industries between 1986 and 1996. Domestic factors in influencing competition e.g. capital intensity, advertising intensity and market size are found to be significant in most cases to explain the level of concentration. Considering variable rate of adjustment of concentration, an increase in labour productivity of large firms and high entry rates are found to be significant for faster adjustment towards equilibrium level. Compared with other developed countries, the annual rate of structural adjustment is found to be slow in the case of Malaysian manufacturing.     

Agglomeration economies in manufacturing industries: the case of Spain

This study analyses the extent of geographical concentration of Spanish industry between 1993 and 1999, and studies the agglomeration economies that could underlie that concentration. The results confirm that there is major geographic concentration in a number of industries with widely varying characteristics, including high-tech businesses and those linked to the provision of natural resources as well as traditional industries. The analysis of the scope of spillovers behind this agglomeration supports the idea that transportation costs may induce plants in some industries to locate near their customers and suppliers. However, one cannot conclude that this is a common fact for all industries. This study also shows that the higher the technological level of an industry, the higher the agglomeration it experiences. This result implies the importance of the labour market, informational spillovers and producer services location for the agglomeration of these industries.     

Growth of factor productivity in Turkish manufacturing industries

This paper presents estimates of rates of total factor productivity (TFP) growth for two-digit manufacturing industries in Turkey over the period 1963 to 1976. Estimates are presented separately for the public and private enterprises in each industry. It is shown that periods of slower productivity growth coincided with periods of a more stringent traderegime. It is also shown that, despite the fact that the rate of growth of TFP was about the same in the public and private sectors, absolute levels of inputs in the public sector enterprises are much higher than in their private sector counterparts.     

Modeling the rebound effect in two manufacturing industries

The rebound effect refers to the phenomenon that energy savings from improvements in energy efficiency are lower than expected due to unintended second-order effects. Grasping specific mechanisms related to the rebound effect requires a good understanding of interactions between heterogonous agents on multiple markets. Otherwise, policies aimed at reducing energy use may render counter-expected and unforeseen consequences. In this paper, we propose a formal model, where technological change results from interactions on two markets: between consumers and producers in the market for final goods, and heterogeneous power plants in the electricity market. The analysis provides insights to the role of technological change, supply–demand coevolution, and status-driven consumption in explaining the rebound effect. The model is employed to compare effectiveness of economic policies aimed at reducing carbon emissions associated with production of consumer goods, namely: a tax on electricity and ‘nuclear obligations’ to produce ten percent of electricity from nuclear energy.     

Dynamic technological learning trends in Turkish manufacturing industries

Efficient development of industries requires a broad range of technological capabilities which can be acquired only by a long process of learning. Continuous measuring and monitoring of the ever-changing technological learning would be useful for building technological capability and managing technological policies. Nevertheless, research on how to measure the technological learning over time at macro levels remains largely untouched. In this paper, by adding the experience curve into the multifactor productivity part of Neoclassical production function, we will develop a model which will allow one to estimate the technological learning levels over long periods. This model would allow a user to both estimate the past learning experiences and forecast its future path on a time varying basis. The model has been used and tested in the estimation of the annual technological learning values for 28 Turkish manufacturing industries from 1981 to 2000.     

Impact of computerized automation on indian manufacturing industries

This article is based on the survey of a group of Indian manufacturing industries using computerized automation (CA). Areas covered include: the reasons for using CA, benefits achieved from it, planning and investment criteria, experience gained by the organizations, etc. The findings of the survey point toward the increasing use of CA among Indian manufacturing firms and that the large scale use of such technologies is imperative to help change the face of Indian firms that have now been thrown open to the winds of international competition.     

Concentration history and market power in US manufacturing industries

For a 1963–1992 panel of US manufacturing industries, the relationship between seller concentration and both price-cost margins (PCMs) and prices is investigated for industries divided by whether concentration has recently increased or decreased. Regressions of PCM in levels and first differences, and price equations in first differences, establish that the positive effect of concentration on prices and profits is always weaker in industries where concentration has recently increased and always stronger in industries where concentration has recently decreased. These results are attributed to the different endogeneity biases in the two samples. Increasing concentration industries are more likely the ones where leading firms have lowered prices to gain share, while decreasing concentration industries are more likely the ones where smaller firms have lowered concentration by lowering prices. An additional conclusion is that the cost-reducing effects of changes in concentration are greater for increasing concentration industries, meaning that increasing concentration industries have lower price increases compared to decreasing concentration industries.     

Link between innovation and productivity in Canadian manufacturing industries

Empirical studies commonly use research and development (R&D) to measure innovation and often find, especially in Canada, no strong link between productivity and innovation. In this article, we model innovation as an unobservable latent variable that underlies four indicators: R&D, patents, technology adoption, and skills. We find that these indicators are reasonably good measures of innovation for aggregate manufacturing. However, except for skills, the reliability of the indicators for innovation differs among individual industries. Our innovation indexes, based on the latent variable model, show that most manufacturing industries became more innovative over the 1980–1997 period. The pace of innovation in the electrical and electronic products industry accelerated during the 1990s. In addition, we show that the new measure of innovation has a positive and statistically significant impact on productivity. It takes from 1 to 3 years, depending on the industry, for innovation to generate an impact on productivity.     

Environmental regulations and innovation activity in UK manufacturing industries

We examine the relationship between environmental regulations and innovation, using data from UK manufacturing industry during 2000-2006. We estimate a dynamic model of innovation behaviour, and explicitly account for the likely endogeneity of our measure of the stringency of environmental regulations (pollution abatement costs). Our results indicate that while on the one hand environmental R&D and investment in environmental capital are stimulated by greater pollution abatement pressures, on the other hand there is not a positive impact of environmental regulation on total R&D or total capital accumulation. We find some evidence that this is because more stringent environmental regulations directly lower the optimal expenditure on non-environmental innovations. In addition, we find that environmental R&D may crowd out non-environmental R&D, although there is no evidence that environmental capital crowds out non-environmental capital.     

Adjustment costs and factor demands in Canadian manufacturing industries

This paper examines whether there is a relationship between the commodity terms of trade (the price of primary commodities relative to the price of manufactures) and the net barter terms of trade of 42 Sub-Saharan African countries. For most countries, there is little evidence of a stable, long-run relationship between the two terms of trade series. Accordingly, the practice in the literature of proxying for movements in any given country's terms of trade by using an aggregate index of relative commodity prices is inappropriate, and is likely to engender misleading policy conclusions.     

Profit rates and structural variables in French manufacturing industries

In this paper, the authors apply the theory of industrial organization to the French manufacturing sector. Profit rates of industries and firms are related to concentration on the product market, differentiation, economies of scale, absolute capital cost requirements and to firm sizes. The analysis suggest that concentration on the seller's side may lead to misallocation of resources in industries in which barriers to entry are high. They also suggest that large firms may be less efficient than smaller firms. These results call into question the industrial policy of the French government over the last ten years.     

Determinants of investment and innovation expenditure in Polish manufacturing industries

This article analyses determinants of sectoral R&D and innovation expenditure as well as investment in Polish manufacturing industries in 1994–2004. The estimated coefficients for user cost of capital are generally in line with the neoclassical model of investment, except for R&D intensity. The latter are primarily discouraged by systemic uncertainty. The rate of growth of sales is not a prominent determinant of investment and innovation expenditure. Market concentration coupled with uncertainty has a damaging effect on physical capital investment but it promotes R&D expenditure and leaves innovation intensity unaltered.     

Determinants of domestic and import prices in Canadian manufacturing industries

This paper examines the determinants of the prices of domestic and imported goods in the domestic market using time-series data for a broad sample of Canadian manufacturing industries. It is found that the costs of both goods are the fundamental determinants of their prices, that the pass-through of costs into prices depends on the levels of domestic and import costs, real income per capita and concentration, and that factors which increase the sensitivity of both prices to domestic costs also reduce their sensitivity to import costs. In addition, it appears that the way in which prices are determined differs between industries with low versus high advertising-sales ratios.     

Environmental regulation and the productivity of Japanese manufacturing industries

This paper attempts to provide empirical evidence on issues concerning: (a) the effect of the stringency of environmental regulations (as measured by pollution control expenditures) on innovative activity (as measured by R&D expenditures) and on the average age of capital stock and (b) the productivity enhancement effect of environmental regulations in Japanese manufacturing industries. The empirical findings in the paper show that the pollution control expenditures have a positive relationship with the R&D expenditures and have a negative relationship with the average age of capital stock. It is also shown that increases in R&D investment stimulated by the regulatory stringency have a significant positive effect on the growth rate of total factor productivity.