The emergence of property rights enforcement in early trade: A behavioral model without reputational effects

The present article focuses on the conditions that allow governments to increase property rights protection because they expect enough income from such action. We develop a behavioral explanation, according to which the answer lies in the growth in the importance, size and wealth of merchant guilds in the medieval era in Western Europe as well as a somewhat surprising effect of volatile price structures. We add to prior research by showing that even uncoordinated embargo pressures among multiple guilds could get medieval rulers to offer high levels of property rights protection.     

R&D,public innovation policy,and productivity: The case of danish manufacturing

The purpose of this paper is to investigate the relationship between private R&D, public innovation support transferred to the private sector, and productivity in Danish manufacturing. Two main conclusions are established. First, public innovation support has a positive and significant effect on private R&D expenditures with an estimated elasticity of 0.062. Second, the indirect effect on productivity from public innovation support is reflected in a positive point estimate which is found to be robust to different specifications of R&D capital.     

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.     

Financial innovation: theoretical issues and empirical evidence in Italy and in the UK

In the first part of the paper, we try to clearly identify financial innovations and draw a general framework. Despite the relevance of financial innovations, a unique definition is difficult to find. We then provide empirical evidence of such innovations on a sample of Italian and UK listed banks over the period 2005–2007 using financial account data. First, the absence of any mention of a specific organizational unit in charge of research and development (R&D) is highlighted. However, the existence of a research and developmental function involving different organizational units cannot be excluded. Second, innovation seems to be mainly concentrated in the product area, both in Italy and in the UK. This could be accounted for by the difference in the “life cycles” of innovations and by the different operational conditions of banks in both systems. Third, larger banks seem more innovative, both in Italy and in the UK. No clear relation between innovation and cost reduction/revenue increase seems to exist, at least in Italy. In the light of the above considerations, policy implication comes to light on whether the choice of not establishing a specific organizational unit dedicated to R&D could turn out effective in the medium-long term.

The role of codified sources of knowledge in innovation: Empirical evidence from Dutch manufacturing

This paper explores ongoing debates about the role that codified forms of knowledge play in fostering innovative behaviour. It aims to provide an empirical exploration of the use of codified sources of information for innovation at the firm and sectoral level. Despite considerable interest in David and Forays (1995) work on the codification of knowledge and the changing nature of innovation due to the use of information and communication technologies, there are relatively few empirical studies that probe the role of codified sources of information in the innovation process. Our goal is to assess how important codified sources of information are for innovation among different firms and sectors. We find that use of codified sources of knowledge is highly concentrated in high technology sectors and among firms with existing absorptive capacity. The analysis shows that the use of other sources of information for innovation is a strong predictor of a firms use of codified sources. The data used for the analysis is based on The Netherlands Community Innovation Survey (II) for the manufacturing sector and covers over 2001 firms in 11 industries.JEL Classification: L60, O32, O33     

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.     

The competitive enforcement of property rights in medieval Japan: The role of temples and monasteries

Medieval Japanese governments only haphazardly enforced claims to scarce resources. Necessarily, this presented landholders with a void. To obtain the enforcement they needed, many turned to institutions affiliated with the fractious Buddhist faith instead. Temples and monasteries enjoyed an exemption from tax on their lands and controlled an array of financial and human resources with which they could adjudicate and enforce claims to scarce resources. To obtain access to that exemption and those resources, landholders “commended” their rights in land to them, and paid them a share of the harvest. In exchange, the temples and monasteries exempted them from tax, adjudicated disputes internal to the estate and protected their estates against external threats. Effectively, the temples and monasteries competed in a market for basic governmental services.By helping to secure basic claims to property, the temples and monasteries helped to promote investment and growth; by competing against the government itself, they helped to forestall the crippling effect of a predatory monopolistic state.     

Institutions and environmental governance: A reconceptualization

This article presents the conceptual revisions needed to extend the new institutional approach to environmental governance from its current local and international domains of application to all governance solutions, including national environmental and natural resource use policies and multi-level governance solutions that are increasingly used to address global environmental change. The article suggests that environmental governance is best understood as the establishment, reaffirmation or change of institutions to resolve conflicts over environmental resources. It also explains why the choice of these institutions is a matter of social justice rather than of efficiency. The article suggests a way to understand formal and state-centered governance solutions as forms of collective ownership not unlike common property. The article demonstrates how institutional analysis can gain resolution by looking at the functional and structural tiers, organization of governance functions, and formulation of key institutional rules as key aspects of the design of governance institutions.     

Multinational enterprises and innovation: firm level evidence on spillover via R&D collaboration

This paper estimates the knowledge spillovers to multinational enterprises (MNEs) in Sweden via domestic and foreign R&;D collaboration. Applying an augmented generalized method of moments-estimator that accounts for selectivity and simultaneity bias on data from 1,249 MNEs, our research has resulted in five distinct conclusions. First, we find that the knowledge spillovers via R&;D collaboration typically take place as a network phenomenon rather than a process between the local firm and a single innovation partner. Second, successful collaboration is conditional on the presence of foreign innovation partners in the network. Third, output is found to be an increasing function of R&;D-collaboration only among non-export oriented firms. Fourth, foreign MNEs, selling mainly to local and regional markets in Sweden, benefit more from R&;D collaboration than do other firms. Overall, the results show that demand-driven motives that require entrepreneurial knowledge to adapt products to local consumers and markets are more important for successful R&;D-collaboration than supply-driven motives.     

Dynamic models of R & D,innovation and productivity: Panel data evidence for Dutch and French manufacturing

This paper introduces dynamics in the R&D-to-innovation and innovation-to-productivity relationships, which have mostly been estimated on cross-sectional data. It considers four nonlinear dynamic simultaneous equations models that include individual effects and idiosyncratic errors correlated across equations and that differ in the way innovation enters the conditional mean of labor productivity: through an observed binary indicator, an observed intensity variable or through the continuous latent variables that correspond to the observed occurrence or intensity. It estimates these models by full information maximum likelihood using two unbalanced panels of Dutch and French manufacturing firms from three waves of the Community Innovation Survey. The results provide evidence of robust unidirectional causality from innovation to productivity and of stronger persistence in productivity than in innovation.     

The impact of institutional volatility on financial volatility in transition economies

What have been the determinants of financial volatility in the transition countries of Central and Eastern Europe and the former Soviet Union? This paper posits that institutional changes, and in particular the volatility of crucial institutions such as property rights, have been the major causes of financial volatility in transition. Building a unique monthly database of 20 transition economies from 1991 to 2017, this paper applies the GARCH family of models to examine financial volatility as a function of institutional volatility. The results show that more advanced institutions help to dampen financial sector volatility, while institutional volatility feeds through directly to financial sector volatility in transition. Democratic changes in particular engender much higher levels of volatility, while property rights are sensitive to the metric used for their measurement.     

The Issue of Efficiency and the Role of State in New Institutional Economics: A Critical Perspective

ABSTRACT

This article scrutinises and criticises the notion of efficiency and the role of state in the emergence and evolution of institutions and property rights within the tradition of new institutional economics. Specifically, the attempt is to criticise the efficiency view of the formation of property rights and institutions. It is shown that the efficiency concept cannot provide a sufficient rationale for explaining the origins of private property. Additionally, some recent developments of North's thought are critically scrutinised, showing that his theoretical apparatus could be conceived as a paradise for the eclectic. Further, the role of the state in different versions of the theory of property rights – with a special reference to North's treatment of the notion of state – is, also, critically examined. Although North’s work has virtues compared to the ‘naïve model’ of property rights by recognising and addressing the role of the state and the issue of power in the formation of property rights and institutions, he does not succeed in fully accounting for the existence of institutional arrangements, due to his adherence to an individualist framework.     

Economic implications of inalienable and communal native title: The case of Wik forestry in Australia

Wik people on Cape York Peninsula in Queensland, Australia, have been granted native title over 18,500 km² of customary land. This was seen as a coup by Wik people and it appears that they have a relatively unencumbered right to manage a large proportion of this land, including for commercial timber production. However, economists of the private property rights tradition are of the view that the inalienable and communal nature of native title presents an obstacle to economic development in remote indigenous communities that will prevent the land from being managed in an economically and ecologically efficient manner, and preclude the land from realising its full market value. This negative view has risen to prominence in Australia and privatisation of the indigenous land estate is being debated. In this paper, it is argued that privatising Australian native title land will not suddenly provide conditions where indigenous enterprise will flourish, nor will it necessarily maximise resource use efficiency where cultural and ecological values are important. For the Wik and other indigenous Australians, factors such as their low Western education and skill levels, poor health, limited financial resources, complex social environment, the remoteness and low productive capacity of their land, and the high importance of non-pecuniary land management objectives, are more important impediments to economic development than the broad type of property right held over natural resources.     

Accumulation, innovation and catching-up: an extended cumulative growth model

This paper presents an extended model of cumulative growth inwhich the effects of innovation and catching-up are considered.Innovation adds another source of cumulative growth to thatof traditional models and allows a consideration of the importanceof non-price determinants of international competitiveness.Catching-up is the major force leading to convergence in productivityowing to the effect of the diffusion of technology. The modelallows one to analyse whether cumulative forces may lead tostable growth and whether this solution generates convergencein productivity levels. The structural model is tested for aset of OECD countries over the period 1965–94.     

The take-off of an interactive innovation: Evidence from China

An interactive innovation can be defined as an end-user application which is subject to network effects at both the demand and supply sides. As a result of network effects, the diffusion of such an innovation is predicted to follow a take-off curve coinciding with the advent of a critical mass of adopters. The current literature on innovation diffusion, mainly focusing on the demand-side dynamics, such as information cascades and herding behaviors among potential adopters, is not sufficient to explain the take-off (or the failure) of interactive innovations. In this paper, we present and examine a case study of the take-off of an interactive innovation, namely the caller-ring-back-tone (CRBT) and mobile music - mobile value-added services (MVAS) - in China. We find that supply-side dynamics, such as choices of platform strategies, helped drive the take-off of this innovation within China's institutional boundaries. The paper makes a contribution in two ways: first, it presents an ‘inside-out’ view of a unique case of take-off phenomenon; and, second it provides an integrated view combining factors from both the demand and supply sides to explain the take-off phenomenon, which is rare in empirical studies.     

The sources and aims of innovation in services: Variety between and within sectors

Services dominate economic activity, but remain under-researched by analysts of innovation and technological change. The early 'one size fits all' theories of innovation in services have in recent years given way to an appreciation that services are diverse, not least in their innovation activities. This paper draws on recent empirical evidence from large-scale surveys undertaken in 13 western European countries, to investigate the extent and the sources of innovation in five services sectors. The analysis includes the extent to which services innovate, and amongst innovators the extent to which they engage in R&D and collaborative arrangements for innovation. The analysis supports the recent literature which emphasises significant differences between sectors in their pattern of innovation behaviour, but also highlights significant intra-sectoral differences in innovation behaviour. This intra-sectoral variation deserves much fuller investigation in the future.     

A welfare analysis of global patent protection in a model with endogenous innovation and foreign direct investment

This paper constructs a North–South quality-ladder model in which foreign direct investment (FDI) is determined by the endogenous location choice of firms, and examines analytically how strengthening patent protection in the South affects welfare in the South. Strengthening patent protection increases the South's welfare by enhancing innovation and FDI, but it also allows the firms with patents to charge higher prices for their goods, which decreases welfare. However, the model shows that the former positive welfare effect outweighs the latter negative effect. Moreover, introducing the strictest form of patent protection in the South, that is, harmonizing patent protection in the South with that in the North, may maximize welfare in the South as well as in the North. Further, a similar result can also be obtained in a nonscale effect model.     

Shaping user-side innovation through standardisation: The example of ICT

This paper looks at the relations that exist between standardisation and user-side innovation in ICT. Some necessary background information are followed by a discussion of how standards and user-side innovations are shaped. A mutual influence between standardisation and innovation can be identified. To avoid the emergence of standards that are beneficial only for a handful of users a co-ordinated representation of users in standards setting is suggested.     

知识产权保护与发展中国家创新能力提升——来自中国的实证分析

分析知识产权保护对发展中国家的影响,需要考虑知识产权保护对发展中国家自主研发能力的作用,需要以发展中国家创新能力的提升为研究归宿。文章在考虑了发展中国家培育自主创新能力必要性的基础上,分析了发展中国家在开放条件下实施知识产权保护战略时面临的多重困境。对中国的实证研究表明:知识产权保护是影响FDI规模和质量的重要因素;知识产权保护促进了内资企业的创新能力,并通过研发投入的加强提高了国际技术溢出的吸收效果;加强知识产权保护带来更多更高技术含量FDI的正面效应,可以弥补其对技术溢出的抑制效应。     

Risk,variety and volatility: growth,innovation and stock prices in early industry evolution

The paper studies the patterns of volatility in firm growth rates and stock prices during the early phase of the life-cycle of an old economy industry, the US automobile industry from 1900-1930, and a new economy industry, the US PC industry from 1974-2000. In both industries, firm growth rates are more volatile in the period in which innovation is the most radical. This is also the period in which stock prices are more volatile. The comparison sheds light on the co-evolution of industrial and financial volatility and the relationship between this co-evolution and mechanisms of Schumpetarian creative destruction. Results provide insight into the debate on whether the statistical behavior of firm growth rates is well represented by Gibrats Law.JEL Classification: L11, 030, G12I thank Massimiliano Tancioni for his excellent research assistance. Support from the following grants is much appreciated: European Commission Key Action Improving the socio-economic knowledge basecontract HPSE-CT-2002-00146, and the Open University RDF Grant contract no. 793.