A Toolkit of Policies to Promote Innovation

Bloom, Nicholas; Reenen, John Van; Williams, Heidi

doi:10.1257/jep.33.3.163

Cited by 309 publications

(205 citation statements)

References 61 publications

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“…Our results suggest that communication and transportation costs are an important determinant of spatial patterns of innovation and trade in technological ideas. While prior research has emphasized the role of R&D tax credits, increasing the supply of college graduates in STEM fields, or expanding mentorship programs (Bell et al, 2018(Bell et al, , 2019Bloom et al, 2019), our findings suggest that investing in transport networks may be an important policy lever to increase innovation, partly by connecting firms, intermediaries, and inventors in the market for innovation. Another potentially important channel is that the integration of a market for innovation reduces the misallocation of ideas across firms as they can increasingly draw on technologies that originate outside their organizational boundaries by purchasing patents.…”

Section: Discussioncontrasting

confidence: 59%

Making a Market: Infrastructure, Integration, and the Rise of Innovation

2020

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We exploit exogenous variation arising from the historical rollout of the Swedish railroad network across municipalities to identify the impacts of lowered interaction costs on innovative activity. A network connection led to a surge in local innovation due to an increased entry, productivity, and specialization of independent inventors. As the railroad network expanded, it further led to the emergence of a national market for ideas: inventors in connected areas began to develop ideas with applications outside the local economy, which were subsequently sold to firms along the network. Our findings suggest that the reduced interaction cost between firms, intermediaries, and inventors was a key driver of the historical emergence of a market for ideas.

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Section: Discussioncontrasting

confidence: 59%

Making a Market: Infrastructure, Integration, and the Rise of Innovation

2020

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“…The SF coefficient is significant in the reduced form of panel A, but insignificant for the IV specification of panel B. 29 More importantly for us, the RSA treatment effect remains significant. The main message from both Tables 6 and 7 is that our estimates of the effects of RSA appear robust to a variety of ways of controlling for potentially confounding policies.…”

Section: B Other Policiesmentioning

confidence: 80%

“…is the share of 28 Equivalent results for unemployment are contained in online Appendix Table A5. 29 The structural funds coefficient is significant for both specifications in online Appendix Table A5 when we use unemployment as the dependent variable. 30 A TTWA is similar to a US commuting zone.…”

Section: Higher Levels Of Aggregation (Ttwa)mentioning

confidence: 95%

Some Causal Effects of an Industrial Policy

Criscuolo

Martin

Overman

et al. 2019

American Economic Review

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We exploit changes in the area-specific eligibility criteria for a program to support jobs through investment subsidies. European rules determine whether an area is eligible for subsidies, and we construct instrumental variables for area eligibility based on parameters of these rule changes. Areas eligible for higher subsidies significantly increased jobs and reduced unemployment. A 10-percentage point increase in the maximum investment subsidy stimulates a 10 percent increase in manufacturing employment. This effect exists solely for small firms: large companies accept subsidies without increasing activity. There are positive effects on investment and employment for incumbent firms but not Total Factor Productivity. (JEL E24, G31, H25, L25, L52, R23)

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“…Draca (2013) estimates the impact of US defense spending on firm-level innovation and finds that increases in procurement contracts are associated with increases in patenting and R&D. 2 An additional benefit of military R&D is the creation of highly specialized human capital valued by the private sector. Silicon Valley companies increasingly scout Pentagon and NSA personnel for potential hires (Sengupta, 2013) 3 For a recent survey of the literature on the evaluation of innovation policies, see Bloom, Van Reenen, and Williams (2019). The literature focuses on two types of R&D policies.…”

Section: Introductionmentioning

confidence: 99%

The Intellectual Spoils of War? Defense R&D, Productivity and International Spillovers

Moretti¹,

Steinwender²

2019

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In the US and many other OECD countries, expenditures for defense-related R&D represent a key policy channel through which governments shape innovation, and dwarf all other public subsidies for innovation. We examine the impact of government funding for R&D-and defense-related R&D in particular-on privately conducted R&D, and its ultimate effect on productivity growth. We estimate models that relate privately funded R&D to lagged government-funded R&D using industry-country level data from OECD countries and firm level data from France. To deal with the potentially endogenous allocation of government R&D funds we use changes in predicted defense R&D as an instrumental variable. In both datasets, we uncover evidence of "crowding in" rather than "crowding out," as increases in government-funded R&D for an industry or a firm result in significant increases in private sector R&D in that industry or firm. A 10% increase in government-financed R&D generates 4.3% additional privately funded R&D. An analysis of wages and employment suggests that the increase in private R&D expenditure reflects actual increases in R&D employment, not just higher labor costs. Our estimates imply that some of the existing crosscountry differences in private R&D investment are due to crosscountry differences in defense R&D expenditures. We also find evidence of international spillovers, as increases in government-funded R&D in a particular industry and country raise private R&D in the same industry in other countries. Finally, we find that increases in private R&D induced by increases in defense R&D result in significant productivity gains.

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A Toolkit of Policies to Promote Innovation

Cited by 309 publications

References 61 publications

Making a Market: Infrastructure, Integration, and the Rise of Innovation

Making a Market: Infrastructure, Integration, and the Rise of Innovation

Some Causal Effects of an Industrial Policy

The Intellectual Spoils of War? Defense R&D, Productivity and International Spillovers

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