Innovative activity and business cycle: Austria in the 19th and 20th century

Abstract

This paper focuses on the analysis of the relationship between business cycles and innovative activity in a small open economy. Small economies benefi t from imports of foreign technologies through international trade and foreign investments and are subjects to signifi cant exogenous shocks that impact their business cycle. The economic analysis is based on the demand and supply theories of innovation and economic fl uctuations. Hypotheses about long term and short term (Granger) effects are tested on Austrian historical data (1852-1979) about the economic output (gross domestic product and industry production) and innovation output (granted patents). The econometric analysis utilizes vector error correction procedure to estimate time-series models of the economy. The results are interpreted in Austrian historical context. The economic-historical analysis suggests that there is no long-term relationship between business cycles and innovative activity between 1852 and 1937. The long-term relationship manifested only between 1948 and 1979. This relationship is very complex and infl uenced by the historical context, and it is not easy to grasp by the econometric analysis. In the short run, there is no compelling evidence trough-out the analyzed time period (1852-1979). However, we cannot fully reject the hypothesis suggesting a relationship between economic cycles and innovative activities. In the most recent period (1948-1979), we can observe a negative impact (Granger causality) of granted patents on the real GDP. Future research taking into account more countries using parametric as well as non-parametric approach could shed some light on the demand hypothesis in the prewar and postwar development of small open economies. This paper showed that there is a long-term equilibrium between economic output and innovation activity. This result suggests that long term factors such as political stability are behind the complex relationship.

Characteristics of Austrian passenger transport policy development since the 1950s

“…This means that all the means of transport diverged from each other rather than reaching some mutual modal equilibrium. However, further analysis based on the vector error correction model can reveal if there is a mutual modal split equilibrium (Minárik, Vokoun and Stellner, 2018). The reasons for the different pace of development were cars and the boom in air transport in recent years.…”

Global economic crisis of 2020 and a new paradigm of countercyclical management

“…They reflected modifications of short economic cycles, namely a decrease in the depth of crises with a simultaneous increase in regularity, the priority of overproduction of fixed capital in comparison with overproduction of goods, the absence of a sharp decline in prices in the pre-crisis period, a reduction in the duration of the phases of crisis and depression (recession) against the background of lengthening the phases of recovery, increased synchronization of national business cycles, and strengthening regional asymmetry in the phases of recovery. On the one hand, these transformations were the result of the deep technological modernization of the economies of developed countries (Miyamoto & Nguyen, 2017), as well as their growing socialization and restructuring, deepening internationalization of business and the introduction of innovative management (Minárik, 2018), and on the other, the introduction of an effective policy of systemic state anticyclical regulation (OECD, 2010). Drivers of global synchronization can be found in structural differences between the economies of developed and developing countries (Karadimitropoulou, 2018), as well as differences in the labor market (Yépez, 2019).…”

What Determines Firm’s Innovation? The Case of Catching-up CEE Countries

“…According to Li, Tarafdar and Rao (2012), it is an important determinant of firm growth, survival, and economic performance. On the other hand, a knowledge-based economy is directly rooted in the production, distribution, and use of knowledge and information through the process of economic learning to catalyze and accelerate the sustainability of economic growth (Momeni, Elahi and Najafi, 2017;Minárik, Vokoun and Stellner, 2018). In the knowledge-based economy innovation systems, firms, organizations, and the government interact with one another and become actors in the cycles of knowledge conversion and innovation (Park, 2001).…”