Over the coming three years, the professor of the UPF Department of Economics and Business, together with a researcher at ESADE, are to carry out the project "Intangibles, Technology Diffusion and Public Policies: Implications for Firm Investment, Market Structure and Aggregate Productivity", within the framework of the EIB Group’s EIBURS sponsorship programme to conduct university research.
The UPF researcher will carry out the project in collaboration with a team of researchers from UPF (Isaac Baley , Manuel Garcia Santana and Priit Jeenas ) and ESADE Business School (Carolina Villegas-Sanchez , principal co-investigator, and Vicente Bermejo ). It will also involve three UPF doctoral students: Andrea Chiavari , Sampreet Goraya and Andrea Sy.
The project reflects the fact that younger, less productive companies have trouble to improve their technology and productivity and compete with market-leading organizations.
The project is funded through a grant obtained in the call " Firm competitiveness, growth and digitalisation " of the EIBURS sponsorship programme, promoted by the European Investment Bank Institute , within the European Investment Bank Group (which includes the European Investment Bank, EIB, and the European Investment Fund, EIF).
The research, which will run between 2021 and 2023 (the first collaboration between UPF and the EIB Group), is endowed with 300,000 euros , 240,000 of which correspond to UPF, and 60,000 to ESADE. It comes in response to the EIB Group’s interest in the study of competitiveness, business growth, innovation, access to finance and investment.
A project with two separate parts, both consisting of macro and micro dimensionsThe first part of the project "Diffusion of intangible capital and technology: measurement and implications for productivity growth, market power and wage inequality", to be led by Andrea Caggese , is motivated by the current slowdown in productivity growth, which was detected in the wake of the 2008 crisis, a subject that concerns the EIB Group and is of great importance for policy makers.
The changing dynamics of technology diffusion and adoption would appear crucial in explaining this trend. In this sense, the project reflects the fact that younger, less productive companies have trouble to improve their technology and productivity and compete with market-leading organizations: this discourages the entry of these young companies in the market, reduces competition, and increases the monopoly power of the dominant companies, while the incentives of the latter to invest in improving productivity decreases. In this sense, the project will investigate the factors that explain the links between technological progress, the diffusion of technology and market results, and the implications for aggregate productivity.
Government policies will be even more important in the coming years since the covid-19 crisis will continue to pose significant economic challenges for all countries.
The second part , "The Investment-Promoting Role of Government Policy: Measurement and Implications for Capital Misallocation and Long-Run Growth", considers that one of the most important elements affecting investments in enterprise and long-term growth in Europe is the crucial role played by government policies: public procurement is one of the main budgetary items of public expenditure, and governments are the main buyers from some major industries, such as construction, transport, waste management and energy.
In addition, government policies will be even more important in the coming years since the covid-19 crisis will continue to pose significant economic challenges for all countries. The project will investigate the importance of the two major policy tools that governments have available to allocate resources -government spending through public procurement and associated fiscal policiesin promoting private investment.
The two parts of the project will focus their analysis on two dimensions. On the one hand, from the "micro" perspective, they will study the impact of the diffusion and adoption of new technologies and government policies in determining innovation, investment and performance at enterprise level. On the other, from the "macro" perspective, they will analyse the aggregate implications in terms of productivity, misallocation of capital, the transmission of technology shocks and long-term growth.
Competitive grants for research on topics of interest to the EIB GroupThe EIBURS research grants provide up to 100,000 euros per year for three years to research centres working on topics of interest to the European Investment Bank Group. They are managed by the Institute’s knowledge programme, which promotes Group relations with universities and research institutes.
The grants are awarded through a competitive process to university departments and research centres in the EU and countries that have applied to join the EU. So far, 31 EIBURS research projects have been funded, led by 26 universities (including UPF) and research centres in 11 countries.