Search

This study examines the induced innovation hypothesis (IIH) from 1958 to 2015 for two Canadian agriculture regions: Central Canada (the provinces of Ontario and Quebec) and Western Canada (the provinces of Alberta, Saskatchewan and Manitoba). There is broadly consistent support for the IIH for Canadian agriculture, especially for Western Canadian agriculture. In addition, there is support for the notion that US, as well as Canadian, research expenditures are important to explain changes in the input ratio in Canadian agriculture in the long run. This indicates the existence of spillover effects from US agricultural research expenditures to Canadian agriculture. [ABSTRACT FROM AUTHOR]

Despite a wealth of case-specific insights from agricultural adoption studies, we lack systematic evidence on which technology characteristics matter for adoption across different innovation contexts. We synthesise the results of 304 quantitative farm-level adoption studies for a wide range of agricultural innovations across more than 60 countries using multi-level meta regression. Our results show that land, capital and knowhow are generally more important when an innovation uses the respective factor intensively, but this effect is reduced in contexts where the factor is abundant. Our findings have implications for the design of rural development and agricultural extension programmes. Both should consider the interplay of geographic context and innovation characteristics to develop more effective sustainable intensification strategies. [ABSTRACT FROM AUTHOR]

We study theoretically and numerically the effects of an environmental tax reform using endogenous growth theory. In the theoretical segment, mobile labor between manufacturing and R&D activities, and elasticity of substitution between labor and energy in manufacturing lower than unity allow for a growth dividend, even if we consider preexisting tax distortions. The scope for innovation is reduced when we consider direct financial investment in the lab, or elastic labor supply. We then apply the core theoretical model to a real growing economy and find that a boost in long-run economic growth following such a carbon policy is a possible outcome. Redistribution of additional carbon tax revenue by lowering capital taxation performs best in terms of effciency measured by aggregate welfare. In terms of equity among social segments the progressive character of lump-sum redistribution fails when we consider very high emissions reduction targets. [ABSTRACT FROM AUTHOR]

The article is a first approximation to identify the endogenous factors that could be explaining the dynamics of Fresh Fruits and Vegetables (ffv) exports from Mexico to Japan during the 2000- 15 period. Using Hayami and Ruttan (1971, 1985) approach on induced innovation, and Blando Sánchez (2017) official sources, it is analyzed the degrees of complementarity in the bilateral trade dynamics on Mexican supply of ffv products to Japan. The analysis suggests that the production of fresh foods in the Asian country has decreased, evidencing opportunities for the exports of ffvs produced in Mexico to the Japanese consumer. However, the signing of the cpttp (2018) Agreement challenges the possibility of studying a future model of relative prices that could trigger an innovation process in the sense pointed out by Hayami and Ruttan (1971, 1985) in Mexico. [ABSTRACT FROM AUTHOR]

In this paper we investigate the long-run economic consequences of phasing out nuclear energy in the presence of stringent climate policies. We integrate endogenous growth theory and technology-based activity analysis into a dynamic numerical general equilibrium model. Both market-based and policy-mandated nuclear phase-out are studied. Using data from the Swiss economy we find that the aggregate welfare loss of carbon policy is as large as 1.21% and that nuclear phase-out raises the loss to 1.58%. Nuclear phase-out has no significant effect on economic growth. Increased investment, induced innovation, and sectoral change are the reasons that the economic impact of nuclear phase-out and the trade-off between energy and climate policy are moderate, once the dynamics of an economy are taken into account. Optimal phase-out time for nuclear depends mainly on future cost escalation in the energy sector. [ABSTRACT FROM AUTHOR]

This article uses nationally representative household-level panel data from Malawi to estimate how rural population density impacts agricultural intensification and household well-being. We find that areas of higher population density are associated with smaller farm sizes, lower real agricultural wage rates, and higher real maize prices. Any input intensification that occurs seems to be going to increasing maize yields, as we find no evidence that increases in population density enable farmers to increase gross value of crop output per hectare. We also find evidence that households in more densely populated areas increasingly rely on off-farm income to earn a living, but there appears to be a rural population density threshold beyond which households can no longer increase off-farm income per capita. [ABSTRACT FROM AUTHOR]

This study measures how Kenyan farmers and farming systems have responded to changes in population density and associated land pressures. Kenya is a relatively densely populated area, with 40% of its rural people residing on 5% of its rural land. We develop a structural model for estimating the impact of population density on input and output prices, farm size, and ultimately on smallholder behavior and agricultural intensification. Evidence is derived from a five-round panel survey between 1997 and 2010. We find a negative relationship between localized population density and farm size, and a positive relationship between population density and measures of land intensification up to roughly 500 persons/km 2 . Beyond this threshold, rising population density is not associated with further increases in land intensification. Some measures of intensification actually show an alarming decline beyond this population density threshold. We also find a relatively weak relationship between population density and off-farm income. Overall, total household income per adult equivalent is found to decline significantly as population density rises. These findings raise serious policy questions about feasible pathways for rural poverty reduction in the context of increasingly land-constrained farming systems. [ABSTRACT FROM AUTHOR]

How do innovators respond to the shock of a natural disaster? Do natural disasters spur technical innovations that can reduce the risk of future hazards? This paper examines the impact of three types of natural disasters—floods, droughts and earthquakes—on the innovation of their respective mitigation technologies. Using patent and disaster data, our study is the first to empirically examine adaptation responses across multiple sectors at the country level. Considering the potential endogeneity of disaster damages, we use meteorological and geophysical data to create hazard intensity measures as instrumental variables. Overall, we show that natural disasters lead to more risk-mitigating innovations, while the degree of influence varies across different types of disasters and technologies. [ABSTRACT FROM AUTHOR]

The microeconomic version of the theory of induced innovation extends the logic of factor substitution and static efficiency to the process of technical change and attempts to show that the ‘bias’ of technical progress in agriculture will work in the same direction as factor substitution at given technology, with factor proportions changing in inverse relation to relative factor prices. This article argues that even within the model itself, the scope for rising labour productivity associated with land-saving technical progress appears to be rather limited. Econometric studies of technical change in Japanese agriculture support this view. Moreover, the theory of induced innovation tends to confuse static efficiency with ‘dynamic efficiency’ implying investments, technological progress and changing factor proportions over time. The theory of induced innovation does not identify anydriving forceof technical change. Therefore, it cannot explain adequately why technical progress takes place or does not take place. The article concludes by arguing that in an agriculture of poor smallholders, price control and price stabilisation rather than market-driven changes of relative factor prices are important in stimulating technical progress. [ABSTRACT FROM AUTHOR]

Abstract: Taking dioxin emissions from incineration and the recycling of home electric appliances in Japan as two case studies, this paper aims to clarify the impact of environmental policy on technological innovation. For our case studies, relevant Japanese patent data were gathered and analyzed for the period 1990–2008. To demonstrate that environmental regulations induce technology innovation, we conducted statistical analysis to compare the number of patents related to each regulation between the period under regulation and period outside the regulation. The results show that after the regulations were introduced, new technological developments occurred for most technological types and the total number of related patent applications was larger even when controlling for other exogenous and endogenous factors such as business cycles and expenditures in Research and Development (R&D). We finally argue that while a possible weakness in these types of direct regulations is the lack of incentives for further innovations, they can still induce innovation if they are flexible and with specific targets. [Copyright &y& Elsevier]

Abstract: Scientific research and private-sector technological innovation differ in objectives, constraints, and organizational forms. Scientific research may thus not be driven by the direct practical benefit to others in the way that private-sector innovation is. Alternatively, some – yet largely unexplored – mechanisms drive the direction of scientific research to respond to the expected public benefit. We test these two competing hypotheses of scientific research. This is important because any coherent specification of what constitutes the socially optimal allocation of research requires that scientists take the public practical benefit of their work into account in setting their agenda. We examine whether the composition of medical research responds to changes in disease prevalence, while accounting for the quality of available research opportunities. We match biomedical publications data with disease prevalence data and develop new methods for estimating the quality of research opportunities from textual information and structural productivity parameters. [Copyright &y& Elsevier]

Abstract: In dealing with a transnational pollutant-emitting duopoly welfare-maximising policy makers face two negative externalities: imperfect competition and unpriced emissions. Strategic environmental policy models show that these externalities involve a trade-off between reducing pollution and allowing for rent-seeking of the respective firm. This dilemma usually results in a suboptimal internalisation of the negative externality emerging from emissions. Indeed, the conventional model setup includes an R&D stage that enables the firms to mitigate regulation costs. But the typical one period configuration ignores that R&D expenditures create knowledge capital which is, due to its inherent cumulativeness, also effective in following periods. Our model analyses the established trade-off in a two period setting and therefore allows for an investigation of intertemporal knowledge accumulation. We find that the intertemporal effects provide an incentive for a policy maker to set a higher tax rate compared to a one-period setup which lessens the magnitude of the suboptimal internalisation of emissions. Under certain conditions even a tax rate above the Pigouvian level is possible in period 1. [Copyright &y& Elsevier]

Abstract: In this paper, we show that the potential for endogenous technological change in alternative energy sources may alter the behaviour of resource-owning firms. When technological progress in an alternative energy source can occur through learning-by-doing, resource owners face competing incentives to extract rents from the resource and to prevent expansion of the new technology. We show that in such a context, it is not necessarily the case that scarcity-driven higher traditional energy prices over time will induce alternative energy supply as resources are exhausted. Rather, we show that as we increase the learning potential in the substitute technology, lower equilibrium energy prices prevail and there may be increased resource extraction and greenhouse gas emissions. We show that the effectiveness and the incidence of emissions reduction policies may be altered by increased potential for technological change. Our results suggest that treating finite resource rents as endogenous consequences of both technological progress and policy changes will be important for the accurate assessment of climate change policy. [Copyright &y& Elsevier]

Global wood consumption trends are reviewed in the context of framing a coherent forest policy in the era of climate change. Over the period 1980 to 2007, global wood consumption has been essentially stagnant, increasing by only 0.4% per year. In contrast over the same period, global consumption of wood products increased steadily, paper by an average 3.2% per annum and solid wood products (sawn timber and wood panels) by 0.8% per annum. Wood saving explains these significantly different growth trajectories in unprocessed wood and processed wood products. Wood saving strategies include recycling paper (in particular), investing in higher yielding pulp technologies, substituting reconstituted wood panels for sawn timber and plywood and growing high pulp-yielding trees in a plantation regime. China's rapidly growing wood products industry has lifted wood saving to a new high. Consistent with the theory of induced innovation, China has so far avoided triggering a global wood shortage and associated wood price increases through a progression of strategies: successful pre-emptive price negotiations, increased use of recycled paper, adoption of high-yielding pulp technologies, substitution of reconstituted wood panels for sawn timber and tree planting substituting for natural forest supply. If China's current wood saving strategies were emulated worldwide, through increased use of recycled paper in particular, and to a lesser extent, substitution of reconstituted wood panels for sawn timber and plywood, the already low growth in global wood consumption would flatten further and perhaps start to decline. These economic realities in the wood products industry align positively with the interlinked imperatives of biodiversity conservation and carbon storage in natural forests, if wood-saving is converted to forest-saving. [ABSTRACT FROM PUBLISHER]

The development of technological solutions to minimize risks of the current climate can lead to two possible outcomes: increase in agricultural productivity and insights about adaptation to future climate change. Drawing on the hypothesis of induced innovation, we investigate whether spatial variations in climatic resources prompted the development of location-specific technologies that led to increased rice productivity in Nepal. Using Nepal's district-level time-series data (1991-1992 and 2002-2003), this article examines the extent to which technological innovations have provided farmers with means to respond to climatic constraints to enhance rice productivity in climatically marginal regions of the country. Complementing this analysis with relevant case studies, we also investigate how and to what extent Nepal's research establishments have provided farmers with technological options to alleviate climatic constraints in rice cultivation across the country's climatically diverse terrain. The findings from both the empirical and qualitative assessment indicate that Nepal's research establishment is engaged in and committed to the development of location-specific technologies that address the constraints of climate. The outcome of such commitment has been a series of technological innovations and changes in policies in agriculture. Together, this might have been responsible for higher yields among the districts with marginal climate, which have subsequently led to convergence of the rice productivity growth rate in the country. If the current trend of addressing the constraints of climate in agriculture through appropriate technological as well as institutional changes continues, then the prospect of adapting to further climate becomes more apparent in Nepal. [ABSTRACT FROM AUTHOR]

Abstract: The paper addresses the mechanisms by which specific economic instruments based on the ‘producer responsibility principle’ (PRP) can influence innovation when environmental policy has impact on very complex industrial subsystems. We consider the EU policy on End-of-Life Vehicles (Directive 2000/53/EC on ELVs) as a representative case study of ‘multiple industry–PRP instrument’ dynamic efficiency problems. In order to achieve ambitious policy targets on ELV recovery/recycling/reuse, interrelated sequences of single innovations in both upstream (car making) and downstream (car recycling/recovery) should take place. We explore the extent to which the introduction of a free take-back (FTB) instrument can influence industrial actors in contributing to ‘innovation paths’ that are still marked by technological uncertainty, evolving capabilities, and different cost-benefit balances for actors themselves. We conclude that differently from static approaches, in which the EI and its formulation is neutral with respect to policy effectiveness, the dynamic efficiency of EIs in ELV-like problems depends both on where, along the ‘production-to-waste chain’, and how, in terms of net cost allocation, the specific incentive is introduced. Consequently, in order to generate a ‘policy-desired’ innovation path, the way in which the EI-related incentive allocated to a certain industry is transmitted to other industries—whether upward or downward along the chain—is also relevant. Disregarding these effects can imply a ‘dissipation’ of innovation incentives, and the generation of ‘regulation-induced rents’ for some actors cannot be ruled out. Policies based on PRP should consider EIs in conjunction with ‘enforceable’ voluntary agreements. [Copyright &y& Elsevier]

Abstract: The recent advances in the economics of innovation and the analysis of how composition effects influence the introduction of technological change in a global economy, characterized by the variety of production functions in use and different local factor markets, provide new strength to the induced innovation approach. Developing the localized technological change approach, it is argued that because there are irreversibilities, limited knowledge and local learning, the introduction of new technologies is induced by the disequilibrium conditions brought about in each system by all changes in relative factor prices. The direction of technological change in terms of its specific form of bias and how it is introduced and adopted, however, reflects the specific conditions of local factor markets. Well-defined long-term technological paths emerge in each region and they depend on the selection process in product markets. The more rigid and idiosyncratic, the endowment of production factors and the system of relative prices are, the more specific the technological path of each region is likely to be. The divide between the microeconomic and the macroeconomic models of induced technological change is reconciled. [Copyright &y& Elsevier]

Abstract: Using patent data from the United States, Japan, and Germany, this paper examines both innovation and diffusion of air pollution control equipment. Whereas the United States was an early adopter of stringent sulfur dioxide (SO2) standards, both Japan and Germany introduced stringent nitrogen dioxide (NO X ) standards much earlier than the US. Nonetheless, in both cases, tightened standards in the US led to more domestic patenting, but not more foreign patenting. Overall, the data suggest that inventors respond to environmental regulatory pressure in their own country, but not to foreign environmental regulations. Moreover, any technology transfer that occurs appears to be indirect. Domestic innovation occurs even for technologies that have already experienced significant innovative activity abroad and utilities purchase pollution abatement equipment from domestic firms. However, patent citation data from the US do show that earlier foreign patents are an important building block for NO X pollution control innovations in the US. [Copyright &y& Elsevier]

Despite growing empirical evidence of the link between environmental policy and innovation, most economic models of environmental policy treat technology as exogenous. For long-term problems such as climate change, this omission may be significant. In this paper, I modify the DICE model of climate change (Managing the Global Commons: the Economics of the Greenhouse Effect, MIT press, Cambridge, MA, 1994; Warming the World: Economic Models of Global Warming, MIT press, Cambridge, MA, 2000) to allow for induced innovation in the energy sector. Ignoring induced technological change overstates the welfare costs of an optimal carbon tax policy by 9.4%. However, cost savings, rather than increased environmental benefits, appear to drive the welfare gains, as the effect of induced innovation on emissions and mean global temperature is small. Sensitivity analysis shows that potential crowding out of other R&D and market failures in the R&D sector are the most important limiting factors to the potential of induced innovation. Differences in these key assumptions explain much of the variation in the findings of other similar models. [Copyright &y& Elsevier]

The theory of induced innovation says that technological innovations which economize on relatively scarce inputs will be invented and adopted. Hayami and Ruttan have hypothesized that this model also holds for institutional innovations. Coase and Williamson suggest that economic organization, such as vertical integration, is the result of transaction cost minimization. Coase discusses the transaction costs of negotiation versus other alternatives for solving externality problems. This paper brings these previously unconnected threads of the literature together and incorporates transaction costs in an induced institutional innovation model. This conceptual model is brought to bear on the issue of institutional innovations over time in relation to the National Native Title Tribunal. In addition to the reductions in transaction costs from a negotiated settlement rather than litigation, there are other advantages of negotiation. These may include improved "quality" of settlements, improved relations between the negotiating parties, and more timely resolution. [ABSTRACT FROM AUTHOR]

This paper discusses the relationship between industry growth and environmental quality in the context of salmon aquaculture. It is argued that industry growth can reduce pollution by inducing more technological innovations for industry-specific, pollution-reducing inputs. This increases the elasticity of substitution between conventional factors of production on the one hand, and pollution on the other, and therefore enables a greater degree of internalization of environmental problems. Four indicators of pollution are examined for Norwegian salmon aquaculture. The salmon aquaculture industry is one in which growth is associated with reduced environmental problems not only in relative, but also in absolute terms. [ABSTRACT FROM AUTHOR]

The Hicks induced innovation hypothesis states that a price increase of a production factor is a spur to invention. We propose an alternative hypothesis restating that a spur to invention requires not only an increase of one factor but also a decrease of at least one other factor to offset the companies' cost. We illustrate the need for our alternative hypothesis in a historical example of the industrial revolution in the United Kingdom. Furthermore, we econometrically evaluate both hypotheses in a case study of research and development (R&D) in 29 OECD countries from 2003 to 2017. Specifically, we investigate the dependence of investments to R&D on the economic environment represented by average wages and oil prices using panel regression. We find that our alternative hypothesis is supported for R&D funded and/or performed by business enterprises while the original Hicks hypothesis holds for R&D funded by the government and R&D performed by universities. Our results reflect that the business sector is significantly influenced by market conditions, unlike the government and higher education sectors. • The Hicks induced innovation hypothesis states that a spur to invention requires an increase of a single production factor. • Our alternative hypothesis restates that a spur to invention also requires a decrease of at least one other factor. • R&D funded and/or performed by the business enterprise sector is driven by high wages and low oil price. • R&D funded by the government sector or performed by the higher education sector is driven only by high wages [ABSTRACT FROM AUTHOR]

• I compare the process of structural transformation in both national data and household panel data in India. • The national data provides evidence that India is in the midst of structural transformation. • Household data tells a similar story, though rural households lag behind in key indicators. • The results have implications for using stylized facts to set policy agenda. This paper compares national-level data from India with 40 years of household panel data from rural India to track sectoral changes in employment and income as well as examine the hypothesis of induced innovation in agricultural production. In the national data, India appears to be in the midst of a structural transformation. The share of agriculture in GDP and employment has shrunk while agricultural output continues to grow. This productivity growth appears to adhere to the induced innovation hypothesis, as productivity per hectare has increased more rapidly than productivity per worker. Many of the same patterns exist in the household data. Tracking households across time, I observe agricultural output has increased, despite more households engaging in off-farm labor. Household agricultural production is highly specialized and has increased its reliance on improved inputs. However, while agricultural income has grown, industrial and service income has remained stagnant, and the relative income of these households has declined in recent years. [ABSTRACT FROM AUTHOR]

• African countries are experiencing agricultural factor price trends that vary with connectedness to towns and economic transformation. • We test whether Kenyan households' response to factor price changes differs systematically by agro-ecological potential and market access. • Farmers in areas of good market access have greater incentives to use labor-saving, land-saving and capital-using practices. • No such changes have occurred in areas of poor market access, suggesting the need for region-specific agricultural research priorities. • Sustainable agricultural productivity growth will require anticipating technologies appropriate for different factor price conditions. While Boserupian intensification processes have been documented in many parts of Africa, there is regional variation in the trends in relative prices of land, labor, and capital inputs such as fertilizer. Some rural areas are experiencing unprecedented spikes in land values associated with growing land scarcity, improved market access, and agricultural commercialization potential, while others remain economically isolated and less influenced by the transformational changes occurring elsewhere in the region. This study uses a panel spanning 13 years of 1208 smallholders in Kenya to assess whether households' response to changes in relative factor prices varies by agro-ecological potential and market access. In areas of low agro-ecological potential, households respond to rising land prices by cultivating less land and applying fertilizer more intensively but do not appear to adjust fertilizer use in response to changing fertilizer prices. By contrast, households in areas of high agro-ecological potential do not appear to adjust the quantity of land under cultivation in response to changing input prices but increase fertilizer use as land prices rise and fertilizer prices fall. Finally, households with better market access conditions appear slightly more responsive to land price changes than do those with poor market access. Given anticipated trends in factor price ratios, this heterogeneity suggests that sustainable forms of agricultural productivity growth will require anticipating the kinds of farm management technologies that will be suitable for farmers in different conditions. This highlights the need for agricultural technology generation and diffusion programs that assist smallholders to overcome the constraints that may prevent them from adapting sufficiently on their own. [ABSTRACT FROM AUTHOR]