Essays in the economics of innovation : an application to the case of Taiwan

This research is an in-depth empirical investigation in the causes and consequences of the innovation activiy of Taiwan's manufacturing firms.The analysis relies on the exploitation of a panel of more than 27000 manufacturing firms observed between 1992 and 1995, 5000 of which can be classified as "innovation firms". The dissertation is organized in three chapters. The first chapter examines the determinants of firms' decision to innovate. We find an overall positive effect (variable across industries) of market concentration. We also observe a non-linear relationship between firms' size and the probability to innovate. Moreover, Taiwan's firms tend to innovate less toward the end of their life cycle. Finally, the growth rate of exportations (at the industry level) significantly increases the probability to innovate. In the second chapter, we estimate the effect of market structure and firm characteristics on the choice of innovation strategy. Four possible strategies are considered: to do R&D only, to import (disembodied) technology only, to mix both, and to forego innovation. We find positive effects of firm size and market structure on the probability of doing R&D (with or without importing technology). We also find that younger firms are more likely to innovate. Finally, we point out significant evidence of complementarity between doing R&D and importing technology. In the final chapter, we focus on the 5000 innovation firms to test the respective effects of importing technology and doing R&D on the growth of total factor and labor productivity. We check for complementarities by including an interaction effect into the regression model of productivity growth. We find that both activities contribute to the growth of labor productivity, whereas total factor productivity growth is mainly driven by R&D. Our results are consistent with possible complementarities between both activities, especially in high-tech industries.