ACTIVITY Yuriy Gorodnichenko UC Berkeley W HAT DO WE KNOW ? Is - - PowerPoint PPT Presentation

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ACTIVITY Yuriy Gorodnichenko UC Berkeley W HAT DO WE KNOW ? Is - - PowerPoint PPT Presentation

Nov 06, 2023 148 likes •331 views

T HE ROLE OF INNOVATION AND SKILLS IN BOOSTING INVESTMENT ACTIVITY Yuriy Gorodnichenko UC Berkeley W HAT DO WE KNOW ? Is innovation a key factor for productivity growth? W HAT DO WE KNOW ? Is innovation a key factor for productivity growth?

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SLIDE 1

THE ROLE OF INNOVATION AND

SKILLS IN BOOSTING INVESTMENT ACTIVITY

Yuriy Gorodnichenko UC Berkeley

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SLIDE 2

WHAT DO WE KNOW?

  • Is innovation a key factor for productivity growth?
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SLIDE 3

WHAT DO WE KNOW?

  • Is innovation a key factor for productivity growth? Yes!
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SLIDE 4

WHAT DO WE KNOW?

  • Is innovation a key factor for productivity growth? Yes!
  • Does modern innovation require skills (human capital)?
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SLIDE 5

WHAT DO WE KNOW?

  • Is innovation a key factor for productivity growth? Yes!
  • Does modern innovation require skills (human capital)? Yes! (most of the time)
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SLIDE 6

WHAT DO WE KNOW?

  • Is innovation a key factor for productivity growth? Yes!
  • Does modern innovation require skills (human capital)? Yes! (most of the time)
  • Should resources (capital/labor) flow to more innovative/productive firms?
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SLIDE 7

WHAT DO WE KNOW?

  • Is innovation a key factor for productivity growth? Yes!
  • Does modern innovation require skills (human capital)? Yes! (most of the time)
  • Should resources (capital/labor) flow to more innovative/productive firms? Yes!
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SLIDE 8

WHAT DO WE KNOW?

  • Is innovation a key factor for productivity growth? Yes!
  • Does modern innovation require skills (human capital)? Yes! (most of the time)
  • Should resources (capital/labor) flow to more innovative/productive firms? Yes!
  • When should the flow stop?
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SLIDE 9

WHAT DO WE KNOW?

  • Is innovation a key factor for productivity growth? Yes!
  • Does modern innovation require skills (human capital)? Yes! (most of the time)
  • Should resources (capital/labor) flow to more innovative/productive firms? Yes!
  • When should the flow stop?

At the point where marginal products (“returns”) are equalized across firms

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SLIDE 10

WHAT DO WE KNOW?

  • Is innovation a key factor for productivity growth? Yes!
  • Does modern innovation require skills (human capital)? Yes! (most of the time)
  • Should resources (capital/labor) flow to more innovative/productive firms? Yes!
  • When should the flow stop?

At the point where marginal products (“returns”) are equalized across firms

  • What happens if this recommendation is violated?
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SLIDE 11

WHAT DO WE KNOW?

  • Is innovation a key factor for productivity growth? Yes!
  • Does modern innovation require skills (human capital)? Yes! (most of the time)
  • Should resources (capital/labor) flow to more innovative/productive firms? Yes!
  • When should the flow stop?

At the point where marginal products (“returns”) are equalized across firms

  • What happens if this recommendation is violated?

Investment in human/physical capital falls Innovation declines

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SLIDE 12

MISALLOCATION TO INNOVATION

AT BE BG HR CY CZ DK EE FI FR DE EL HU IE IT LV LT LU MT NL PL PT RO SK SI ES SE UK

20 30 40 50 60 Global Innovation Index Knowledge & Technology Output .75 1.25 1.75

  • St. Deviation of Log Marginal Revenue Product of Capital

(EIB Investment Survey)

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SLIDE 13

INNOVATION TO INVESTMENT

AT BE BG HR CY CZ DK EE FI FR DE EL HU IE IT LV LT LU MT NL PL PT RO SK SI ES SE UK

20 30 40 50 60 Global Innovation Index Knowledge & Technology Output .15 .2 .25 .3 .35 .4 Investment to GDP ratio (Penn World Table)

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SLIDE 14

SCOPE FOR IMPROVEMENT

.5 1 1.5 2 St.Dev. of Log Marginal Revenue Product of Capital

DEES IT FRUK PLHUCZ NL FI SE ATRO SI BEBGDKHRCYSK PT EE LV IE LT LU ELMT

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SLIDE 15

ENDOWMENTS OR INSTITUTIONS

Firm Characteristics Institutions Standard Deviation of Log Marginal Revenue Product

  • f Capital

German German 1.04 Greek Greek 1.69

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SLIDE 16

ENDOWMENTS OR INSTITUTIONS

Firm Characteristics Institutions Standard Deviation of Log Marginal Revenue Product

  • f Capital

German German 1.04 Greek Greek 1.69 German Greek 2.14

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SLIDE 17

ENDOWMENTS OR INSTITUTIONS

Firm Characteristics Institutions Standard Deviation of Log Marginal Revenue Product

  • f Capital

German German 1.04 Greek Greek 1.69 German Greek 2.14 Greek German 1.04