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Business cycles, technology and exports

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  • Dario Guarascio
  • Mario Pianta

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  • Matteo Lucchese
  • Francesco Bogliacino

Abstract

This article shows—on both conceptual and empirical grounds—the importance of business cycles in affecting key relationships between innovation and international performance. While periods of upswing are characterised by a well documented ‘virtuous circle’ between innovation inputs, new products and export success, during downswings most of the positive relationships and feedbacks tend to break down. The findings of Guarascio et al. in (University of Urbino DESP WP 1406, 2014 ) on the long-term relationships between R&D, new products and exports are confirmed and qualified with major novelties. But when the period of analysis is split between periods of upswing and downswing—following Lucchese and Pianta in (Comparat Econ Stud, 54: 341–359, 2012 )—significantly different relationships emerge. These results are obtained through an approach that combines several complementary perspectives. A Schumpeterian view on the diversity of technological change allows to disentangle the specificities and effects of innovation inputs and outputs, and of new products and new processes. A structural change perspective on the role of demand as a driver of innovation and on the importance of open economies allows to link industries’ dynamics with international competitiveness. A business cycle perspective crossing the two previous approaches sheds new light on the fragility of key economic relationships and on the long term damage that recessions may cause to the ‘virtuous circle’ of innovation and performance. The model we propose links exports, R&D and innovation success in a system of three simultaneous equations allowing for the presence of feedbacks loops among key variables. The empirical test is carried out for the period 1995–2010 at the industry level, on 21 manufacturing and 17 service sectors; country coverage includes Germany, France, Italy, Spain, the Netherlands and the United Kingdom, representing a very large part of the European economy. Copyright Springer International Publishing Switzerland 2015

Suggested Citation

  • Dario Guarascio & Mario Pianta & Matteo Lucchese & Francesco Bogliacino, 2015. "Business cycles, technology and exports," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 32(2), pages 167-200, August.
  • Handle: RePEc:spr:epolit:v:32:y:2015:i:2:p:167-200
    DOI: 10.1007/s40888-015-0013-z
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    Cited by:

    1. Castellacci, Fulvio & Natera, Jose Miguel, 2016. "Innovation, absorptive capacity and growth heterogeneity: Development paths in Latin America 1970–2010," Structural Change and Economic Dynamics, Elsevier, vol. 37(C), pages 27-42.
    2. Francesco Bogliacino & Dario Guarascio & Valeria Cirillo, 2015. "Where Does the Surplus Go? Disentangling the Capital-Labor Distributive Conflict," DOCUMENTOS DE TRABAJO - ESCUELA DE ECONOMÍA 013535, UN - RCE - CID.
    3. Bramucci, Alessandro, 2016. "Offshoring, employment and wages," IPE Working Papers 71/2016, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    4. Alessandro Bramucci, 2015. "Offshoring, Employment and Wages," Working Papers 1506, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2015.
    5. Dario Guarascio & Mario Pianta & Francesco Bogliacino, 2016. "Export, R&D and new products. a model and a test on European industries," Journal of Evolutionary Economics, Springer, vol. 26(4), pages 869-905, October.
    6. repec:gam:jsusta:v:10:y:2018:i:2:p:463-:d:131183 is not listed on IDEAS
    7. Francesco Bogliacino & Dario Guarascio & Valeria Cirillo, 2016. "The dynamics of profits and wages: technology, offshoring and demand," LEM Papers Series 2016/04, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    8. Francesco Crespi & Dario Guarascio, 2017. "The demand-pull effect of public procurement on innovation and industrial renewal," LEM Papers Series 2017/20, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

    More about this item

    Keywords

    Business cycles; Innovation; Export; Three stage least squares; F41; F43; O31; O33; C3;

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables

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