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Begin New Search Publishing Institution Norwegian Institute of International Affairs Author Fulvio Castellacci

1. Policy Strategies for Economic Development in Cuba: A Simulation Model Analysis

Author:
Fulvio Castellacci and Hamza Kanar
Publication Date:
12-2013
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
The economic reforms recently implemented in Cuba do not adequately deal with the structural issues that hamper the country's economic development. The paper presents a system dynamics model to investigate Cuba's development process, and a simulation analysis to compare different policy scenarios that may be realized in the future as economic reforms will continue. The results indicate that the most effective development policy would be to combine active public policies to enhance the R sector, on the one hand, and foster the emergence of an efficient private sector that will develop the capital infrastructure of the economy, on the other.
Topic:
Development, Economics, and Foreign Aid
Political Geography:
Latin America and Caribbean

2. Do the effects of R tax credits vary across industries? A meta-regression analysis

Author:
Fulvio Castellacci and Christine Mee Lie
Publication Date:
07-2013
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
This paper presents a survey of the micro-econometric literature on the effects of R tax credits on firms' innovation activities. The authors focus on one specific aspect that has not received sufficient attention in previous research: the sectoral dimension. Our meta-regression analysis (MRA) sets up a new database collecting a large number of firm-level studies on the effects of R tax credits and investigates the factors that may explain differences in the estimated effects that are reported in the literature. The main result of the MRA analysis is indeed that sectors matter. Micro-econometric studies that have focused on a sub-sample of high-tech industries have on average obtained a smaller estimated effect of R tax credits. The paper proposes a simple framework to investigate why the effects of R tax credits vary across sectors and points out new directions and hypotheses for future research.
Topic:
Development, Economics, International Trade and Finance, and Markets

3. Business Groups, Innovation and Institutional Voids in Latin America

Author:
Fulvio Castellacci
Publication Date:
10-2012
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
The paper presents an empirical analysis of the innovative activities of business groups in Latin America. It compares the innovativeness of group-affiliated firms (GAFs) and standalone firms (SAFs), and it investigates how country-specific institutional factors – financial, legal, and labor market institutions – affect the group-innovation relationship. The empirical analysis is based on the most recent wave of the World Bank Enterprise Survey (period 2010-2011), and it focuses on a sample of 6500 manufacturing firms across 20 Latin American countries. The econometric results point out two major conclusions. First, GAFs are more innovative than SAFs: we estimate the innovation propensity of GAFs to be 9% higher than that of SAFs. Secondly, across countries, the innovativeness of GAFs is higher for national economies with a better institutional system than for countries with a less efficient institutional set up.
Topic:
Economics, Globalization, International Trade and Finance, and Markets
Political Geography:
Latin America

4. Capable Companies or Changing Markets? Explaining the Export Performance of Firms in the Defence Industry

Author:
Fulvio Castellacci and Arne Fevolden
Publication Date:
02-2012
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
The paper carries out an empirical analysis of the factors explaining the export performance of firms in the defence sector. We focus on the case of Norway, and make use of two complementary methodologies: the first is based on quantitative firm-level data analysis for the whole population of defence companies, and the second is based on qualitative case study research on the three most important defence export products (weapon stations, ammunition, electronics). Our empirical results highlight the importance of four major success factors for exporting firms: (1) the participation in offset agreements; (2) the ability to focus on their set of core competencies; (3) their R activities and interactions with the public S system; (4) demand opportunities and, relatedly, user-producer interactions.
Topic:
Defense Policy, Arms Control and Proliferation, Markets, Science and Technology, and Weapons of Mass Destruction
Political Geography:
Norway

5. Defence Firms Facing Liberalization: Innovation and Export in an Agent-based Model of the Defence Industry

Author:
Fulvio Castellacci, Arne Fevolden, and Martin Blom
Publication Date:
01-2012
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
The paper presents an agent-based simulation model of the defence industry. The model resembles some of the key characteristics of the European defence sector, and studies how firms in this market will respond to the challenges and opportunities provided by a higher degree of openness and liberalization in the future. The simulation analysis points out that European defence firms will progressively become more efficient, less dependent on public procurement and innovation policy support, and more prone to knowledge sharing and inter-firm collaborations. This firmlevel dynamics will in the long-run lead to an increase in the industry's export propensity and a less concentrated market.
Topic:
Defense Policy, Arms Control and Proliferation, Markets, Weapons of Mass Destruction, and Governance
Political Geography:
Europe

6. The trade-off between Innovation and Defence Industrial Policy

Author:
Fulvio Castellacci, Martin Blom, and Arne Martin Fevolden
Publication Date:
05-2012
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
The paper investigates the trade-off between innovation and defence industrial policy. It presents an agent-based simulation model calibrated for the Norwegian defence industry that compares different policy scenarios and examines the effects of a pending EU market liberalization process. The paper points to two main results. (1) It finds that a pure scenario where national authorities focus on, and provide support exclusively for, either a) international competitiveness or b) national defence and security objectives, is more Pareto efficient than a corresponding mixed strategy where policy makers simultaneously pursue both international competitiveness and defence and security objectives. (2) Under the conditions of the new EU liberalization regime, it finds that a stronger and more visible trade-off will emerge between international competitiveness and national defence and security objectives. Policy makers will have to choose which to prioritise, and set a clear agenda focusing on one of the two objectives.international competitiveness or b) national defence and security objectives, is more Pareto efficient than a corresponding mixed strategy where policy makers simultaneously pursue both international competitiveness and defence and security objectives. (2) Under the conditions of the new EU liberalization regime, it finds that a stronger and more visible trade-off will emerge between international competitiveness and national defence and security objectives. Policy makers will have to choose which to prioritise, and set a clear agenda focusing on one of the two objectives.
Topic:
Security, Defense Policy, International Trade and Finance, and Markets
Political Geography:
Europe

7. Innovation, Absorptive Capacity and Complexity along Development Stages

Author:
Fulvio Castellacci and Jose Miguel Natera
Publication Date:
04-2012
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
The paper presents an empirical analysis of the time series properties of Schumpeterian multiple equilibria models. It considers a panel of 116 countries over the period 1980-2008, and makes use of panel cointegration analysis and Granger causality tests to identify the set of dynamic relationships linking together innovation, absorptive capacity and economic growth in different country clubs. The results provide general support for this class of models and show that absorptive capacity and innovation progressively become more important engines of growth as the development process unfolds over time. Relatedly, the complexity of the economic system (measured by the number of significant Granger causal relationships driving economic growth) increases as we move from the less-developed, to the middle-income and then to the advanced country clubs.
Topic:
Development, Economics, International Cooperation, and Political Economy

8. Service Innovation and the Proximity-Concentration Trade-off Model of Trade and FDI

Author:
Fulvio Castellacci
Publication Date:
06-2011
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
This paper introduces service innovation in the proximity-concentration trade-off model of trade and FDI (Helpman, Melitz and Yeaple, 2004). The idea is that innovation will have two main effects on service firms' choice between exports and FDI. First, innovative firms will on average have higher productivity levels than non-innovative enterprises. Secondly, innovators will have to pay a higher relational distance cost for undertaking export activities, and they will therefore prefer to avoid (or reduce) these costs by choosing a FDI strategy instead. We test the empirical relevance of this idea on a new survey dataset for a representative sample of firms in all business service sectors in Norway. The results show that firms are more likely to choose FDI rather than export the greater their productivity level and the higher the relational distance costs they face.
Topic:
Industrial Policy, International Trade and Finance, and Foreign Direct Investment

9. A new panel dataset for cross-country analyses of national systems, growth and development (CANA)

Author:
Fulvio Castellacci and Jose Miguel Natera
Publication Date:
02-2011
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
Missing data represent an important limitation for cross-country analyses of national systems, growth and development. This paper presents a new cross-country panel dataset with no missing value. We make use of a new method of multiple imputation that has recently been developed by Honaker and King (2010) to deal specifically with time-series cross-section data at the country-level. We apply this method to construct a large dataset containing a great number of indicators measuring six key country-specific dimensions: innovation and technological capabilities, education system and human capital, infrastructures, economic competitiveness, political-institutional factors, and social capital. The CANA panel dataset thus obtained provides a rich and complete set of 41 indicators for 134 countries in the period 1980-2008 (for a total of 3886 country-year observations). The empirical analysis shows the reliability of the dataset and its usefulness for cross-country analyses of national systems, growth and development. The new dataset is publicly available.
Topic:
Development, Economics, Government, International Affairs, and Infrastructure

10. Sectoral Productivity Trend: Convergence Islands in Oceans of Divergence

Author:
Fulvio Castellacci, Gaaitzen J. de Vries, and Bart Los
Publication Date:
07-2010
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
In their influential study on productivity growth at the sector-level, Bernard and Jones (1996, BJ) observed convergence of aggregate labor productivity levels in 14 highly developed countries in 1970-1987. They also found evidence that this could be attributed to convergence in services productivity rather than in manufacturing. The main question this paper addresses is whether this result can be generalized to a broader set of countries. Several strands of growth theory suggest that thresholds with regard to a variety of issues can lead to multiple growth regimes, which are likely to lead to very heterogeneous patterns of convergence and divergence. To analyze this, we use econometric techniques that explicitly allow for identification of parameter heterogeneity (quantile regressions and quantile smoothing splines), both with regard to initial conditions and to performance conditional on these initial productivity levels. BJ's data are extended in several dimensions. The recently developed sectoral dataset we use spans the period 1970-2004 and covers 49 countries, including many developing countries. Overall, our findings suggest that convergence as found by BJ only applies to limited groups of country-sectors ('convergence islands'), whereas the biggest parts of our sample spaces can be considered as 'oceans of divergence'.
Topic:
Development, Economics, and Emerging Markets