This monthly selection of articles has been carried out by Philippe Gugler and Damiano Lepori, the Center for Competitiveness, University of Fribourg. The entire selection, carried out since 2013, can be consulted on the academic articles page of our web.

Competitiveness and production efficiency across OECD countries

By: M. Salas-Velasco. Competitiveness Review, Vol. 29 Iss. 2, pp. 160-180. 2019.

Abstract: “The purpose of this paper was to measure the efficiency of resource utilization across OECD countries aiming to verify that higher levels of competitiveness enhance the production capacity – the maximum possible output of an economy in a given period with the available resources. The author used a two-stage procedure to first estimate the cross- sectional efficiency scores of 18 OECD economies by data envelopment analysis, and then to assess the impact of contextual variables on efficiency running regressions in the second-stage analysis. In particular, in the second stage, the author examined the effects of competitiveness on the production efficiency of the countries, while controlling for other independent variables. The results confirmed that the higher the level of competitiveness, innovation and sophistication factors predominantly, the higher the level of productive efficiency of the countries analyzed. The paper is novel because it opens the black box of the aggregate process of production of the conversion of resources into a national product. From the social point of view, it is relevant to know if a country could produce more output with the same resources, such as labor and capital and, therefore, could increase per capita income and social welfare.” [ABSTRACT FROM AUTHOR]

The Competitiveness and managerial discretion: an empirical investigation at the national-level

By: M. S. Haj Youssef, H. Maher Hussein, I. Christodoulou. Competitiveness Review, Vol. 29 Iss. 2, pp. 181-203, 2019.

Abstract: “The purpose of this paper is to examine the national-level predictors of country competitiveness using the concept of managerial discretion. The objective is to empirically link the strategic management discipline particularly the upper echelon theory to the concept of country performance measured by competitiveness. This paper tests the proposed relationship between managerial discretion and country competitiveness using a sample of 18 countries from 6 different regional clusters. Discretion scores are generated from survey responses of prominent senior management consultants, while country competitiveness is measured via the Global Competitiveness Index developed by the World Economic Forum. A multi-level regression analysis on the panel data set spanning 10 years of national competitiveness levels is used to empirically demonstrate the association between managerial discretion and country competitiveness. The authors show that managerial discretion is a direct predictor of national competitiveness through its ability to provide CEOs with a wider array of actions to innovate and enhance firm performance which will ultimately contribute to country competitiveness. The positive influence of managerial discretion on country competitiveness provide an interesting framework to examine the influence of firms over public policy-making. Additionally, with businesses becoming increasingly globalized, the profile of countries becomes of a great importance and can become a tool for corporate strategic decisions, such as: market entry strategies. By linking the well-known term of competitiveness to the concept of managerial discretion, the authors provide a totally new approach to assess country performance. Additionally, this paper contributes to the growing literature of managerial discretion by discovering new national-level consequences.” [ABSTRACT FROM AUTHORS]

Cluster externalities, firm capabilities, and the recessionary shock: How the macro-to-micro-transition shapes firm performance during stable times and times of crisis

By: C. Hundt, L. Holtermann, J. Steeger, J. Bersch. ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung, ZEW Discussion Papers, No. 19-008, 2019.

Abstract: “In this paper, we examine the macro-to-micro-transition of cluster externalities to firms and how it is affected by the macroeconomic instability caused by the recessionary shock of 2008/2009. Using data from 16’166 manufacturing and business services firms nested in 390 German regions, we employ within-firm regression techniques to estimate the impact of cross- level interactions between firm- and cluster-level determinants on phase-related differences in firm performance between a pre-crisis (2004-2007) and a crisis period (2009-2011). The empirical results validate the existence of a macro-to-micro-transition that evolves best in the case of broad firm-level capabilities and variety-driven externalities. Furthermore, the results indicate that the transition strongly depends on the macroeconomic cycle. While the transition particularly benefits from a stable macroeconomic environment (2004-2007), its mechanisms are interrupted when being exposed to economic turmoil (2009-2011). Yet, the crisis- induced interruption of the transition is mainly restricted to the national recession in 2009. As soon as the macroeconomic pressure diminishes (2010-2011), we observe a reversion of the transmission mechanisms to the pre-crisis level. Our study contributes to the existing literature by corroborating previous findings that the economic performance of firms depends on a working macro-to-micro transition of external re- sources, which presupposes sufficient cluster externalities and adequate firm-level combinative capabilities. In contrast to previous studies on this topic, the transition mechanism is not modeled as time-invariant. Instead, it is coupled to the prevailing macroeconomic regime.” [ABSTRACT FROM AUTHORS]

Do Tax Incentives Affect Business Location and Economic Development? Evidence from State Film Incentives

By: P. Button. IZA Institute of Labor Economics, IZA DP No. 12225, 2019.

Abstract: “I estimate the impacts of recently-popular U.S. state film incentives on filming location, film industry employment, wages, and establishments, and spillover impacts on related industries. I compile a detailed database of incentives, matching this with TV series and feature film data from the Internet Movie Database (IMDb) and Studio System, and establishment and employment data from the Quarterly Census of Employment and Wages and Country Business Patterns. I compare these outcomes in states before and after they adopt incentives, relative to similar states that did not adopt incentives over the same time period (a panel difference-in-differences). I find that TV series filming increases by 6.3 to 55.4% (0.67 to 1.50 additional TV series) after incentive adoption. However, there is no meaningful effect on feature films, and employment, wages, and establishments in the film industry and in related industries. These results show that the ability for tax incentives to affect business location decisions and economic development is mixed, suggesting that even with aggressive incentives, and “footloose” filming, incentives can have little impact.” [ABSTRACT FROM AUTHOR]

Rereading industrial districts through the lens of entrepreneurship

By: R. Grandinetti. European Planning Studies, DOI: 10.1080/09654313.2019.1614151, 2019.

Abstract: “This paper analyzes the link between industrial districts and entrepreneurship, building a bridge between the literature on entrepreneurship and the literature on industrial districts. Drawing a distinction between generic entrepreneurship and selective entrepreneurship leads us to acknowledge that a close association between industrial districts as a whole and entrepreneurship is only well-founded if we are speaking of the generic definition of the latter. Burt’s theory of structural holes and its application to industrial districts enables us to identify two different types of industrial district, one featuring a high degree of density or closure (P-clusters), the other a high degree of brokerage or (selective) entrepreneurship (SV-clusters). The framework proposed here also suggests a novel interpretation of the transformations that industrial districts of the first type have undergone under the pressure of globalization.” [ABSTRACT FROM AUTHOR]

Relatedness, Complexity and Local Growth

By: B. Davies, D. C. Maré. IZA Institute of Labor Economics, IZA DP No. 12223, 2019.

Abstract: “We derive a measure of the relatedness between economic activities based on weighted correlations of local employment shares, and use this measure to estimate city and activity complexity. Our approach extends discrete measures used in previous studies by recognising the extent of activities’ local over-representation and by adjusting for differences in signal quality between geographic areas with different sizes. We examine the contribution of relatedness and complexity to urban employment growth, using 1981–2013 census data from New Zealand. Complex activities experienced faster employment growth during our period of study, especially in complex cities. However, this growth was not significantly stronger in cities more dense with related activities. Relatedness and complexity appear to be most relevant for analysing how large, complex cities grow, and are less informative for understanding employment dynamics in small, less complex cities.” [ABSTRACT FROM AUTHORS]

Productivity Growth, Industry Location Patterns and Labor Market Frictions

By: C. Davis, K. Hashimoto. The Institute of Social and Economic Research, Osaka University, Discussion Paper No. 1052, 2019.

Abstract: “This paper constructs a two-country model of international trade to study how labor market frictions affect industry location patterns, unemployment rates, and fully endogenous productivity growth. We show that when the larger country offers subsidies to labor search costs or reduces unemployment benefits, the domestic unemployment rate falls, causing greater industry concentration and faster productivity growth, but higher unemployment for the smaller country. When similar labor market policies are implemented in the smaller country, however, the resulting fall in domestic unemployment leads to lower industry concentration and slower productivity growth, while lowering unemployment in the larger country.” [ABSTRACT FROM AUTHORS]

The development of competitiveness clusters in Croatia: a survey-based analysis

By: I.-D. Anić, N. Corrocher, A. Morrison, Z. Aralica. European Planning Studies, DOI: 10.1080/09654313.2019.1610726, 2019.

Abstract: “In order to stimulate growth and competitiveness, many EU member states have implemented cluster-based development strategies. Several works underline the benefits of policy-driven clusters, but understanding how clusters can create value for their members is still an open issue. This work contributes to the literature by investigating 13 Competitiveness Clusters in Croatia, a special type of policy-driven clusters developed within the country’s smart specialization strategy, using original data from a survey on 250 cluster members. Our results indicate the existence of very different attitudes towards the rationale for the initiative. In particular, while some members are more interested in lobbying activities, others see networking and innovation as the most important objectives of clusters. Findings also show that the evaluation of cluster management, governance and performance varies according to the desired objectives. Overall the Competitiveness Clusters initiative in Croatia did not meet members’ expectations.” [ABSTRACT FROM AUTHORS]