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Mehmet Ugur

University of Greenwich, Internatiional Business and Economics, Faculty Member

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Mehmet Ugur investigates the interactions between innovation, governance, institutions and performance in various contexts, including economic growth, firm performance, innovation, income distribution, European Union policy making, and European network industries.

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Papers by Mehmet Ugur

Does intellectual property protection deliver economic benefits? A multi‐outcome meta‐regression analysis of the evidence

Journal of Economic Surveys, 2022

Both theoretical and empirical work reports contingent and conflicting findings on how intellectu... more Both theoretical and empirical work reports contingent and conflicting findings on how intellectual property (IP) protection affects related outcomes such as innovation, technology diffusion, productivity, or growth. To establish where the balance of the evidence lies, we conduct a multi‐outcome meta‐regression analysis to synthesize findings form 91 primary studies that report 1626 effect‐size estimates for one or more outcomes. Controlling for unobserved heterogeneity and selection bias only, we find that the effect on innovation, technology diffusion, productivity, and economic growth is statistically or practically insignificant. The effect remains insignificant when we control for observed sources of heterogeneity and estimate meta‐effects based on different scenarios for "best‐practice" research. Our work contributes to the existing research effort by extending the application of the multi‐outcome meta‐regression analysis into evidence synthesis in economics. It also...

Innovation, market power and the labour share: Evidence from OECD industries

Technological Forecasting and Social Change , 2024

Two issues remain overlooked in empirical investigations of how labour share varies with technolo... more Two issues remain overlooked in empirical investigations of how labour share varies with technological innovation and market power. One is the risk of omitted variable bias that arises from failure to control for both innovation and market power at the same time. The second is the risk of confounding bias that arises from the possibility that innovation and market power affect each other and the labour share at the same time. I address both issues by adopting a simultaneous equations approach and using EU-KLEMS data from 1995 to 2019 on 31 OECD industries and 12 countries. The novel evidence I discover indicates that: (i) innovation always increases with market power, particularly when the latter increase from a high initial level; (ii) market power always increases with innovation, particularly when the latter is extended to include marketing and organisational innovation; (iii) market power is always more detrimental for labour share compared to innovation; and (iv) the combined effect of human capital and labour-market institutions reverses the adverse effect of innovation but it is insufficient to reverse the adverse effect of market power. These findings are robust to a wide range of sensitivity checks and indicate that the major driver of the decline in labour share is not technological innovation per se, but the extent of market power that enables firms to set real wages below the marginal product of labour.

Does intellectual property protection deliver economic benefits? A multi-outcome meta-regression analysis of the evidence

Journal of Economic Surveys, 2021

Both theoretical and empirical work reports contingent and conflicting findings on how intellectu... more Both theoretical and empirical work reports contingent and conflicting findings on how intellectual property (IP) protection affects related outcomes such as inno- vation, technology diffusion, productivity, or growth. To establish where the balance of the evidence lies, we conduct a
multi-outcome meta-regression analysis to synthesize findings form 91 primary studies that report 1626 effect-size estimates for one or more outcomes. Controlling for unobserved heterogeneity and
selection bias only, we find that the effect on innovation, technology diffusion, productivity, and economic growth is statistically or practically insignificant. The effect remains insignificant when we control for observed sources of heterogeneity and estimate meta-effects based on different scenarios for "best-practice" research. Our work con- tributes to the existing research effort by extending the application of the multi-outcome meta-regression anal- ysis into evidence synthesis in economics. It also pro- vides verifiable/replicable evidence indicating that the sanguine claims about the economic benefits of IP pro- tection voiced in some legal studies and the advocacy literature are misleading.

Leverage, competition and financial distress hazard: Implications for capital structure in the presence of agency costs

Economic Modeling, 2022

Does leverage or product-market competition increase or decrease financial distress risk? The exi... more Does leverage or product-market competition increase or decrease financial distress risk? The existing literature provides conflicting and largely a-theoretical answers. Drawing on agency theory, we hypothesize that leverage and competition are incentive-alignment mechanisms with non-monotonic and substitute effects on financial distress hazard. Using an unbalanced panel of 13,896 listed firms from 1992 to 2014 and a multi-level hazard model that takes account of frailty and endogeneity, we find that leverage or competition have a hazard-reducing effect when the discipline effect dominates the agency-cost effect. In contrast, they have a hazard-increasing effect when the agency-cost effect dominates the discipline effect. Furthermore, the level of leverage that minimizes financial distress risk is higher in less competitive industries. Finally, long-term debt is a stronger disciplining device compared to short-term debt; and the financial distress predictors widely used in the literature explain only a small fraction of the distress hazard after controlling for leverage and competition. ☆ We thank the Editor and three anonymous referees for their helpful comments.

Innovation, firm survival and productivity: the state of the art

Economics of Innovation and New Technology, 2020

Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research pu... more Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world's largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.

Employment Impact of Technologies in the Developing World

Handbook of Labor, Human Resources and Population Economics, 2019

This chapter proposes to examine the impact of technological progress on employment in developing... more This chapter proposes to examine the impact of technological progress on employment in developing countries. Using the World Enterprise Survey data, the focus is laid on the manufacturing sector. On employment, the impact of foreign technology, imported inputs, and foreign ownership are positive. Domestic innovation also results in higher levels of employment. Hence, foreign technology and better quality imported inputs can be beneficial for the firms as new opportunities may come up for expansion in activities though the joint effect turns out to be negative. Furthermore, the skilled labor demand responds positively to technology and input acquisition from abroad while the unskilled labor demand does not rise significantly. Domestic innovation also shows positive effect on skilled labor. Hence, it seems that the dampening effect of new technology on employment in absolute sense seems to be rather exaggerated while the concern may be justified in relative terms or in reference to unskilled labor particularly.

Intra-industry firm heterogeneity, sub-optimal adaptation and exit hazard: a fitness landscape approach to firm survival and learning

Economics of Innovation and New Technology, 2020

We draw on insights from the fitness landscape literature and from models of firm dynamics with l... more We draw on insights from the fitness landscape literature and from models of firm dynamics with learning to hypothesize that: (i) firms in industries with higher company age or size heterogeneity have higher exit hazard after controlling for age, size, and a variety of other predictors of firm survival; and (ii) higher levels of R&D investment mitigate the hazardincreasing effects of industry firm heterogeneity after controlling for the direct effects of R&D intensities at industry and firm level. We test for these novel sources of selection with evidence from a panel dataset of 35,136 R&D-active UK firms from 1998 to 2012 and a range of discrete-time hazard estimators. The findings, which remain robust to multiple sensitivity checks, offer two novel contributions to the literature: (i) firm heterogeneity is not just a passive precondition for subsequent selection process in industry evolution; this heterogeneity enhances selection as more firms might be stranded in suboptimal positions; (ii) firms in more heterogenous industries can mitigate the hazard-increasing effects through R&D investment that facilitates adaptation and search for better fitness locations.

Modeling growth: exogenous, endogenous and Schumpeterian growth models

In this lecture, I review the theoretical origins of the empirical growth models. I begin with th... more In this lecture, I review the theoretical origins of the empirical growth models. I begin with the Solow and AK models informed by neoclassical theory. I demonstrate that both models do not make an explicit distinction between capital accumulation and technological progress. They just lump together the physical and human capital. Then I discuss the Schumpeterian growth models with creative destruction and institutions (particularly democracy as a meta-institution). I demonstrate that the Schumpeterian models can address a wider range of questions – particularly those that cannot be addressed satisfactorily by neoclassical models. I conclude by arguing for innovations in growth modeling – particularly for innovations that involve explicit incorporation of product-market competition and non-linearities in the relationship between innovation and growth.

Intra-industry firm heterogeneity, sub-optimal adaptation and exit hazard: A fitness landscape approach to firm survival and learning 1

We draw on insights from the fitness landscape literature and from models of firm dynamics with l... more We draw on insights from the fitness landscape literature and from models of firm dynamics with learning to hypothesize that: (i) firms in industries with higher company age or size heterogeneity have higher exit hazard after controlling for age, size, and a variety of other predictors of firm survival; and (ii) higher levels of R&D investment mitigate the hazardincreasing effects of industry firm heterogeneity after controlling for the direct effects of R&D intensities at industry and firm level. We test for these novel sources of selection with evidence from a panel dataset of 35,136 R&D-active UK firms from 1998 to 2012 and a range of discrete-time hazard estimators. The findings, which remain robust to multiple sensitivity checks, offer two novel contributions to the literature: (i) firm heterogeneity is not just a passive precondition for subsequent selection process in industry evolution; this heterogeneity enhances selection as more firms might be stranded in suboptimal positions; (ii) firms in more heterogenous industries can mitigate the hazard-increasing effects through R&D investment that facilitates adaptation and search for better fitness locations.

Information asymmetry, risk aversion and R&D subsidies: effect-size heterogeneity and policy conundrums

Economics of Innovation and New Technology

Drawing on the theory of contracts and Schumpeterian models of innovation, we argue that direct p... more Drawing on the theory of contracts and Schumpeterian models of innovation, we argue that direct public support for business R&D may deliver sub-optimal outcomes if firms are riskaverse and have private information about their R&D productivity. Using observable proxies for risk aversion and R&D productivity, we report that the average treatment effect (ATT) in the sample of sample of 43,650 British firms is positive but highly heterogenous. The ATTs tend to be: (a) insignificant or negligible when the perceived risk of R&D investment is high due to crisis episodes or because of investment in basic research; (b) insignificant among larger and older firms and firms closer to the R&D frontier; and (c) positive and larger than the average among small and young firms and firms further away from the R&D frontier. Our findings point out to conundrums in the use of R&D subsidies as an innovation policy tool: The case for R&D subsidies is stronger during economic downturns, when the investment is in basic R&D and when firms have a higher probability of innovation success; but the subsidy is less likely to increase business R&D under these conditions.

Variations in the effect of R&D investment on firm productivity: UK evidence

Our research provides novel findings about the heterogenous effects of R&D on UK firm-level produ... more Our research provides novel findings about the heterogenous effects of R&D on UK firm-level productivity. In our comprehensive analysis, the effect of R&D on UK productivity is broken down by type of R&D, sources of R&D funding, sector and Pavitt class. Our sample consists of a panel of 10,920 firms from 1998 to 2012. We find that R&D has a positive and significant effect on labour productivity in the UK. However, there is considerable heterogeneity in the results. The output elasticity of R&D capital is higher for firms in less competitive sectors and in more R&D intensive sectors. Finally, we find that applied R&D, experimental R&D, intramural R&D and R&D from private sources tend to have higher productivity impacts compared with basic R&D, extramural R&D or publicly-funded R&D.

Ecosystem complexity, firm learning and survival: UK evidence on intra-industry age and size diversity as exit hazards

Firm age or size diversity in an industry is taken for granted but its implications for industry ... more Firm age or size diversity in an industry is taken for granted but its implications for industry evolution and firm survival have remained below the radars of empirical research. We address this knowledge gap by drawing on an interdisciplinary theoretical framework informed by theoretical biology, organizational ecology and industrial organisation. We hypothesize that firms in more diverse industries are more likely to exit as a result of rugged fitness distributions where a global fitness optimum is less likely to emerge. We also hypothesize that investment in research and development (R&D) may counterbalance the adverse effect of diversity on survival by enabling the firm to engage in active learning about its market and technology niches. Evidence from discrete-time hazard estimators and an unbalanced panel dataset of 35,136 R&D-active UK firms lend support to these hypotheses. The findings remain robust to: (i) a battery of sensitivity checks, including step-wise estimations, different diversity measures and various firm cohorts; (ii) control for frailty and for a wide range of firm, industry, and macroeconomic factors considered in the survival literature; and (iii) taking account of direct effects of age, size and R&D intensity.

What do we know about R&D spillovers and productivity? Meta-analysis evidence on heterogeneity and statistical power

Research Policy, 2020

As Mohnen (1996: 40) has indicated, research and development (R&D) externalities is a twosided th... more As Mohnen (1996: 40) has indicated, research and development (R&D) externalities is a twosided theoretical issue. Its 'dark' side concerns the under-investment problem caused by nonappropriability of R&D benefits. On the 'bright' side, R&D spillovers are a source of productivity gains. Both aspects have been invoked to justify public support for R&D investment directly and indirectly. To establish whether public support can be justified due to productivity gains from spillovers, we meta-analyse 983 productivity estimates for spillovers and 501 estimates for own-R&D from 60 empirical studies. Our findings indicate that the average spillover effect is: (i) positive but heterogenous and smaller than what is reported in most narrative reviews; (ii) usually smaller than that of own-R&D capital; (iii) too small to be practically significant when evidence with adequate statistical power is considered. Controlling for observable sources of heterogeneity and best-practice research, the meta-effect is insignificant in the full sample but significant and large among OECD firms/industries/countries. We discuss the implications of these findings for future research and public support for R&D investment.

Inverted-U Relationship between Innovation and Survival: Evidence from Firm-Level UK Data

SSRN Electronic Journal, 2015

Theoretical and empirical work on innovation and firm survival has produced varied and often conf... more Theoretical and empirical work on innovation and firm survival has produced varied and often conflicting findings. In this paper, we draw on Schumpeterian models of competition and innovation and stochastic models of firm dynamics to demonstrate that the conflicting findings may be due to linear specifications of the innovation-survival relationship. We demonstrate that a quadratic specification is appropriate theoretically and fits the data well. Our findings from an unbalanced panel of 39,705 UK firms from 1997-2012 indicate that an inverted-U relationship holds for different types of R&D expenditures and sources of funding. We also report that R&D intensity is more likely to increase survival when firms are in more concentrated industries and in Pavitt technology classes consisting of specialized suppliers of technology and scale-intensive industries. Finally, we report that the effects of firm and industry characteristics as well as macroeconomic environment indicators are all consistent with prior findings. The results are robust to step-wise modeling, controlling for left truncation and use of lagged values to address potential simultaneity bias.

Effects of Government Education and Health Expenditures on Economic Growth: A Meta-Analysis

SSRN Electronic Journal, 2015

Using a sample of 306 estimates drawn from 31 primary studies, this paper conducts an empirical s... more Using a sample of 306 estimates drawn from 31 primary studies, this paper conducts an empirical synthesis of the link between economic growth and government expenditure on education or health using meta-analysis. We also explain the heterogeneity in empirical results. We find that the effect of government education expenditure on growth is positive, whereas the growth effect of government health expenditure is negative. Our meta-regression analysis suggests that factors such as econometric specifications, publication characteristics as well as data characteristics explain the heterogeneity in the literature. We also find no evidence of publication selectivity.

Policy Entrepreneurship, Policy Opportunism, and EU Conditionality: The AKP and TÜSİAD Experience in Turkey

Governance, 2008

This article examines the relationship between European Union (EU) conditionality for membership ... more This article examines the relationship between European Union (EU) conditionality for membership and policy entrepreneurship in a candidate country. In Turkey, EU conditionality opened a window of opportunity for policy reform by lowering the political costs of controversial reforms. The study demonstrates that the Justice and Development Party (AKP) and the Turkish Industrialists' and Businessmen's Association (TÜSİAD) responded to a window of opportunity by advocating a series of reforms that represented a bold challenge to the traditionally reform-averse and Euroskeptic political culture in Turkey. The study finds a difference in the duration of both actors' commitment to reforms. To explain this difference, we distinguish between policy entrepreneurs, who are actors with a long time horizon, and policy opportunists, who are actors with a short time horizon. The policy implication of this finding is that the European Commission's expectations of the AKP government to deliver the necessary reforms may be too optimistic.

Corporate governance in Turkey: an overview and some policy recommendations

Corporate Governance: The international journal of business in society, 2003

Both international and domestic developments have combined to bring the corporate governance (CG)... more Both international and domestic developments have combined to bring the corporate governance (CG) debate to the fore in Turkey. Given this increased interest in CG matters and the signi cance of Turkey as an emerging market, we provide an overview of the Turkish CG framework with two objectives in mind: (i) contributing to the growing CG literature by presenting the main aspects of the CG practice in Turkey, and (ii) locating the Turkish CG reform agenda within the global debate-especially as it relates to the practice in emerging markets. We begin with a review of the CG debate as it relates to emerging markets. We then provide an account of the socioeconomic environment within which the Turkish CG debate is unfolding. This is followed by an examination of the external (market-related) and internal (rm-related) dimensions of the Turkish CG framework. Finally, we summarize the main ndings and offer some recommendations for a successful reform initiative in Turkey.

Turkey and European Integration: Prospects and Issues in the Post-Helsinki Era

Protocol for the Systematic Review of Question 2: What is the evidence of the relationship between education, skills and growth in low-income countries?

Searches in databases will be conducted as 'Title', 'Abstract', 'Keyword', and 'Text' searches. T... more

Asymmetric information and heterogeneous effects of R&D subsidies: evidence on R&D investment and employment of R&D personel

Public subsidies are expected to stimulate business RD (ii) is positive among start-ups, younger ... more Public subsidies are expected to stimulate business RD (ii) is positive among start-ups, younger and smaller firms, but negative among older and larger firms; and (iii) follows an inverted-U pattern when evaluated against the firm’s R&D intensity. Our findings are consistent across two estimation methods (propensity score matching and double robust estimators) and two innovation inputs (privately-funded R&D investment and employment of scientists and technicians).

Does intellectual property protection deliver economic benefits? A multi‐outcome meta‐regression analysis of the evidence

Journal of Economic Surveys, 2022

Both theoretical and empirical work reports contingent and conflicting findings on how intellectu... more Both theoretical and empirical work reports contingent and conflicting findings on how intellectual property (IP) protection affects related outcomes such as innovation, technology diffusion, productivity, or growth. To establish where the balance of the evidence lies, we conduct a multi‐outcome meta‐regression analysis to synthesize findings form 91 primary studies that report 1626 effect‐size estimates for one or more outcomes. Controlling for unobserved heterogeneity and selection bias only, we find that the effect on innovation, technology diffusion, productivity, and economic growth is statistically or practically insignificant. The effect remains insignificant when we control for observed sources of heterogeneity and estimate meta‐effects based on different scenarios for "best‐practice" research. Our work contributes to the existing research effort by extending the application of the multi‐outcome meta‐regression analysis into evidence synthesis in economics. It also...

Innovation, market power and the labour share: Evidence from OECD industries

Technological Forecasting and Social Change , 2024

Two issues remain overlooked in empirical investigations of how labour share varies with technolo... more Two issues remain overlooked in empirical investigations of how labour share varies with technological innovation and market power. One is the risk of omitted variable bias that arises from failure to control for both innovation and market power at the same time. The second is the risk of confounding bias that arises from the possibility that innovation and market power affect each other and the labour share at the same time. I address both issues by adopting a simultaneous equations approach and using EU-KLEMS data from 1995 to 2019 on 31 OECD industries and 12 countries. The novel evidence I discover indicates that: (i) innovation always increases with market power, particularly when the latter increase from a high initial level; (ii) market power always increases with innovation, particularly when the latter is extended to include marketing and organisational innovation; (iii) market power is always more detrimental for labour share compared to innovation; and (iv) the combined effect of human capital and labour-market institutions reverses the adverse effect of innovation but it is insufficient to reverse the adverse effect of market power. These findings are robust to a wide range of sensitivity checks and indicate that the major driver of the decline in labour share is not technological innovation per se, but the extent of market power that enables firms to set real wages below the marginal product of labour.

Does intellectual property protection deliver economic benefits? A multi-outcome meta-regression analysis of the evidence

Journal of Economic Surveys, 2021

Both theoretical and empirical work reports contingent and conflicting findings on how intellectu... more Both theoretical and empirical work reports contingent and conflicting findings on how intellectual property (IP) protection affects related outcomes such as inno- vation, technology diffusion, productivity, or growth. To establish where the balance of the evidence lies, we conduct a
multi-outcome meta-regression analysis to synthesize findings form 91 primary studies that report 1626 effect-size estimates for one or more outcomes. Controlling for unobserved heterogeneity and
selection bias only, we find that the effect on innovation, technology diffusion, productivity, and economic growth is statistically or practically insignificant. The effect remains insignificant when we control for observed sources of heterogeneity and estimate meta-effects based on different scenarios for "best-practice" research. Our work con- tributes to the existing research effort by extending the application of the multi-outcome meta-regression anal- ysis into evidence synthesis in economics. It also pro- vides verifiable/replicable evidence indicating that the sanguine claims about the economic benefits of IP pro- tection voiced in some legal studies and the advocacy literature are misleading.

Leverage, competition and financial distress hazard: Implications for capital structure in the presence of agency costs

Economic Modeling, 2022

Does leverage or product-market competition increase or decrease financial distress risk? The exi... more Does leverage or product-market competition increase or decrease financial distress risk? The existing literature provides conflicting and largely a-theoretical answers. Drawing on agency theory, we hypothesize that leverage and competition are incentive-alignment mechanisms with non-monotonic and substitute effects on financial distress hazard. Using an unbalanced panel of 13,896 listed firms from 1992 to 2014 and a multi-level hazard model that takes account of frailty and endogeneity, we find that leverage or competition have a hazard-reducing effect when the discipline effect dominates the agency-cost effect. In contrast, they have a hazard-increasing effect when the agency-cost effect dominates the discipline effect. Furthermore, the level of leverage that minimizes financial distress risk is higher in less competitive industries. Finally, long-term debt is a stronger disciplining device compared to short-term debt; and the financial distress predictors widely used in the literature explain only a small fraction of the distress hazard after controlling for leverage and competition. ☆ We thank the Editor and three anonymous referees for their helpful comments.

Innovation, firm survival and productivity: the state of the art

Economics of Innovation and New Technology, 2020

Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research pu... more Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world's largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.

Employment Impact of Technologies in the Developing World

Handbook of Labor, Human Resources and Population Economics, 2019

This chapter proposes to examine the impact of technological progress on employment in developing... more This chapter proposes to examine the impact of technological progress on employment in developing countries. Using the World Enterprise Survey data, the focus is laid on the manufacturing sector. On employment, the impact of foreign technology, imported inputs, and foreign ownership are positive. Domestic innovation also results in higher levels of employment. Hence, foreign technology and better quality imported inputs can be beneficial for the firms as new opportunities may come up for expansion in activities though the joint effect turns out to be negative. Furthermore, the skilled labor demand responds positively to technology and input acquisition from abroad while the unskilled labor demand does not rise significantly. Domestic innovation also shows positive effect on skilled labor. Hence, it seems that the dampening effect of new technology on employment in absolute sense seems to be rather exaggerated while the concern may be justified in relative terms or in reference to unskilled labor particularly.

Intra-industry firm heterogeneity, sub-optimal adaptation and exit hazard: a fitness landscape approach to firm survival and learning

Economics of Innovation and New Technology, 2020

We draw on insights from the fitness landscape literature and from models of firm dynamics with l... more We draw on insights from the fitness landscape literature and from models of firm dynamics with learning to hypothesize that: (i) firms in industries with higher company age or size heterogeneity have higher exit hazard after controlling for age, size, and a variety of other predictors of firm survival; and (ii) higher levels of R&D investment mitigate the hazardincreasing effects of industry firm heterogeneity after controlling for the direct effects of R&D intensities at industry and firm level. We test for these novel sources of selection with evidence from a panel dataset of 35,136 R&D-active UK firms from 1998 to 2012 and a range of discrete-time hazard estimators. The findings, which remain robust to multiple sensitivity checks, offer two novel contributions to the literature: (i) firm heterogeneity is not just a passive precondition for subsequent selection process in industry evolution; this heterogeneity enhances selection as more firms might be stranded in suboptimal positions; (ii) firms in more heterogenous industries can mitigate the hazard-increasing effects through R&D investment that facilitates adaptation and search for better fitness locations.

Modeling growth: exogenous, endogenous and Schumpeterian growth models

In this lecture, I review the theoretical origins of the empirical growth models. I begin with th... more In this lecture, I review the theoretical origins of the empirical growth models. I begin with the Solow and AK models informed by neoclassical theory. I demonstrate that both models do not make an explicit distinction between capital accumulation and technological progress. They just lump together the physical and human capital. Then I discuss the Schumpeterian growth models with creative destruction and institutions (particularly democracy as a meta-institution). I demonstrate that the Schumpeterian models can address a wider range of questions – particularly those that cannot be addressed satisfactorily by neoclassical models. I conclude by arguing for innovations in growth modeling – particularly for innovations that involve explicit incorporation of product-market competition and non-linearities in the relationship between innovation and growth.

Intra-industry firm heterogeneity, sub-optimal adaptation and exit hazard: A fitness landscape approach to firm survival and learning 1

We draw on insights from the fitness landscape literature and from models of firm dynamics with l... more We draw on insights from the fitness landscape literature and from models of firm dynamics with learning to hypothesize that: (i) firms in industries with higher company age or size heterogeneity have higher exit hazard after controlling for age, size, and a variety of other predictors of firm survival; and (ii) higher levels of R&D investment mitigate the hazardincreasing effects of industry firm heterogeneity after controlling for the direct effects of R&D intensities at industry and firm level. We test for these novel sources of selection with evidence from a panel dataset of 35,136 R&D-active UK firms from 1998 to 2012 and a range of discrete-time hazard estimators. The findings, which remain robust to multiple sensitivity checks, offer two novel contributions to the literature: (i) firm heterogeneity is not just a passive precondition for subsequent selection process in industry evolution; this heterogeneity enhances selection as more firms might be stranded in suboptimal positions; (ii) firms in more heterogenous industries can mitigate the hazard-increasing effects through R&D investment that facilitates adaptation and search for better fitness locations.

Information asymmetry, risk aversion and R&D subsidies: effect-size heterogeneity and policy conundrums

Economics of Innovation and New Technology

Drawing on the theory of contracts and Schumpeterian models of innovation, we argue that direct p... more Drawing on the theory of contracts and Schumpeterian models of innovation, we argue that direct public support for business R&D may deliver sub-optimal outcomes if firms are riskaverse and have private information about their R&D productivity. Using observable proxies for risk aversion and R&D productivity, we report that the average treatment effect (ATT) in the sample of sample of 43,650 British firms is positive but highly heterogenous. The ATTs tend to be: (a) insignificant or negligible when the perceived risk of R&D investment is high due to crisis episodes or because of investment in basic research; (b) insignificant among larger and older firms and firms closer to the R&D frontier; and (c) positive and larger than the average among small and young firms and firms further away from the R&D frontier. Our findings point out to conundrums in the use of R&D subsidies as an innovation policy tool: The case for R&D subsidies is stronger during economic downturns, when the investment is in basic R&D and when firms have a higher probability of innovation success; but the subsidy is less likely to increase business R&D under these conditions.

Variations in the effect of R&D investment on firm productivity: UK evidence

Our research provides novel findings about the heterogenous effects of R&D on UK firm-level produ... more Our research provides novel findings about the heterogenous effects of R&D on UK firm-level productivity. In our comprehensive analysis, the effect of R&D on UK productivity is broken down by type of R&D, sources of R&D funding, sector and Pavitt class. Our sample consists of a panel of 10,920 firms from 1998 to 2012. We find that R&D has a positive and significant effect on labour productivity in the UK. However, there is considerable heterogeneity in the results. The output elasticity of R&D capital is higher for firms in less competitive sectors and in more R&D intensive sectors. Finally, we find that applied R&D, experimental R&D, intramural R&D and R&D from private sources tend to have higher productivity impacts compared with basic R&D, extramural R&D or publicly-funded R&D.

Ecosystem complexity, firm learning and survival: UK evidence on intra-industry age and size diversity as exit hazards

Firm age or size diversity in an industry is taken for granted but its implications for industry ... more Firm age or size diversity in an industry is taken for granted but its implications for industry evolution and firm survival have remained below the radars of empirical research. We address this knowledge gap by drawing on an interdisciplinary theoretical framework informed by theoretical biology, organizational ecology and industrial organisation. We hypothesize that firms in more diverse industries are more likely to exit as a result of rugged fitness distributions where a global fitness optimum is less likely to emerge. We also hypothesize that investment in research and development (R&D) may counterbalance the adverse effect of diversity on survival by enabling the firm to engage in active learning about its market and technology niches. Evidence from discrete-time hazard estimators and an unbalanced panel dataset of 35,136 R&D-active UK firms lend support to these hypotheses. The findings remain robust to: (i) a battery of sensitivity checks, including step-wise estimations, different diversity measures and various firm cohorts; (ii) control for frailty and for a wide range of firm, industry, and macroeconomic factors considered in the survival literature; and (iii) taking account of direct effects of age, size and R&D intensity.

What do we know about R&D spillovers and productivity? Meta-analysis evidence on heterogeneity and statistical power

Research Policy, 2020

As Mohnen (1996: 40) has indicated, research and development (R&D) externalities is a twosided th... more As Mohnen (1996: 40) has indicated, research and development (R&D) externalities is a twosided theoretical issue. Its 'dark' side concerns the under-investment problem caused by nonappropriability of R&D benefits. On the 'bright' side, R&D spillovers are a source of productivity gains. Both aspects have been invoked to justify public support for R&D investment directly and indirectly. To establish whether public support can be justified due to productivity gains from spillovers, we meta-analyse 983 productivity estimates for spillovers and 501 estimates for own-R&D from 60 empirical studies. Our findings indicate that the average spillover effect is: (i) positive but heterogenous and smaller than what is reported in most narrative reviews; (ii) usually smaller than that of own-R&D capital; (iii) too small to be practically significant when evidence with adequate statistical power is considered. Controlling for observable sources of heterogeneity and best-practice research, the meta-effect is insignificant in the full sample but significant and large among OECD firms/industries/countries. We discuss the implications of these findings for future research and public support for R&D investment.

Inverted-U Relationship between Innovation and Survival: Evidence from Firm-Level UK Data

SSRN Electronic Journal, 2015

Theoretical and empirical work on innovation and firm survival has produced varied and often conf... more Theoretical and empirical work on innovation and firm survival has produced varied and often conflicting findings. In this paper, we draw on Schumpeterian models of competition and innovation and stochastic models of firm dynamics to demonstrate that the conflicting findings may be due to linear specifications of the innovation-survival relationship. We demonstrate that a quadratic specification is appropriate theoretically and fits the data well. Our findings from an unbalanced panel of 39,705 UK firms from 1997-2012 indicate that an inverted-U relationship holds for different types of R&D expenditures and sources of funding. We also report that R&D intensity is more likely to increase survival when firms are in more concentrated industries and in Pavitt technology classes consisting of specialized suppliers of technology and scale-intensive industries. Finally, we report that the effects of firm and industry characteristics as well as macroeconomic environment indicators are all consistent with prior findings. The results are robust to step-wise modeling, controlling for left truncation and use of lagged values to address potential simultaneity bias.

Effects of Government Education and Health Expenditures on Economic Growth: A Meta-Analysis

SSRN Electronic Journal, 2015

Using a sample of 306 estimates drawn from 31 primary studies, this paper conducts an empirical s... more Using a sample of 306 estimates drawn from 31 primary studies, this paper conducts an empirical synthesis of the link between economic growth and government expenditure on education or health using meta-analysis. We also explain the heterogeneity in empirical results. We find that the effect of government education expenditure on growth is positive, whereas the growth effect of government health expenditure is negative. Our meta-regression analysis suggests that factors such as econometric specifications, publication characteristics as well as data characteristics explain the heterogeneity in the literature. We also find no evidence of publication selectivity.

Policy Entrepreneurship, Policy Opportunism, and EU Conditionality: The AKP and TÜSİAD Experience in Turkey

Governance, 2008

This article examines the relationship between European Union (EU) conditionality for membership ... more This article examines the relationship between European Union (EU) conditionality for membership and policy entrepreneurship in a candidate country. In Turkey, EU conditionality opened a window of opportunity for policy reform by lowering the political costs of controversial reforms. The study demonstrates that the Justice and Development Party (AKP) and the Turkish Industrialists' and Businessmen's Association (TÜSİAD) responded to a window of opportunity by advocating a series of reforms that represented a bold challenge to the traditionally reform-averse and Euroskeptic political culture in Turkey. The study finds a difference in the duration of both actors' commitment to reforms. To explain this difference, we distinguish between policy entrepreneurs, who are actors with a long time horizon, and policy opportunists, who are actors with a short time horizon. The policy implication of this finding is that the European Commission's expectations of the AKP government to deliver the necessary reforms may be too optimistic.

Corporate governance in Turkey: an overview and some policy recommendations

Corporate Governance: The international journal of business in society, 2003

Both international and domestic developments have combined to bring the corporate governance (CG)... more Both international and domestic developments have combined to bring the corporate governance (CG) debate to the fore in Turkey. Given this increased interest in CG matters and the signi cance of Turkey as an emerging market, we provide an overview of the Turkish CG framework with two objectives in mind: (i) contributing to the growing CG literature by presenting the main aspects of the CG practice in Turkey, and (ii) locating the Turkish CG reform agenda within the global debate-especially as it relates to the practice in emerging markets. We begin with a review of the CG debate as it relates to emerging markets. We then provide an account of the socioeconomic environment within which the Turkish CG debate is unfolding. This is followed by an examination of the external (market-related) and internal (rm-related) dimensions of the Turkish CG framework. Finally, we summarize the main ndings and offer some recommendations for a successful reform initiative in Turkey.

Turkey and European Integration: Prospects and Issues in the Post-Helsinki Era

Protocol for the Systematic Review of Question 2: What is the evidence of the relationship between education, skills and growth in low-income countries?

Searches in databases will be conducted as 'Title', 'Abstract', 'Keyword', and 'Text' searches. T... more

Asymmetric information and heterogeneous effects of R&D subsidies: evidence on R&D investment and employment of R&D personel

Public subsidies are expected to stimulate business RD (ii) is positive among start-ups, younger ... more Public subsidies are expected to stimulate business RD (ii) is positive among start-ups, younger and smaller firms, but negative among older and larger firms; and (iii) follows an inverted-U pattern when evaluated against the firm’s R&D intensity. Our findings are consistent across two estimation methods (propensity score matching and double robust estimators) and two innovation inputs (privately-funded R&D investment and employment of scientists and technicians).