I. Measuring process innovation outputs and understanding their implications for firms and workers: Evidence from Pakistan

Abstract

New processes significantly affect firms and workers; however, due to a lack of quantitative metrics, our understanding of the measures, determinants, and impacts of new processes remains limited. Drawing on unique data from Pakistan, we analyze five different metrics of process innovation output: cost reduction, defect rate reduction, reduction in production cycle time, increase in production capacity, and improvement in product quality. We find that the breadth and depth of innovative capabilities, level of competition, and availability of market sources of knowledge are important inducers of process innovation, and that smaller firms are more likely to introduce new processes and are better able to transform them into higher output. All five process innovation outputs are associated with higher labor productivity and sales expansion; however, there is considerable heterogeneity in the size of these impacts. We did not find that adopting new processes led to lower employment.

Researchers: Waqar Wadho, Azam Chaudhry

II. The closed-form solutions for a model with technology diffusion via Lie symmetries

Abstract

A critical component of economic growth is growth in productivity which is dependent on technology adoption. While most technologies are created in developed economies, they diffuse to developing economies through various channels such as trade, migration and knowledge spillovers. In this paper, we develop the first model that integrates compartmental models with diffusion to analyze technology adoption within a framework of a system of second-order non-linear partial differential equations. We employ Lie point symmetries to derive reductions and closed-form solutions for a model of technology diffusion. A three-dimensional Lie algebra is established for the model. We utilize the combinations of Lie symmetries to obtain reductions and establish closed-form solution for the technology diffusion model. Additionally, we utilise the closed-form solution to provide graphical representations of the technology diffusion process over effective distance and over time and find the commonly observed S-curve path of technology diffusion. Furthermore, we conduct a sensitivity analysis to develop policy insights into the factors influencing the diffusion of technology.

Researchers: Azam Chaudhry, Rehana Naz