ifo Center for the Economics of Innovation and Digital Transformation

Industries, Institutions and Regulation

While the aim of economic research is usually to derive generalizable conclusions, many markets have industry-specific features that need to be taken into account. The assessment of industry-specific competitiveness and productivity lays the foundation for further economic analysis. Knowledge of explanatory factors and long-term perspectives of German and European industries helps to reveal (and evaluate) measures to strengthen competitiveness. Moreover, industry-specific regulation is continually subject to structural changes, not least due to the emergence of new technologies. Innovation, often measured using patent data, plays an important role here as well, as an outcome of regulation. At the same time, the patent system itself is a form of regulation whose effects on different industries are studied. Key research expertise concerns the evaluation of regulatory changes to estimate their implications for specific industries and along the supply chain.

Innovation

Projects in this area study the performance of existing firms, as well as the creation of new firms, with a focus on their innovative output. The Center’s research covers a broad range of determinants of innovation and entrepreneurship, and emphasizes the policy-relevant conclusions that can be drawn. The Center is particularly well positioned to swiftly transfer these insights to their implementation in new policies through its policy consulting, as well as through its network to relevant stakeholders in policy and industry. This more applied work in turn inspires new research through new and relevant questions and institutional knowledge that can be used to find answers empirically. Examples of determinants of innovation that have been analyzed by the Center’s economists include competition, R&D subsidies, regional policy, migration, and intellectual property rights. What all of these factors have in common is that they can be directly influenced by policymakers, but need to be better understood in order to design optimal policies.

Digital Transformation

Digitalization is transforming the world at an ever-increasing pace. By making information exchange easy, frictionless, and immediate, digitalization is the driving force behind the transformation of the global economy. Digitalization has fundamentally altered how individuals behave, how production and business processes are organized, and how market participants interact. At the same time, these processes and their inherent complexity are presenting new challenges to researchers, practitioners, and policymakers. This research area therefore asks who wins, who loses, and importantly, which industry, innovation and digital infrastructure policies and what kind of institutional framework can help firms and individuals to benefit from the potential of digitalization. The application of state-of-the art policy evaluation methods is essential to an understanding of what works and what does not. The considerable public investment in the diffusion of high-speed broadband infrastructure in Europe, and the overall fears and hopes associated with the digital transformation, underline the urgent need for robust and rigorous empirical evidence of the socio-economic impact of the digital transformation. Telecommunications policy evaluations in Germany, Italy and Austria that were conducted by the Center have been widely recognized by policymakers, industry, and regulators.

Industry-Level Analysis

Another focus of the Center is industry analysis. Sincef 1993 a major outlet for this analysis has been the twice-yearly publication of more than 100 industry reports commissioned by DG Nexolution (formerly Deutscher Genossenschafts-Verlag eG). These industry reports provide the ifo Center for the Economics of Innovation and Digital Transformation with a unique institutional knowledge of the competitive situation and the institutional framework conditions in several branches. This indepth knowledge is used to complement the Center’s quantitative microeconometric studies with qualitative evidence. The Center’s industry sector experts also maintain close contacts with firms and industry associations and organize a annual conference (ifo Wirtschaftsdialog) to enhance the exchange between research, business and politics.

Prof. Robert Fairlie, University of California, Los Angeles

Ph.D. Prof. Dr. Monika Schnitzer, Ludwig-Maximilians-Universität München

Prof. Dr. Simon Wiederhold, Leibniz-Institut für Wirtschaftsforschung Halle

Prof. Dr. Joachim Winter, Ludwig-Maximilians-Universität München

CESifo Area on Applied Microeconomics

CESifo Area on Economics of Digitization