This paper examines the impact of industrial policies (IPs) on innovation in the global automobile industry. We compile the first comprehensive dataset linking global IPs with patent data related to the auto industry from 2008 to 2023. We document a major shift in policy focus: by 2022, nearly half of all IPs targeted electric vehicles (EV)-related sectors, up from almost none in 2008. In the meantime, there has been a clear technological transition from internal combustion engine (GV) technologies to EV innovations. Our analysis finds a positive relationship between policy support and innovation activity. At the country level, a one-standard-deviation increase in five-year cumulative EV-targeted IPs is associated with a four-percent rise in new EV patent applications. Firm-level analyses (using OLS, IV, and PPML) indicate that a ten-percent increase in EV financial incentives received by automakers and EV battery producers leads to a similar four-percent increase in EV innovations. We confirm the importance of path dependence in the direction of technology change in the automobile industry but find no evidence that EV-targeted IPs stimulate innovation in GV technologies.
Authors
Panle Jia Barwick, Hyuk-Soo Kwon, Shanjun Li, Yucheng Wang, Nahim B. Zahur
- Acknowledgements & Disclosure
- We thank Nathan Lane, Penny Goldberg, and Reka Juhasz for useful comments and Chuwei Fu, Chenyan Gong, Feiyu Wang, Haohan Wenyan, and Yiqun Zhao for excellent research assistance. All errors are our own. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- DOI
- https://doi.org/10.3386/w33138
- Pages
- 69
- Published in
- United States of America
Table of Contents
- Introduction 3
- Data 8
- Measuring IP using Global Trade Alert Database 9
- Measuring IP using Country-by-Model EV Subsidy 11
- Patents Data: PATSTAT Database 12
- OECD EPS Database 14
- Descriptive Patterns: Industrial Policies and Patents 15
- IPs in the Automobile Industry 15
- Firm Subsidies 16
- Innovations: the Transition to Green Technology 17
- Country-level Analysis on Industrial Policies 18
- Empirical Strategy 18
- Baseline Estimation Results 20
- Robustness Checks and Discussions 22
- Firm-level Analysis on the Effects of EV Subsidies 24
- Empirical Strategy 24
- Baseline Regression Results 26
- Robustness Checks and Discussion 27
- Conclusion 28
- Appendix 44
- Online Appendix 45
- Additional Figures and Tables 45
- Details in Processing the Global Trade Analysis (GTA) Database 62
- Identify Industrial Policy 62
- Methodology 62
- Example of Labeling and Explanation 63
- Model Performance 65
- Classification and Aggregation 66
- Details in Processing the PATSTAT Global Database 67
- Details in Processing Other Data 67
- Matching Firm-Level Patent Data 67
- Constructing Country-Model-Specific EV Subsidy 68
