Publications & Documents

In this paper, we focus on the managerial characteristics of micro and small-sized firms. Using linked employer-employee data on the Portuguese economy for the 2010-2018 period, we estimate the impact of management teams’ human capital on the probability of firms becoming financially distressed and their subsequent recovery. Our estimates show that the relevance of management teams’ formal education on the probability of firms becoming financially distressed depends on firms’ size and the type of education. We show that management teams’ formal education and tenure reduce the probability of micro and small-sized firms becoming financially distressed and increases the probability of their subsequent recovery. The estimates also suggest that those impacts are stronger for micro and small-sized firms. Additionally, our results show that functional experience previously acquired in other firms, namely in foreign-owned and in exporting firms and in the area of finance, may reduce the probability of micro firms becoming financially distressed. On the other hand, previous functional experience in other firms seems to have a strong and highly significant impact on increasing the odds of recovery of financially distressed firms. We conclude that policies that induce an improvement in the managerial human capital of micro and small-sized firms have significant scope to improve their financial condition, enhancing the economy’s resilience against shocks.

This paper presents new evidence on the impact of intangible capital on productivity dispersion within industries. It first shows that rise in productivity dispersion after 2000 is more pronounced in intangible-intensive industries; then analyses the link between intangible capital intensity and productivity dispersion both at the top and at the bottom of the productivity distribution, and in different industries. The findings suggest that industries that have experienced a stronger increase in intangible investment have also seen a steeper rise in productivity dispersion both at the top and at the bottom of the productivity distribution. While the results at the top seem to be associated with the scalability of intangible capital – which is likely to disproportionally benefit high-productivity firms and incumbents – dispersion at the bottom appears to be linked to complementarities between intangible investment and factors like digital intensity, trade openness and venture capital.

Whilst overall productivity growth is stalling, firms at the frontier are still able to capture the benefits of the newest technologies and business practices. This paper uses linked employer-employee data covering all Belgian firms over a period of almost 20 years and investigates the differences in human capital between highly productive firms and less productive firms. We find a clear positive correlation between the share of high-skilled and STEM workers in a firm's workforce and its productivity. We obtain elasticities of 0.20 to 0.70 for a firm's productivity as a function of the share of high-skilled workers. For STEM (science, technology, engineering, mathematics) workers, of all skill levels, we find elasticities of 0.20 to 0.45. More importantly, the elasticity of STEM workers is increasing over time, whereas the elasticity of high-skilled workers is decreasing. This is possibly linked with the increasing number of tertiary education graduates and at the same time increased difficulties in filling STEM-related vacancies. Specifically, for high-skilled STEM workers in the manufacturing sector, the productivity gain can be as much as 4 times higher than the gain from hiring additional high-skilled non-STEM workers. To ensure that government efforts to increase the adoption of the latest technologies and business practices within firms lead to sustainable productivity gains, such actions should be accompanied by measures to increase the supply and mobility of human (STEM) capital. Without a proper supply of skills, firms will not be able to reap the full benefits of the digital revolution.

Using artificial intelligence (AI) and other digital technologies in manufacturing, and other areas of production, is essential for raising labour productivity growth in OECD countries. AI can increase productivity in manufacturing in many ways, from reducing machine downtime to managing supply-chains. However, even in the most advanced economies, the use of AI in manufacturing is limited. This Going Digital Toolkit note discusses the challenges faced by manufacturers in adopting AI and what these imply for the design of policies, including for: skills; institutions for technology diffusion; connectivity; research and manufacturing linkages; computing infrastructure; and, programme evaluation. The Annex provides examples of policy initiatives in a variety of countries.

Finland has been setting research and development (R&D) intensity targets for almost 50 years. This paper explores the Finnish national policy experience in fostering public and private investments in R&D. Three key insights are the following: a) a systemic and integrated policy approach needs an impactful co-ordination and governance mechanism; b) a balanced innovation system with well-working joint public-private partnership efforts and mechanisms will do better in absorbing shocks; c) a key strategy to absorb shocks to the economy and society is to invest in long-term capabilities. This study also provides an overview of the factors influencing the level of R&D intensity. The current 4% target to be reached by 2030 was set in 2019 but thus far relatively few policy actions have been introduced to operationalise it. With these dynamics and uncertainty, it remains to be seen if the target will be reached by 2030.

This report presents the results of a proof of concept for a new analytical infrastructure ('Fundstat') for analysing government funding of R&D at the project level, exploiting the wealth of text-based information about funded projects. Reflecting the growth in popularity of artificial intelligence (AI) and the OECD Council Recommendation on AI’s emphasis on R&D investment, the report focuses on analysing government investments into AI-related R&D. Using text mining tools, it documents the creation of a list of key terms used to identify AI-related R&D projects contained in 13 funding databases from eight OECD countries and the EU, provides estimates for the total number and volume of government R&D funding, and characterises their AI funding portfolio. The methods and findings developed in this study also serve as a prototype for a new distributed mechanism capable of measuring and analysing government R&D support across key OECD priority areas and topics.

As artificial intelligence (AI) advances across economies and societies, stakeholder communities are actively exploring how best to encourage the design, development, deployment and use of AI that is human-centred and trustworthy. This report presents a framework for comparing tools and practices to implement trustworthy AI systems as set out in the OECD AI Principles. The framework aims to help collect, structure and share information, knowledge and lessons learned to date on tools, practices and approaches for implementing trustworthy AI. As such, it provides a way to compare tools in different use contexts. The framework will serve as the basis for the development of an interactive, publicly available database on the OECD.AI Policy Observatory. This report informs ongoing OECD work towards helping policy makers and other stakeholders implement the OECD AI Principles in practice.