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Viroj Jienwatcharamongkhol and Sam Tavassoli

It is well known that exporters are productive firms, but the source of their productivity is left unexplained. This chapter aims to endogenize the productivity heterogeneity of exporting firms by incorporating innovation in a structural model framework. In doing so, we close the gap between the innovation–productivity and productivity–export literature. Two waves of the Swedish Community Innovation Survey (CIS) are merged. This allows for a setup that takes into account the links from innovation input to innovation output and also from innovation output to productivity and exports. The main findings highlight that exporters are productive firms with innovation output in the past, which in turn was driven by prior R & D and other innovation activity investments.

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Charlie Karlsson and Sam Tavassoli

The authors discuss the controversial area of industrial policy which, after the 2008 crisis, faced the reaction that markets do not always perform optimally for society, generating a demand for new policy models. The chapter shows how the views on industrial policy have changed from a long-term perspective, with a special focus on the post-war period up to the current post-industrial society. The authors argue that industrial policies should be placed at the regional level and that small- and medium-sized regions need different policies than do large urban regions. In addition, this chapter briefly evaluates the EU’s current approach to industrial policy – the so-called smart specialisation – and sheds light on the problems related to this policy initiative.

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Charlie Karlsson and Sam Tavassoli

Today there is great interest in industrial policy among policy-makers, particularly within the European Union. The new interest in policy models that considers the higher integration of global economies has led the European Union to formulate the Europe 2020 Strategy. The purpose of this strategy is to provide a new framework for economic and particularly industrial policy in Europe. Industrial policy, indeed, became the flagship of the Europe 2020 Strategy, which indicates the overall aim of EU industrial policy to promote European industrial competitiveness, thus placing more emphasis on factors such as the growth of SMEs, the supply and management of raw materials and well-paid jobs. The purpose of this chapter is: (1) to make a survey of the problems involved in policy evaluation in general and specifically in the evaluation of industrial policies with reference to the Europe 2020 strategy, and (2) to sketch the role of policy monitoring and evaluation in an industrial policy life cycle model. This contributes to better understanding of challenges facing policy-makers and researchers to design a holistic policy evaluation framework that is results-oriented.

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Sam Tavassoli, Babak Kianian and Tobias C. Larsson

This chapter argues that the location of manufacturing is gradually shifting to the west again, exemplifying the ‘manufacturing renaissance’. Such a claim is based on the recent observed trend and the discussion is contextualized within the established theory that has been able to explain the location of manufacturing, that is, the product life cycle (PLC) model. Then the chapter identifies and discusses the four main drivers of this new phenomenon: (i) rising wage levels in emerging economies; (ii) falling quality of business milieu in emerging economies; (iii) emergence of new process innovations in western economies; and (iv) rising demand for western-made manufacturing. Finally, it is noted that the return of manufacturing should be kept in proportion to the amount of manufacturing activities that are still being offshored to less developed countries (LDCs), and not all industries are coming back to the west at the same pace.