Person:
de Nicola, Francesca

Last updated: May 19, 2025

Biography

Francesca de Nicola is a senior economist in the Economic and Market Research Unit of the International Finance Corporation. Her current research focuses on productivity, innovation, and the green transition. She started her career at the International Food Policy Research Institute. She has published in journals such as the Journal of Development Economics, Quantitative Economics, and Energy Economics. She holds a PhD in economics from Johns Hopkins University and a master’s degree in economics from Bocconi University.

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Now showing 1 - 10 of 18

Technological Decoupling? The Impact on Innovation of US Restrictions on Chinese Firms
(Washington, DC: World Bank, 2024-10-23) Cao, Yu; De Nicola, Francesca; Mattoo, Aaditya; Timmis, Jonathan; de Nicola, Francesca
Recent U.S.-China tensions have raised the specter of technological decoupling. This paper examines the impact of U.S. export restrictions and technology licensing on Chinese firms’ innovation. It finds that U.S. sanctions reduce the quantity and quality of patent outputs of targeted Chinese firms, primarily due to decreased collaboration with U.S. inventors. However, firms with higher initial patent stock or in sectors with a smaller technological distance to the U.S. are less affected. Sanctions in specific technology fields lead to a decline in the patent output of both Chinese firms with U.S. collaborators and U.S. firms with Chinese collaborators.
Green Technologies: Decarbonizing Development in East Asia and Pacific
(Washington, DC: World Bank, 2025-05-19) de Nicola, Francesca; Mattoo, Aaditya; Tran, Trang Thu
The East Asia and Pacific region is helping the world decarbonize and is encouraging the domestic adoption of renewables. But there is an imbalance: while the region’s innovation and investment improve global access to green technologies, its own emissions continue to grow because of the reluctance to penalize carbon-intensive practices. The disparity between domestic supply and demand spills over into international trade, provoking measures by other countries that limit access to markets and technologies. "Green Technologies: Decarbonizing Development in East Asia and Pacific" argues that deeper reform of the region’s own policies will encourage the domestic diffusion of cleaner technologies and may also foster greater international cooperation—on climate as well as on innovation and trade in green goods. The book proposes a framework to guide policy on green technology development and diffusion. It will be of interest to policy makers, businesses, and researchers working at the intersection of economics and environmental policy.
The Innovation Imperative for Developing East Asia
(Washington, DC: World Bank, 2021-02-23) de Nicola, Francesca; Cirera, Xavier; Kuriakose, Smita; Mason, Andrew D.; Tran, Trang Thu; Mare, Davide S.; de Nicola, Francesca
After a half century of transformative economic progress that moved hundreds of millions of people out of poverty, countries in developing East Asia are facing an array of challenges to their future development. Slowed productivity growth, increased fragility of the global trading system, and rapid changes in technology are all threatening export-oriented, labor-intensive manufacturing—the region’s engine of growth. Significant global challenges—such as climate change and the COVID-19 pandemic—are exacerbating economic vulnerability. These developments raise questions about whether the region’s past model of development can continue to deliver rapid growth and poverty reduction. Against this background, The Innovation Imperative in Developing East Asia aims to deepen understanding of the role of innovation in future development. The report examines the state of innovation in the region and analyzes the main constraints that firms and countries face to innovating. It assesses current policies and institutions, and lays out an agenda for action to spur more innovation-led growth. A key finding of the report is that countries’ current innovation policies are not aligned with their capabilities and needs. Policies need to strengthen the capacity of firms to innovate and support technological diffusion rather than just invention. Policy makers also need to eliminate policy biases against innovation in services, a sector that is growing in economic importance. Moreover, countries need to strengthen key complementary factors for innovation, including firms’ managerial quality, workers’ skills, and finance for innovation. Countries in developing East Asia would also do well to deepen their tradition of international openness, which could foster openness in other parts of the world. Doing so would help sustain the flows of ideas, trade, investment, and people that facilitate the creation and diffusion of knowledge for innovation.
Bank Ownership and Firm Innovation
(World Bank, Washington, DC, 2023-06-20) De Nicola, Francesca; Iootty, Mariana; Melecky, Martin; de Nicola, Francesca
This paper studies the effect of bank ownership on product innovation by borrowing firms, highlighting the role of the state, foreign, and combined foreign-state bank ownership. It uses Enterprise Survey data for more than 22,000 firms in 49 countries from 2016 to 2020, linked to Fitchconnect data on banks: their ownership, soundness indicators, and legal origins. The paper confirms that a firm's access to bank credit is associated with a greater probability of product innovation, even when adjusting for possible reverse causality. If the credit is provided by a state-owned bank, the probability that the borrowing firm will innovate increases. The analysis does not find a similarly positive effect for foreign bank ownership. But when considering the combined effect of foreign state ownership, the results are most statistically and economically significant. Although the results may not be extendable to research and development spending (a key input to innovation), the findings show that foreign state banks can serve as an additional financing vehicle to stimulate radical innovation alongside equity financiers.
Resource Misallocation and Distortions: Some Evidence from East Asia
(World Bank, Washington, DC, 2022-11-03) de Nicola, Francesca; de Nicola, Francesca
Developing East Asia has undergone a dramatic transformation over the past few decades thanks to a combination of policies that fostered outward-oriented and labor-intensive growth, investments in basic human capital, and sound economic governance. However, slowing growth and shifting patterns in global trade, rapid technological change, and evolving country circumstances present challenges to sustaining past productivity growth and ensuring future growth. Thus, understanding the extent of misallocation and its drivers is an important step toward identifying the types of policies that can improve domestic productivity and the competitiveness of firms. This Research and Policy Brief reviews the evidence for East Asian countries and discusses the limitations of current approaches to measuring misallocation.
The Returns to Innovation in East Asia: The Role of the Business Environment and Firms' Characteristics
(World Bank, Washington, DC, 2022-02) de Nicola, Francesca; Chen, Pinyi; de Nicola, Francesca
The paper studies the relationship between innovation efforts, innovation outputs, and productivity, using firm-level data from six East Asian countries. Firms are more likely to invest in innovation when they use technology licensed by a foreign company, are part of a large group, and have a more educated workforce. Investment in research and development can significantly boost both product and process innovation. Product innovation yields significant productivity gains. However, productivity gains from process innovation are not detectable in the sample.
Financial Structure and Firm Innovation: Evidence from around the World
(World Bank, Washington, DC, 2021-05) de Nicola, Francesca; Miguel, Faruk; Mare, Davide S.; de Nicola, Francesca
This paper analyzes the relationship between financial structure and innovation. Analysis of cross-country micro data over 2009–18 shows that a firm’s financial sources matter for the choice to innovate and the extent to which a firm innovates. The relationship is stronger for firms relying on non-bank financial intermediaries and for firms in low-technology sectors. Moreover, the use of external sources of finance is associated with improved prospects of innovation, especially in more financially developed countries. These findings suggest that developing the financial sector can bring benefits in terms of innovation.
Productivity in the Time of COVID-19: Evidence from East Asia and Pacific
(World Bank, Washington, DC, 2021-04-26) De Nicola, Francesca; Timmis, Jonathan; Tran, Trang Thu; Mattoo, Aaditya; de Nicola, Francesca
Firms in the East Asia and Pacific (EAP) region have been hit hard by the COVID-19 (coronavirus) pandemic, with dramatic and widespread falls in sales and employment. Firm sales in some EAP countries were 38 to 58 percent lower in April or May 2020, compared to the same month in the previous year. Small and medium-sized enterprises (SMEs) have been particularly affected. The pandemic will have a lasting impact on productivity growth as firm indebtedness and increased uncertainty inhibit investment, and firm closures and unemployment lead to a loss of valuable intangible assets. Support for firms is needed but must be based as far as possible on objective criteria, related not only to past performance or current pain but to the potential for firms, including new firms, to thrive in the future. To avoid unduly prolonging assistance, governments should build exit strategies into the design of support measures and commit to phasing support out by linking it to observable macroeconomic indicators of recovery.
Productivity Loss and Misallocation of Resources in Southeast Asia
(World Bank, Washington, DC, 2020-11) de Nicola, Francesca; Nguyen, Ha; Loayza, Norman; de Nicola, Francesca
This paper examines within-sector resource misallocation in three Southeast Asian countries -- Indonesia, Malaysia, and Vietnam. The methodology accounts for measurement error in revenues and costs. The firm-level evidence suggests that measurement error is substantial, resulting in an overestimation of misallocation by as much as 30 percent. Nevertheless, resource misallocation across firms within a sector remains large, albeit declining. The findings imply that there are considerable potential gains from efficient reallocation -- above 80 percent for Indonesia and around 20 to 30 percent for Malaysia and Vietnam. Private domestic firms and firms with higher productivity appear to face larger distortions that prevent them from expanding.
Political Connections and Financial Constraints: Evidence from Transition Countries
(World Bank, Washington, DC, 2019-08) de Nicola, Francesca; Bussolo, Maurizio; Panizza, Ugo; Varghese, Richard; de Nicola, Francesca
This paper examines whether political connections ease financial constraints faced by firms. Using firm-level data from six Central and Eastern European economies, the paper shows that politically connected firms: (i) have high levels of leverage, (ii) have low levels of profitability, (iii) are less capitalized, (iv) have low marginal productivity of capital, and (v) do not invest more than unconnected firms. Next, the paper shows that connected firms borrow more because they have easier access to credit and that political connections lead to a misallocation of capital. The results are consistent with the idea that political connections distort capital allocation and may have welfare costs.