R&D and Non-linear Productivity Growth of Heterogeneous Firms
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Date
2012-10
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Working Paper
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Abstract
The present paper studies the relationship between R&D investment and firm productivity growth by explicitly accounting for non-linearities in the R&D-productivity relationship and inter-sectoral firm heterogeneity. In order to address these issues, we employ a two step estimation approach, and match two rm-level panel data sets for the OECD countries, which allows us to relax both the linearity and homogeneity assumptions of the canonical Griliches (1979) knowledge capital model. Our results suggest that: (i) R&D investment increases rm productivity with an average elasticity of 0.15; (ii) the impact of R&D investment on rm productivity is dierential at dierent levels of R&D intensity { the productivity elasticity ranges from -0.02 for low levels of R&D intensity to 0.33 for high levels of R&D intensity; (iii) the relationship between R&D expenditures and productivity growth is non-linear, and only after a certain critical mass of R&D is reached, the productivity growth is signicantly positive; (iv) there are important inter-sectoral dierences with respect to R&D investment and firm productivity { high-tech sectors' rms not only invest more in R&D, but also achieve more in terms of productivity gains connected with research activities.
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315
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KOF Swiss Economic Institute, ETH Zurich
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BETRIEBLICHE INVESTITIONEN; Generalised propensity score; MEMBER COUNTRIES OF THE OECD (ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT); R&D investment; ECONOMIC PRODUCTIVITY; FORSCHUNG UND ENTWICKLUNG; BUSINESS INVESTMENTS; OECD-MITGLIEDSLÄNDER (ORGANISATION FÜR WIRTSCHAFTLICHE ZUSAMMENARBEIT); WIRTSCHAFTLICHE PRODUKTIVITÄT; RESEARCH AND DEVELOPMENT; Firm productivity
Organisational unit
02525 - KOF Konjunkturforschungsstelle / KOF Swiss Economic Institute