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R&D and Absorptive Capacity: Theory and Empirical Evidence

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Author Info
Rachel Griffith
Stephen Redding
John Van Reenen

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Abstract

This paper presents a single unified framework that integrates the theoretical literature on Schumpeterian endogenous growth and major strands of the empirical literature on R&D, productivity growth and productivity convergence. Starting from a structural model of endogenous growth following Aghion and Howitt (1992,1998) , we provide microeconomic foundations for the reduced-form equations for total factor productivity (TFP); growth frequently estimated empirically using industry-level data. R&D affects both innovation and the assimilation of others' discoveries ("absorptive capacity"). Long-run cross-country differences in productivity emerge endogenously, and the analysis implies that many existing studies underestimate R&D's social rate of return by neglecting absorptive capacity. Copyright The editors of the "Scandinavian Journal of Economics", 2002 .

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Article provided by Blackwell Publishing in its journal The Scandinavian Journal of Economics.

Volume (Year): 105 (2003)
Issue (Month): 1 (03)
Pages: 99-118
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Handle: RePEc:bla:scandj:v:105:y:2003:i:1:p:99-118

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  2. Rachel Griffith & Stephen Redding & Helen Simpson, 2003. "Productivity Convergence and Foreign Ownership at the Establishment Level," CEP Discussion Papers dp0573, Centre for Economic Performance, LSE. [Downloadable!]
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  3. Antonelli Cristiano, 2008. "Pecuniary externalities: the convergence of directed technological change and the emergence of innovation systems," Dipartimento di Economia "S. Cognetti de Martiis" LEI & BRICK - Laboratorio di economia dell'innovazione "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio Carlo 200807, University of Turin. [Downloadable!]
  4. Vincent M. Otto & Timo Kuosmanen & Ekko C. van Ierland, 2006. "Estimating Feedback Effect in Technical Change: A Frontier Approach," Working Papers 2006.27, Fondazione Eni Enrico Mattei. [Downloadable!]
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  6. Antonelli Cristiano & Patrucco Pierpaolo & Quatraro Francesco, 2008. "Pecuniary Knowledge Externalities: Evidence from European Regions," Dipartimento di Economia "S. Cognetti de Martiis" LEI & BRICK - Laboratorio di economia dell'innovazione "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio Carlo 200803, University of Turin. [Downloadable!]
  7. Rachel Griffith & Stephen Redding & Helen Simpson, 2004. "Foreign Ownership and Productivity: New Evidence from the Service Sector and the R&D Lab," CEP Discussion Papers dp0649, Centre for Economic Performance, LSE. [Downloadable!]
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  8. David Popp, 2004. "International Innovation and Diffusion of Air Pollution Control Technologies: The Effects of NOX and SO2 Regulation in the US, Japan, and Germany," NBER Working Papers 10643, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Jakob Madsen & Shishir Saxena & James Ang, 2008. "The Indian Growth Miracle And Endogenous Growth," Monash Economics Working Papers 17/08, Monash University, Department of Economics. [Downloadable!]
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  10. Hewitt-Dundas, Nola & Roper, Stephen, 2008. "Ireland's Innovation Performance: 1991 to 2005," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), vol. 2008(2-Summer), pages pages 46-. [Downloadable!]
  11. Arvind Virmani, 2005. "Policy regimes, growth and poverty in India : Lessons of government failure and entrepreneurial success," Indian Council for Research on International Economic Relations, New Delhi Working Papers 170, Indian Council for Research on International Economic Relations, New Delhi, India. [Downloadable!]
  12. Elad Harison & Heli Koski, 2009. "Organizing High-Tech R&D - Secrets of Successful Innovation Alliances," Discussion Papers 1175, The Research Institute of the Finnish Economy. [Downloadable!]
  13. Nuno Crespo & Maria Paula Fontoura, 2005. "Determinant Factors of FDI Spillovers – What Do We Really Know?," Working Papers 2005/06, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.. [Downloadable!]
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  14. Maik T. Schneider, 2007. "Knowledge Codification and Endogenous Growth," Economics working paper series 07/65, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
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