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Predicting R&D investment with ex ante productivity

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  • Ziemowit Bednarek

Abstract

In this article I demonstrate the relationship between research and development expenditure and firm productivity. Using data envelopment, I construct a measure of the firm-level distance from the industry-wide productivity frontier. Firms ex ante further from the productivity frontier invest more in R&D. On average, a 1% larger distance from the frontier causes a 0.6% to 1.2% increase in the R&D intensity next quarter. The effect is statistically and economically significant.

Suggested Citation

  • Ziemowit Bednarek, 2014. "Predicting R&D investment with ex ante productivity," Applied Economics Letters, Taylor & Francis Journals, vol. 21(15), pages 1079-1082, October.
    • Handle: RePEc:taf:apeclt:v:21:y:2014:i:15:p:1079-1082
    DOI: 10.1080/13504851.2014.909567
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