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Link between innovation and productivity in Canadian manufacturing industries

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  • Wulong Gu
  • Jianmin Tang

Abstract

Empirical studies commonly use research and development (R&D) to measure innovation and often find, especially in Canada, no strong link between productivity and innovation. In this article, we model innovation as an unobservable latent variable that underlies four indicators: R&D, patents, technology adoption, and skills. We find that these indicators are reasonably good measures of innovation for aggregate manufacturing. However, except for skills, the reliability of the indicators for innovation differs among individual industries. Our innovation indexes, based on the latent variable model, show that most manufacturing industries became more innovative over the 1980-1997 period. The pace of innovation in the electrical and electronic products industry accelerated during the 1990s. In addition, we show that the new measure of innovation has a positive and statistically significant impact on productivity. It takes from 1 to 3 years, depending on the industry, for innovation to generate an impact on productivity.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Economics of Innovation and New Technology.

Volume (Year): 13 (2004)
Issue (Month): 7 ()
Pages: 671-686

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Handle: RePEc:taf:ecinnt:v:13:y:2004:i:7:p:671-686

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Keywords: Innovation; Productivity;

References

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  1. Zvi Griliches & Jacques Mairesse, 1995. "Production Functions: The Search for Identification," NBER Working Papers 5067, National Bureau of Economic Research, Inc.
  2. Bruno Crépon & Emmanuel Duguet & Jacques Mairesse, 1998. "Research, Innovation and Productivity : An Econometric Analysis at the Firm Level," Working Papers 98-33, Centre de Recherche en Economie et Statistique.
  3. Jean O. Lanjouw & Mark Schankerman, 1999. "The Quality of Ideas: Measuring Innovation with Multiple Indicators," NBER Working Papers 7345, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Massimiliano Mazzanti & Roberto Zoboli, 2006. "Examining the Factors Influencing Environmental Innovations," Working Papers 2006.20, Fondazione Eni Enrico Mattei.
  2. M. Constanza Demmel & Juan A. Máñez & María E. Rochina-Barrachina & Juan A. Sanchis-Llopis, 2013. "Innovation and productivity: evidence for 4 Latin American countries manufacturing industry," Working Papers 1307, Department of Applied Economics II, Universidad de Valencia.
  3. Mario Pianta & Andrea Vaona, 2007. "Innovation and Productivity in European Industries," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 16(7), pages 485-499.
  4. Susanna Mancinelli & Massimiliano Mazzanti, 2009. "Innovation, networking and complementarity: evidence on SME performances for a local economic system in North-Eastern Italy," The Annals of Regional Science, Springer, vol. 43(3), pages 567-597, September.
  5. Massimiliano Mazzanti & Susanna Mancinelli, 2007. "SME Performance, Innovation and Networking Evidence on Complementarities for a Local Economic System," Working Papers 2007.50, Fondazione Eni Enrico Mattei.

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