R&D and absorptive capacity : theory and empirical evidence
AbstractThis paper presents a single unified framework that integrates the theoretical literature on Schumpeterian endogenous growth and major strands of the empirical literatures 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.
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Bibliographic InfoPaper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 209.
Date of creation: Mar 2003
Date of revision:
Publication status: Published in Scandinavian Journal of Economics, March, 2003, 105(1), pp. 99-118. ISSN: 1467-9442
absorptive capacity; endogenous growth; R&D; total factor productivity (TFP). JEL Classification codes: O10; O30; O47;
Other versions of this item:
- Rachel Griffith & Stephen Redding & John Van Reenen, 2003. "R&D and Absorptive Capacity: Theory and Empirical Evidence," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(1), pages 99-118, 03.
- J1 - Labor and Demographic Economics - - Demographic Economics
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- Par Hansson & Magnus Henrekson, 1994. "What makes a country socially capable of catching up?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 130(4), pages 760-783, December.
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