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Innovation, investment and productivity: evidence from Spanish firms

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  • Omar LICANDRO
  • Reyes MAROTO
  • Luis A. PUCH

Abstract

In this paper we analyze the role of replacement and innovation activity in shaping investment behavior and labor productivity in a panel of Spanish manufacturing firms from 1990 to 2001. Investment is concentrated about large investment episodes, or investment spikes, whose nature varies by observable firm characteristics. We find evidence of replacement activity as a determinant of investment spikes for those firms that are not involved in process innovation nor plant expansion. Then we explore how large investment episodes transmit into the evolution of labor productivity under different innovative strategies. We find that expansionary and innovative firms increase their productivity after an investment spike. However, long learning curves seems to be associated with innovative investments.

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Bibliographic Info

Paper provided by European University Institute in its series Economics Working Papers with number ECO2004/07.

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Date of creation: 2004
Date of revision:
Handle: RePEc:eui:euiwps:eco2004/07

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Keywords: investment spikes; machine replacement; technological innovation; labor productivity; learning effects;

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References

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  1. Russell Cooper & John Haltiwanger & Laura Power, 1995. "Machine Replacement and the Business Cycle: Lumps and Bumps," NBER Working Papers 5260, National Bureau of Economic Research, Inc.
  2. Plutarchos Sakellaris, 2001. "Patterns of plant adjustment," Finance and Economics Discussion Series 2001-05, Board of Governors of the Federal Reserve System (U.S.).
  3. Øivind Anti Nilsen & Fabio Schiantarelli, 2003. "Zeros and Lumps in Investment: Empirical Evidence on Irreversibilities and Nonconvexities," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 1021-1037, November.
  4. J. Bradford Jensen & Robert H. McGuckin & Kevin Stiroh, 2000. "The Impact of Vintage and Survival on Productivity: Evidence from Cohorts of U.S. Manufacturing Plants," Economics Program Working Papers 00-01, The Conference Board, Economics Program.
  5. Mark E. Doms & Timothy Dunne, 1998. "Capital Adjustment Patterns in Manufacturing Plants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(2), pages 409-429, April.
  6. Laura Power, 1998. "The Missing Link: Technology, Investment, And Productivity," The Review of Economics and Statistics, MIT Press, vol. 80(2), pages 300-313, May.
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Cited by:
  1. Laia Castany & Enrique Lopez-Bazo & Rosina Moreno, 2007. "Decomposing differences in total factor productivity across firm size," IREA Working Papers 200705, University of Barcelona, Research Institute of Applied Economics, revised Mar 2007.
  2. M. Grazzi & N. Jacoby & T. Treibich, 2013. "Dynamics of Investment and Firm Performance: Comparative evidence from manufacturing industries," Working Papers wp869, Dipartimento Scienze Economiche, Universita' di Bologna.
  3. Bruno de Oliveira Cruz & Raouf Boucekkine, 2006. "Technological Progress and Investment Microeconomic Foundations and Macroeconomic Implications," Discussion Papers 1170, Instituto de Pesquisa Econômica Aplicada - IPEA.
  4. Laia Castany, 2008. "The Role of Firm Size in Training Provision Decisions: evidence from Spain," IREA Working Papers 200808, University of Barcelona, Research Institute of Applied Economics, revised Jun 2008.
  5. Laia Castany, 2010. "The role of size in firms' training: evidence from Spain," International Journal of Manpower, Emerald Group Publishing, vol. 31(5), pages 563-584, September.
  6. José A. Herce, . "Could this ever happen in Spain? Economic and policy aspects of a SARS-like episode," Working Papers 2004-09, FEDEA.
  7. Laia Castany, 2008. "The Role of Firm Size in Training Provision Decisions: evidence from Spain," Economics of Education Working Paper Series 0028, University of Zurich, Institute for Strategy and Business Economics (ISU).
  8. Omar Licandro & Reyes Maroto & Luis A. Puch, . "Patterns of Investment in Spanish Manufacturing Firms," Studies on the Spanish Economy 185, FEDEA.

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