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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
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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. J. Bradford Jensen & Robert H McGuckin & Kevin J Stiroh, 2000. "The Impact of Vintage and Survival on Productivity: Evidence from Cohorts of U.S. Manufacturing Plants," Working Papers 00-06, Center for Economic Studies, U.S. Census Bureau.
  2. Oivind Anti Nilsen & Fabio Schiantarelli, 1996. "Zeroes and Lumps in Investment: Empirical Evidence on Irreversibilities and Non-Convexities," Boston College Working Papers in Economics 337., Boston College Department of Economics, revised 01 Nov 2000.
  3. 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.
  4. 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.
  5. Plutarchos Sakellaris, 2001. "Patterns of plant adjustment," Finance and Economics Discussion Series 2001-05, Board of Governors of the Federal Reserve System (U.S.).
  6. 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.
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Cited by:
  1. Laia Castany & Enrique López-Bazo & Rosina Moreno, 2007. "Decomposing differences in total factor productivity across firm size," Working Papers XREAP2007-01, Xarxa de Referència en Economia Aplicada (XREAP), revised Mar 2007.
  2. 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).
  3. José A. Herce, . "Could this ever happen in Spain? Economic and policy aspects of a SARS-like episode," Working Papers 2004-09, FEDEA.
  4. Marco Grazzi & Nadia Jacoby & Tania Treibich, 2013. "Dynamics of Investment and Firm Performance: Comparative Evidence from Manufacturing Industries," GREDEG Working Papers 2013-09, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
  5. 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.
  6. Omar Licandro & Reyes Maroto & Luis A. Puch, . "Patterns of Investment in Spanish Manufacturing Firms," Studies on the Spanish Economy 185, FEDEA.
  7. 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.
  8. 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.

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