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Disentangling the processes of firm growth and R&D investment

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Abstract

What are the secrets for stimulating R&D investment and job creation? This question is of central importance for the EU Innovation Union strategy. This policy brief applies a new econometric technique to the EU Industrial R&D Scoreboard data on the world's top R&D investors, to highlight the key role of sales growth (instead of profits growth) as the engine of R&D investment and job creation.

Suggested Citation

  • Alexander Coad & Nicola Grassano, 2016. "Disentangling the processes of firm growth and R&D investment," JRC Research Reports JRC103175, Joint Research Centre.
    • Handle: RePEc:ipt:iptwpa:jrc103175
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    File URL: https://publications.jrc.ec.europa.eu/repository/handle/JRC103175
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    1. Annette Alstadsæter & Salvador Barrios & Gaetan Nicodeme & Agnieszka Maria Skonieczna & Antonio Vezzani, 2018. "Patent boxes design, patents location, and local R&D," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 33(93), pages 131-177.
    2. Kamien, Morton I & Schwartz, Nancy L, 1975. "Market Structure and Innovation: A Survey," Journal of Economic Literature, American Economic Association, vol. 13(1), pages 1-37, March.
    3. Thompson, Peter, 1999. "Rationality, rules of thumb, and R&D," Structural Change and Economic Dynamics, Elsevier, vol. 10(3-4), pages 321-340, December.
    4. Daria Ciriaci & Nicola Grassano & Antonio Vezzani, 2016. "Regulation, red tape and location choices of top R&D investors," JRC Working Papers on Corporate R&D and Innovation 2016-01, Joint Research Centre.
    5. Himmelberg, Charles P & Petersen, Bruce C, 1994. "R&D and Internal Finance: A Panel Study of Small Firms in High-Tech Industries," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 38-51, February.
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    1. Marta Postuła & Wojciech Chmielewski & Piotr Puczyński & Rafał Cieślik, 2021. "The Impact of Information and Communication Technologies (ICT) on Energy Poverty and Unemployment in Selected European Union Countries," Energies, MDPI, vol. 14(19), pages 1-18, September.

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    More about this item

    Keywords

    R&D investment; firm growth; SVAR; sales growth; industrial dynamics;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General

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