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Is Corporate R&D Investment in High-Tech Sectors More Effective? Some Guidelines for European Research Policy

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Author Info

  • Ortega-Argilés, Raquel

    ()
    (IN+ Center for Innovation)

  • Piva, Mariacristina

    ()
    (Università Cattolica del Sacro Cuore)

  • Potters, Lesley

    (Utrecht School of Economics)

  • Vivarelli, Marco

    ()
    (Università Cattolica del Sacro Cuore)

Abstract

This paper discusses the link between R&D and productivity across the European industrial and service sectors. The empirical analysis is based on both the European sectoral OECD data and on a unique micro longitudinal database consisting of 532 top European R&D investors. The main conclusions are as follows. First, the R&D stock has a significant positive impact on labour productivity; this general result is largely consistent with previous literature in terms of the sign, the significance and the magnitude of the estimated coefficients. More interestingly, both at sectoral and firm levels the R&D coefficient increases monotonically (both in significance and magnitude) when we move from the low-tech to the medium and high-tech sectors. This outcome means that corporate R&D investment is more effective in the high-tech sectors and this may need to be taken into account when designing policy instruments (subsidies, fiscal incentives, etc.) in support of private R&D. However, R&D investment is not the sole source of productivity gains; technological change embodied in gross investment is of comparable importance on aggregate and is the main determinant of productivity increase in the low-tech sectors. Hence, an economic policy aiming to increase productivity in the low-tech sectors should support overall capital formation.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3945.

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Length: 25 pages
Date of creation: Jan 2009
Date of revision:
Publication status: published in: Contemporary Economic Policy, 2010, 28 (3), 353-365
Handle: RePEc:iza:izadps:dp3945

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Keywords: high-tech sectors; productivity; industrial policy; R&D; innovation;

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Cited by:
  1. Bronwyn H. Hall & Jacques Mairesse & Pierre Mohnen, 2009. "Measuring the Returns to R&D," NBER Working Papers 15622, National Bureau of Economic Research, Inc.
  2. Møen, Jarle & Thorsen, Helge Sandvig, 2013. "Publication bias in the returns to R&D literature," Discussion Papers, Department of Business and Management Science, Norwegian School of Economics 2013/12, Department of Business and Management Science, Norwegian School of Economics.
  3. Antonio Vezzani & Sandro Montresor, 2013. "The production function of top R&D investors: Accounting for size and sector heterogeneity with quantile estimations," JRC-IPTS Working Papers on Corporate R&D and Innovation 2013-02, Institute of Prospective Technological Studies, Joint Research Centre.
  4. Fernandes, Cristina & Ferreira, João & Raposo, Mario, 2013. "Drivers to firm innovation and their effects on performance: An international comparison," MPRA Paper 46776, University Library of Munich, Germany.

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