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Firm Level Investment and R&D in France and the United States: A Comparison

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  • Benoit Mulkay
  • Bronwyn H. Hall
  • Jacques Mairesse

Abstract

This paper is a contribution to the small but growing literature that compares the investment and R&D behavior of manufacturing firms in large developed countries that have varying financial and capital market institutions. Specifically, we look at two similar samples of French and United States firms during the period 1982-1993. We estimate a dynamic specification of a simple error-corrected investment model for both ordinary investment and for R&D investment, a model that incorporates both output (sales or turnover) and cash flow as predictors for investment. Our focus is on two comparisons: France versus United States and physical investment versus R&D investment. In general, we do not find any significant differences between the two countries in the long run effects of demand (output) on investment. However, we do find that cash flow or profits appear to have a much larger impact on both R&D and investment in the U.S. Except for the well-known difference in the serial correlation of the two types of capital spending, we reject any significant differences between investment and R&D behavior for each country; the major differences are between countries.

Suggested Citation

  • Benoit Mulkay & Bronwyn H. Hall & Jacques Mairesse, 2000. "Firm Level Investment and R&D in France and the United States: A Comparison," NBER Working Papers 8038, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:8038
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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