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R&D and Productivity in the UK: evidence from firm-level data in the 1990s

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  • Mark Rogers

Abstract

The UK`s business R&D (BERD) to GDP ratio is low compared to other leading economies, and the ratio has slowly declined over the 1990s. This paper uses data on large UK firms to analyse the link between R&D and productivity over the 1989-2000 period. Using a production function approach, and a sample of up to 719 firms, various different samples and estimators are used to assess the elasticity of, and rate of return to, R&D. The results indicate that UK returns to R&D are similar to returns in other leading economies. Furthermore, the returns to R&D have been relatively stable over the 1990s. There is no evidence to suggest that stock market listed firms, or firms with higher past profitability, have significantly different returns. Overall, the results suggest that the low BERD to GDP ratio in the UK is unlikely to be due to direct financial or human capital constraints (as these imply finding relatively high rates of return). Instead, the low BERD to GDP ratio appears to reflect low (perceived) opportunities by firms and the inability of firms to manage R&D to generate value. The paper provides some, tentative evidence, that high rates of competition in the science-based sector are associated with low returns to R&D.

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Bibliographic Info

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 255.

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Date of creation: 01 Jan 2006
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Handle: RePEc:oxf:wpaper:255

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Keywords: R&D; Productivity;

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References

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Cited by:
  1. Bogliacino, Francesco & Pianta, Mario, 2011. "Engines of growth. Innovation and productivity in industry groups," Structural Change and Economic Dynamics, Elsevier, vol. 22(1), pages 41-53, February.
  2. Raquel Ortega-Argilés & Lesley Potters & Marco Vivarelli, 2009. "R&D and Productivity: Testing Sectoral Peculiarities Using Micro Data," JRC-IPTS Working Papers on Corporate R&D and Innovation 2009-3, Institute of Prospective Technological Studies, Joint Research Centre.
  3. Kumbhakar, Subal C. & Ortega-Argilés, Raquel & Potters, Lesley & Vivarelli, Marco & Voigt, Peter, 2009. "Corporate R&D and Firm Efficiency: Evidence from Europe’s Top R&D Investors," IZA Discussion Papers 4657, Institute for the Study of Labor (IZA).
  4. Raquel Ortega-Argilés & Mariacristina Piva & Marco Vivarelli, 2013. "Productivity gains from R&D investment: are high-tech sectors still ahead?," DISCE - Quaderni del Dipartimento di Scienze Economiche e Sociali dises1390, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).

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