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On the Relationship between R&D and Productivity: a Treatment Effect Analysis

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  • Giuseppe Medda

    (University of Cagliari, Italy.)

  • Claudio Piga

    (Business School, University of Nottingham, UK.)

  • Donald S. Siegel

    ()
    (Department of Economics, Rensselaer Polytechnic Institute, Troy NY 12180-3590, USA)

Abstract

This study uses firm level data from two detailed surveys of Italian manufacturing firms to study the relationship between R&D expenditures and productivity growth. The analysis considers the different contributions of various forms of R&D (product, process, internal, external in collaboration with universities, research centres and other firms) to Total Factor Productivity (TFP). Thus, this paper answers the call for more research on the links between a firm's external R&D and its productivity. In the cross-section econometric analysis, we estimate a Treatment Effects model based on the assumption that the decision to carry out R&D is endogenous. We found evidence supporting such a methodological approach. The main results reveal a positive and statistically significant relationship between the detailed measures of R&D and TFP. It is noteworthy that among external R&D investments, only expenditures for projects run in collaboration with other firms turn out to be highly significant, while cooperation in R&D with universities does not seem to lead to productivity enhancements. Because of the public good nature of research, firms may resort to do R&D within laboratories run by universities only when the outcome of the research does not have important strategic consequences.

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Bibliographic Info

Paper provided by Rensselaer Polytechnic Institute, Department of Economics in its series Rensselaer Working Papers in Economics with number 0307.

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Date of creation: Nov 2003
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Handle: RePEc:rpi:rpiwpe:0307

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Cited by:
  1. Hall, Bronwyn H. & Mairesse, Jacques & Mohnen, Pierre, 2010. "Measuring the Returns to R&D," MERIT Working Papers 006, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  2. Møen, Jarle & Thorsen, Helge Sandvig, 2013. "Publication bias in the returns to R&D literature," Discussion Papers 2013/12, Department of Business and Management Science, Norwegian School of Economics.
  3. G. Medda & C. Piga, 2004. "R&S e spillover industriali: un'analisi sulle imprese italiane," Working Paper CRENoS 200406, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.

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