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The Importance of R&D and Innovation for Productivity: A Reexamination in Light of the 2000 French Innovation Survey

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  • Jacques Mairesse
  • Pierre Mohnen
  • Elizabeth Kremp

Abstract

This paper consists in a detailed robustness investigation of the Crépon, Duguet and Mairesse [1998] (CDM) econometric framework, which encompasses as a reduced form equation the production function extended to R&D, as pioneered by Zvi Griliches. We focus on the sensitivity of the estimated productivity elasticities of innovation and R&D, with respect to different model specifications and estimation methods, and to the different innovation output quantitative and qualitative indicators available in the 1998-2000 French Community Innovation Survey. The main conclusion we draw is that as long as we properly correct for endogeneity and also, when appropriate, for selectivity, we find again estimates of the productivity elasticities of R&D and of the corresponding median rates of return to R&D, which are close to the usual estimates from the extended Cobb-Douglas production function. We interpret the need to instrument innovation and R&D as revealing important measurement errors in the innovation intensity variables, as well as but to a lesser extent in the innovation binary indicators, the R&D intensity variable and binary indicator. Although innovation surveys unveil interesting information and the CDM model is a good framework, which can both be used to advance our understanding of the firm R&D and innovation activities and performances, much more remains to be done to improve the quality of the data and relevance of the analysis.

Suggested Citation

  • Jacques Mairesse & Pierre Mohnen & Elizabeth Kremp, 2005. "The Importance of R&D and Innovation for Productivity: A Reexamination in Light of the 2000 French Innovation Survey," Annals of Economics and Statistics, GENES, issue 79-80, pages 487-527.
  • Handle: RePEc:adr:anecst:y:2005:i:79-80:p:487-527
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    Cited by:

    1. Hall, Bronwyn H. & Mairesse, Jacques & Mohnen, Pierre, 2010. "Measuring the Returns to R&D," Handbook of the Economics of Innovation, Elsevier.
    2. Hall, B.H., 2011. "Innovation and productivity," MERIT Working Papers 028, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. Pierre Mohnen & Bronwyn Hall, 2013. "Innovation and Productivity: An Update," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 3(1), pages 47-65, June.
    4. repec:pal:compes:v:60:y:2018:i:4:d:10.1057_s41294-018-0075-3 is not listed on IDEAS
    5. Mairesse, Jacques & Mohnen, Pierre, 2010. "Using Innovation Surveys for Econometric Analysis," Handbook of the Economics of Innovation, Elsevier.
    6. Michael Polder & George van Leeuwen & Pierre Mohnen & Wladimir Raymond, 2010. "Product, Process and Organizational Innovation: Drivers, Complementarity and Productivity Effects," DRUID Working Papers 10-24, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    7. repec:eee:respol:v:47:y:2018:i:10:p:1918-1932 is not listed on IDEAS
    8. Raymond, Wladimir & Mairesse, Jacques & Mohnen, Pierre & Palm, Franz, 2015. "Dynamic models of R & D, innovation and productivity: Panel data evidence for Dutch and French manufacturing," European Economic Review, Elsevier, vol. 78(C), pages 285-306.
    9. repec:dug:actaec:y:2018:i:5:p:127-140 is not listed on IDEAS

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