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The Productivity Effects of Internal and External R&D: Evidence from a Dynamic Panel Data Model

  • Boris Lokshin
  • René Belderbos
  • Martin Carree

We examine the impact of internal and external R&D on labour productivity in a 6-year panel of Dutch manufacturing firms. We apply a dynamic panel data model that allows for decreasing or increasing returns to scale in internal and external R&D and for economies of scope. We find complementarity between internal and external R&D, with a positive impact of external R&D only evident in case of sufficient internal R&D. These findings confirm the role of internal R&D in enhancing absorptive capacity. The scope economies are accompanied by decreasing returns to scale at high levels of internal and external R&D. The analysis indicates that productivity grows by increasing the share of external R&D in total R&D. Copyright (c) Blackwell Publishing Ltd and the Department of Economics, University of Oxford, 2008.

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Article provided by Department of Economics, University of Oxford in its journal Oxford Bulletin of Economics and Statistics.

Volume (Year): 70 (2008)
Issue (Month): 3 (06)
Pages: 399-413

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Handle: RePEc:bla:obuest:v:70:y:2008:i:3:p:399-413
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