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Product market regulation, innovation, and productivity

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  • Amable, Bruno
  • Ledezma, Ivan
  • Robin, Stéphane

Abstract

Several recent policy and academic contributions consider that liberalising product markets would foster innovation and growth. This paper analyses the innovation–productivity relationship at the industry-level for a sample of OECD manufacturing industries. We pay particular attention to the vertically-induced influence of product market regulation (PMR) of key input sectors of the economy on the innovative process of manufacturing and its consequences on productivity. We test for a differentiated effect of this type of PMR depending on whether countries are technological leaders or laggards in a given industry and for a given time period. Contrary to the most widespread policy claims, the innovation-boosting effects of liberalisation policies at the leading edge are systematically not supported by the data. These findings question the relevance of a research and innovation policy based on product market liberalisation.

Suggested Citation

  • Amable, Bruno & Ledezma, Ivan & Robin, Stéphane, 2016. "Product market regulation, innovation, and productivity," Research Policy, Elsevier, vol. 45(10), pages 2087-2104.
    • Handle: RePEc:eee:respol:v:45:y:2016:i:10:p:2087-2104
    DOI: 10.1016/j.respol.2016.08.003
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    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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