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R&D and Productivity: A Two Way Avenue?

  • Bravo-Ortega, Claudio
  • García Marín, Álvaro

Summary Most of the empirical studies assessing the R&D-productivity relationship at the country level fail to consider the possible simultaneity of these variables. Using a 65-country panel for the period between 1965 and 2005, this paper studies the relationship between R&D and productivity using several R&D indicators. We establish that per capita R&D expenditure is strongly exogenous to productivity. This result allows us to develop a further argument that demonstrates the high social returns to R&D spending. Our estimates also indicate that a 10% increase in R&D per capita generates an average increase of about 1.6% in the long-run TFP.

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Article provided by Elsevier in its journal World Development.

Volume (Year): 39 (2011)
Issue (Month): 7 (July)
Pages: 1090-1107

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Handle: RePEc:eee:wdevel:v:39:y:2011:i:7:p:1090-1107
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