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Determination of R&D investment in French firms: a two-part hierarchical model with correlated random effects


  • Myriam Abdelmoula
  • Jean Michel Etienne


The aim of this paper is to identify the determinants of Research and development (R&D) investment in French firms. For analysis of covariate effects on R&D expenditures, a two-part model that combines a probit regression on the decision to perform R&D and a linear regression on log-positive expenditures is estimated. This two-part hierarchical model with a correlated random effect's structure accounts for both the skewed nature of firms' R&D expenditures data in French regions and the fact that firms' expenditures are correlated within the regions. In this study, we propose to identify which factors have affected French R&D investment in French manufacturing sectors in 2005. Estimations are based on a sample of 3308 French firms within 19 regions of France.

Suggested Citation

  • Myriam Abdelmoula & Jean Michel Etienne, 2010. "Determination of R&D investment in French firms: a two-part hierarchical model with correlated random effects," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 19(1), pages 53-70.
  • Handle: RePEc:taf:ecinnt:v:19:y:2010:i:1:p:53-70
    DOI: 10.1080/10438590903016435

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    References listed on IDEAS

    1. Bresson G. & Etienne J-M. & Legros D., 2007. "Two-part hierarchical model with correlated random effects: an Application on households gasoline expenditures in French communes," Working Papers ERMES 0709, ERMES, University Paris 2.
    2. Valdemar Smith & Erik Strøjer Madsen & Mogens Dilling-Hansen, 2002. "Do R&D Investments Affect Export Performance?," CIE Discussion Papers 2002-09, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
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