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Mapping the Two Faces of R&D: Productivity Growth in a Panel of OECD Industries

  • Rachel Griffith

    (Institute for Fiscal Studies and University College London)

  • Stephen Redding

    (Centre for Economic Performance and London School of Economics)

  • John Van Reenen

    (Centre for Economic Performance and London School of Economics)

Many writers have claimed that research and development (R&D) has two faces. In addition to the conventional role of stimulating innovation, R&D enhances technology transfer (absorptive capacity). We explore this idea empirically using a panel of industries across twelve OECD countries. We find R&D to be statistically and economically important in both technological catch-up and innovation. Human capital also plays an major role in productivity growth, but we only find a small effect of trade. In failing to take account of R&D-based absorptive capacity, existing U.S.-based studies may underestimate the return to R&D. © 2004 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 86 (2004)
Issue (Month): 4 (November)
Pages: 883-895

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Handle: RePEc:tpr:restat:v:86:y:2004:i:4:p:883-895
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