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Looking beyond the R&D effects on innovation: The contribution of non-R&D activities to total factor productivity growth in the EU

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  • Lopez-Rodriguez, Jesus
  • Martinez, Diego

Abstract

Although non-R&D innovation activities account for a significant portion of innovation efforts carried out across very heterogeneous economies in Europe, how to incorporate them in to economic models is not always straightforward. For instance, the traditional macro approach to estimating the determinants of total factor productivity (TFP) does not handle them well. To counter these problems, this paper proposes applying an augmented macro-theoretical model to estimate the determinants of TFP by jointly considering the effects of R&D and the impact of non-R&D innovation activities on the productivity levels of firms. Estimations from a model of a sample of EU-26 countries covering the period 2004-2008 show that the distinction between R&D and non-R&D effects is significant for a number of different issues. First, the results show a sizeable impact on TFP growth, as the impact of R&D is twice that of non-R&D. Second, absorptive capacity is only linked to R&D endowments. And third, the two types of endowments cannot strictly been seen as complementary, at least for the case of countries with high R&D intensities or high non-R&D intensities.

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  • Lopez-Rodriguez, Jesus & Martinez, Diego, 2014. "Looking beyond the R&D effects on innovation: The contribution of non-R&D activities to total factor productivity growth in the EU," Cardiff Economics Working Papers E2014/5, Cardiff University, Cardiff Business School, Economics Section.
  • Handle: RePEc:cdf:wpaper:2014/5
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    2. Sang-Do Park, 2018. "The Nexus of FDI, R&D, and Human Capital on Chinese Sustainable Development: Evidence from a Two-Step Approach," Sustainability, MDPI, vol. 10(6), pages 1-23, June.
    3. Lopez-Rodriguez, Jesus & Martinez-Lopez, Diego, 2017. "Looking beyond the R&D effects on innovation: The contribution of non-R&D activities to total factor productivity growth in the EU," Structural Change and Economic Dynamics, Elsevier, vol. 40(C), pages 37-45.
    4. Thomä, Jörg & Zimmermann, Volker, 2019. "Non-R&D, interactive learning and economic performance: Revisiting innovation in small and medium enterprises," ifh Working Papers 17/2019, Volkswirtschaftliches Institut für Mittelstand und Handwerk an der Universität Göttingen (ifh).
    5. Chen, Jin & Heng, Cheng Suang & Tan, Bernard C.Y. & Lin, Zhijie, 2018. "The distinct signaling effects of R&D subsidy and non-R&D subsidy on IPO performance of IT entrepreneurial firms in China," Research Policy, Elsevier, vol. 47(1), pages 108-120.
    6. Zhong Xie & Guixue Zang & Feifei Wu, 2019. "On the Relationship between Innovation Activity and Manufacturing Upgrading of Emerging Countries: Evidence from China," Sustainability, MDPI, vol. 11(5), pages 1-19, March.
    7. Roberts Skapars & Sandra Jekabsone & Janis Priede & Irina Skribane, 2017. "Productivity and its Impact on the Competitiveness of Latvia," European Research Studies Journal, European Research Studies Journal, vol. 0(3A), pages 920-930.

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    More about this item

    Keywords

    TFP; R&D; non-R&D expenditures; EU countries;
    All these keywords.

    JEL classification:

    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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