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

  • Rachel Griffith
  • Stephen Redding
  • John Van Reenen

Many writers have claimed that R&D has two 'faces'. In addition to the conventional role of stimulating innovation, R&D enhances technology transfer by improving the ability of firms to learn about advances in the leading edge ('absorptive capacity'). In this paper we document that there has been convergence of TFP within a panel of industries across thirteen OECD countries since 1970. Furthermore, we find evidence that both R&D and human capital appear statistically and economically important in this catch up process as well as stimulating innovation directly. Trade, by contrast, plays a more modest role in productivity growth.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0458.

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Date of creation: May 2000
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Handle: RePEc:cep:cepdps:dp0458
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