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Innovation, investment and productivity: evidence from Spanish firms

  • Omar LICANDRO
  • Reyes MAROTO
  • Luis A. PUCH

In this paper we analyze the role of replacement and innovation activity in shaping investment behavior and labor productivity in a panel of Spanish manufacturing firms from 1990 to 2001. Investment is concentrated about large investment episodes, or investment spikes, whose nature varies by observable firm characteristics. We find evidence of replacement activity as a determinant of investment spikes for those firms that are not involved in process innovation nor plant expansion. Then we explore how large investment episodes transmit into the evolution of labor productivity under different innovative strategies. We find that expansionary and innovative firms increase their productivity after an investment spike. However, long learning curves seems to be associated with innovative investments.

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Paper provided by European University Institute in its series Economics Working Papers with number ECO2004/07.

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Date of creation: 2004
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Handle: RePEc:eui:euiwps:eco2004/07
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  1. Laura Power, 1998. "The Missing Link: Technology, Investment, And Productivity," The Review of Economics and Statistics, MIT Press, vol. 80(2), pages 300-313, May.
  2. Russell Cooper & John Haltiwanger & Laura Power, 1995. "Machine Replacement and the Business Cycle: Lumps and Bumps," Papers 0062, Boston University - Industry Studies Programme.
  3. Plutarchos Sakellaris, 2001. "Patterns of plant adjustment," Finance and Economics Discussion Series 2001-05, Board of Governors of the Federal Reserve System (U.S.).
  4. Oivind Anti Nilsen & Fabio Schiantarelli, 1996. "Zeroes and Lumps in Investment: Empirical Evidence on Irreversibilities and Non-Convexities," Boston College Working Papers in Economics 337., Boston College Department of Economics, revised 01 Nov 2000.
  5. Mark E. Doms & Timothy Dunne, 1998. "Capital Adjustment Patterns in Manufacturing Plants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(2), pages 409-429, April.
  6. J. Bradford Jensen & Robert H. McGuckin & Kevin Stiroh, 2000. "The Impact of Vintage and Survival on Productivity: Evidence from Cohorts of U.S. Manufacturing Plants," Economics Program Working Papers 00-01, The Conference Board, Economics Program.
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