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Growth through heterogeneous innovations

  • Akcigit, Ufuk

    ()

    (University of Pennsylvania and NBER)

  • Kerr, William R.

    ()

    (Harvard University and NBER)

We study how exploration versus exploitation innovations impact economic growth through a tractable endogenous growth framework that contains multiple innovation sizes, multi-product firms, and entry/exit. Firms invest in exploration R&D to acquire new product lines and exploitation R&D to improve their existing product lines. We model and show empirically that exploration R&D does not scale as strongly with firm size as exploitation R&D. The resulting framework conforms to many regularities regarding innovation and growth differences across the firm size distribution. We also incorporate patent citations into our theoretical framework. The framework generates a simple test using patent citations that indicates that entrants and small firms have relatively higher growth spillover effects.

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Paper provided by Bank of Finland in its series Research Discussion Papers with number 28/2013.

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Length: 80 pages
Date of creation: 22 Nov 2013
Date of revision:
Handle: RePEc:hhs:bofrdp:2013_028
Contact details of provider: Postal: Bank of Finland, P.O. Box 160, FI-00101 Helsinki, Finland
Web page: http://www.suomenpankki.fi/en/

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