IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper

The Transatlantic Productivity Gap: Is R&D the Main Culprit?

  • Raquel Ortega-Argilés

    (Faculty of Economics, University of Barcelona)

  • Mariacristina Piva

    ()

    (Dipartimento di Scienze Economiche e Sociali, Università Cattolica del Sacro Cuore)

  • Marco Vivarelli

    ()

    (Dipartimenti e Istituti di Scienze Economiche Università Cattolica del Sacro Cuore)

The literature has pointed to different causes to explain the productivity gap between Europe and United States in the last decades. This paper tests the hypothesis that the lower European productivity performance in comparison with the US can be explained not only by a lower level of corporate R&D investment, but also by a lower capacity to translate R&D investment into productivity gains. The proposed microeconometric estimates are based on a unique longitudinal database covering the period 1990-2008 and comprising 1,809 US and European companies for a total of 16,079 observations. Consistent with previous literature, we find robust evidence of a significant impact of R&D on productivity; however – using different estimation techniques - the R&D coefficients for the US firms always turn out to be significantly higher. To see to what extent these transatlantic differences may be related to the different sectoral structures in the US and the EU, we differentiated the analysis by sectors. The result is that both in manufacturing, services and high-tech sectors US firms are more efficient in translating their R&D investments into productivity increases.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.ub.edu/irea/working_papers/2011/201103.pdf
Download Restriction: no

Paper provided by University of Barcelona, Research Institute of Applied Economics in its series IREA Working Papers with number 201103.

as
in new window

Length: 45 pages
Date of creation: Mar 2011
Date of revision: Mar 2011
Handle: RePEc:ira:wpaper:201103
Contact details of provider: Postal:
Diagonal 690-696, 08034 Barcelona

Phone: +34 93 402 43 13cazza
Web page: http://www.ub.edu/irea/
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Gordon, Robert J, 2004. "Five Puzzles in the Behaviour of Productivity, Investment and Innovation," CEPR Discussion Papers 4414, C.E.P.R. Discussion Papers.
  2. Maria Laura Parisi & Fabio Schiantarelli & Alessandro Sembenelli, 2002. "Productivity, Innovation Creation and Absorption, and R&D: Micro Evidence for Italy," Boston College Working Papers in Economics 526, Boston College Department of Economics.
  3. Kevin J. Stiroh, 2002. "Information Technology and the U.S. Productivity Revival: What Do the Industry Data Say?," American Economic Review, American Economic Association, vol. 92(5), pages 1559-1576, December.
  4. Laura Turner & Hervé Boulhol, 2010. "Recent trends and structural breaks in US and EU15 labour productivity growth," PSE - G-MOND WORKING PAPERS halshs-00963134, HAL.
  5. Hall, Bronwyn H. & Mairesse, Jacques, 1995. "Exploring the relationship between R&D and productivity in French manufacturing firms," Journal of Econometrics, Elsevier, vol. 65(1), pages 263-293, January.
  6. Klette, Tor Jakob & Kortum, Samuel S, 2002. "Innovating Firms and Aggregate Innovation," CEPR Discussion Papers 3248, C.E.P.R. Discussion Papers.
  7. Berndt, Ernst R. & Morrison, Catherine J., 1992. "High-tech capital formation and economic performance in U.S. manufacturing industries : an exploratory analysis," Working papers 3419-92., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  8. Abowd, John M. & Haltiwanger, John C. & Lane, Julia & McKinney, Kevin Lee & Sandusky, L. Kristin, 2007. "Technology and the Demand for Skill: An Analysis of Within and Between Firm Differences," IZA Discussion Papers 2707, Institute for the Study of Labor (IZA).
  9. Azele Mathieu & Bruno Van Pottelsberghe, 2008. "A note on the drivers of R&D intensity," Working Papers CEB 08-002.RS, ULB -- Universite Libre de Bruxelles.
  10. Acs, Zoltan J & Audretsch, David B & Feldman, Maryann P, 1994. "R&D Spillovers and Recipient Firm Size," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 336-40, May.
  11. Bruno Crépon & Emmanuel Duguet & Jacques Mairesse, 1998. "Research, Innovation and Productivity : An Econometric Analysis at the Firm Level," Working Papers 98-33, Centre de Recherche en Economie et Statistique.
  12. Aghion, Philippe & Howitt, Peter, 1996. "The Observational Implications of Schumpeterian Growth Theory," Empirical Economics, Springer, vol. 21(1), pages 13-25.
  13. Jorgenson, Dale W., 1966. "The Embodiment Hypothesis," Scholarly Articles 3403063, Harvard University Department of Economics.
  14. Charles R. Hulten, 1992. "Growth Accounting When Technical Change is Embodied in Capital," NBER Working Papers 3971, National Bureau of Economic Research, Inc.
  15. Bogliacino, Francesco & Pianta, Mario, 2011. "Engines of growth. Innovation and productivity in industry groups," Structural Change and Economic Dynamics, Elsevier, vol. 22(1), pages 41-53, February.
  16. Robert J. Gordon, 2000. "Does the "New Economy" Measure Up to the Great Inventions of the Past?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 49-74, Fall.
  17. Raquel Ortega-Argilés & Mariacristina Piva & Lesley Potters & Marco Vivarelli, 2010. "Is Corporate R&D Investment In High-Tech Sectors More Effective?," Contemporary Economic Policy, Western Economic Association International, vol. 28(3), pages 353-365, 07.
  18. Daniel J. Wilson, 2004. "IT and beyond: the contribution of heterogeneous capital to productivity," Working Paper Series 2004-13, Federal Reserve Bank of San Francisco.
  19. Janz, Norbert & Lööf, Hans & Peters, Bettina, 2004. "Firm Level Innovation and Productivity - Is there a Common Story Across Countries?," Working Paper Series in Economics and Institutions of Innovation 24, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  20. repec:fth:harver:1487 is not listed on IDEAS
  21. Olivier Blanchard, 2004. "The Economic Future of Europe," NBER Working Papers 10310, National Bureau of Economic Research, Inc.
  22. Francesco Daveri, . "The new economy in Europe (1992-2001)," Working Papers 213, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  23. Hulten, Charles R, 1992. "Growth Accounting When Technical Change Is Embodied in Capital," American Economic Review, American Economic Association, vol. 82(4), pages 964-80, September.
  24. Charles I. Jones, . "Sources of U.S. Economic Growth in a World of Ideas," Working Papers 98009, Stanford University, Department of Economics.
  25. Baldwin, John R. & Harchaoui, Tarek, 2002. "Productivity Growth in Canada," Productivity Growth in Canada, Statistics Canada, Economic Analysis, number stcb6e, December.
  26. Hercowitz, Zvi, 1998. "The 'embodiment' controversy: A review essay," Journal of Monetary Economics, Elsevier, vol. 41(1), pages 217-224, February.
  27. Zoltan Acs & David Audretsch, 1990. "Innovation and Small Firms," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011131.
  28. Stephen D. Oliner & Daniel E. Sichel, 2000. "The resurgence of growth in the late 1990s: is information technology the story?," Finance and Economics Discussion Series 2000-20, Board of Governors of the Federal Reserve System (U.S.).
  29. Santamara, Llus & Nieto, Mara Jess & Barge-Gil, Andrs, 2009. "Beyond formal R&D: Taking advantage of other sources of innovation in low- and medium-technology industries," Research Policy, Elsevier, vol. 38(3), pages 507-517, April.
  30. Bronwyn H. Hall, 2007. "Measuring the Returns to R&D: The Depreciation Problem," NBER Working Papers 13473, National Bureau of Economic Research, Inc.
  31. Winter, Sidney G., 1984. "Schumpeterian competition in alternative technological regimes," Journal of Economic Behavior & Organization, Elsevier, vol. 5(3-4), pages 287-320.
  32. Greenwood, J. & Hercowitz, Z. & Krusell, P., 1996. "Long-Run Implications of Investment-Specific Technological Change," RCER Working Papers 420, University of Rochester - Center for Economic Research (RCER).
  33. Marcel P. Timmer & Bart van Ark, 2005. "Does information and communication technology drive EU-US productivity growth differentials?," Oxford Economic Papers, Oxford University Press, vol. 57(4), pages 693-716, October.
  34. M. Ishaq Nadiri & Ingmar R. Prucha, 1993. "Estimation of the Depreciation Rate of Physical and R&D Capital in the U.S. Total Manufacturing Sector," NBER Working Papers 4591, National Bureau of Economic Research, Inc.
  35. Zvi Griliches, 1979. "Issues in Assessing the Contribution of Research and Development to Productivity Growth," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 92-116, Spring.
  36. Philippe Cuneo & Jacques Mairesse, 1984. "Productivity and R&D at the Firm Level in French Manufacturing," NBER Chapters, in: R&D, Patents, and Productivity, pages 375-392 National Bureau of Economic Research, Inc.
  37. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: U.S. Economic Growth in the Information Age," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(1), pages 125-236.
  38. Ramon Gomez-Salvador & Alberto Musso & Marc Stocker & Jarkko Turunen, 2006. "Labour productivity developments in the euro area," Occasional Paper Series 53, European Central Bank.
  39. Harhoff, Dietmar, 1994. "R&D and productivity in German manufacturing firms," ZEW Discussion Papers 94-01, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  40. Thomas Hatzichronoglou, 1997. "Revision of the High-Technology Sector and Product Classification," OECD Science, Technology and Industry Working Papers 1997/2, OECD Publishing.
  41. Hans Loof & Almas Heshmati, 2006. "On the relationship between innovation and performance: A sensitivity analysis," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(4-5), pages 317-344.
  42. McMorrow, Kieran & Röger, Werner & Turrini, Alessandro Antonio, 2009. "The EU-US total factor productivity gap : An industry-level perspective," CEPR Discussion Papers 7237, C.E.P.R. Discussion Papers.
  43. repec:crs:wpaper:9833 is not listed on IDEAS
  44. Robert J. Gordon & Ian Dew-Becker, 2005. "Why did Europe’s productivity catch-up sputter out? a tale of tigers and tortoises," Proceedings, Federal Reserve Bank of San Francisco.
  45. Greenhalgh, C & Longland, M & Bosworth, D, 2001. "Technological Activity and Employment in a Panel of UK Firms," Scottish Journal of Political Economy, Scottish Economic Society, vol. 48(3), pages 260-82, August.
  46. Dosi, Giovanni, 1997. "Opportunities, Incentives and the Collective Patterns of Technological Change," Economic Journal, Royal Economic Society, vol. 107(444), pages 1530-47, September.
  47. Bart van Ark & Mary O'Mahoney & Marcel P. Timmer, 2008. "The Productivity Gap between Europe and the United States: Trends and Causes," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 25-44, Winter.
  48. Dale W. Jorgenson, 1966. "The Embodiment Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 74, pages 1.
  49. Acs, Zoltan J & Audretsch, David B, 1988. "Innovation in Large and Small Firms: An Empirical Analysis," American Economic Review, American Economic Association, vol. 78(4), pages 678-90, September.
  50. Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, vol. 13(6), pages 343-373, December.
  51. Dale W. Jorgenson & Mun S. Ho & Kevin J. Stiroh, 2007. "A retrospective look at the U.S. productivity growth resurgence," Staff Reports 277, Federal Reserve Bank of New York.
  52. Stephen D. Oliner & Daniel E. Sichel, 1994. "Computers and Output Growth Revisited: How Big Is the Puzzle?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(2), pages 273-334.
  53. Francesco Crespi & Mario Pianta, 2008. "Diversity in innovation and productivity in Europe," Journal of Evolutionary Economics, Springer, vol. 18(3), pages 529-545, August.
  54. Timmer, Marcel P. & Ypma, Gerard & Ark, Bart van der, 2003. "IT in the European Union: driving productivity divergence?," GGDC Research Memorandum 200363, Groningen Growth and Development Centre, University of Groningen.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ira:wpaper:201103. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alicia García)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.