Exploring the Relationship between R&D and Productivity: A Country-Level Study
Research and development (R&D) has been considered a source of growth in productivity starting from Schultz (1953). Since then, significant research has studied this relationship at the firm, industry and country level. However, at the country level, most of the empirical studies assessing the R&D-productivity relationship often fail to consider the possible simultaneity of these variables. Do more productive countries invest more on R&D or does the higher level of R&D investment lead to higher levels of productivity? Do both relationships occur at the same time? Using a 65-country panel for the time period of 1960-2000, this study provides evidence that the relationship is mainly based on investment in R&D and not the reverse. In addition, we found that per capita R&D expenditure is strongly exogenous to productivity. These results suggest that, on average, those countries making the most effort in the R&D sector will be more productive in the future. Finally, we present evidence those points out a strong relationship between R&D and productivity in terms of both magnitude and significance.
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.:
- Bruno Van Pottelsberghe De La Potterie & Frank Lichtenberg, 2001.
"Does Foreign Direct Investment Transfer Technology Across Borders?,"
The Review of Economics and Statistics,
MIT Press, vol. 83(3), pages 490-497, August.
- Bruno Van Pottelsberghe & Frank Lichtenberg, 2001. "Does foreign direct investment transfer technology across borders?," ULB Institutional Repository 2013/6221, ULB -- Universite Libre de Bruxelles.
- Yoosoon Chang, 2000.
"Bootstrap Unit Root Tests in Panels with Cross-Sectional Dependency,"
Cowles Foundation Discussion Papers
1251, Cowles Foundation for Research in Economics, Yale University.
- Chang, Yoosoon, 2004. "Bootstrap unit root tests in panels with cross-sectional dependency," Journal of Econometrics, Elsevier, vol. 120(2), pages 263-293, June.
- Yoosoon Chang, 2000. "Bootstrap Unit Root Tests in Panels with Cross-Sectional Dependency," Econometric Society World Congress 2000 Contributed Papers 1585, Econometric Society.
- Chang, Yoosoon, 2002. "Bootstrap Unit Root Tests in Panels with Cross-Sectional Dependency," Working Papers 2000-01, Rice University, Department of Economics.
- Luis A. Rivera-Batiz & Paul M. Romer, 1991.
"International Trade with Endogenous Technological Change,"
NBER Working Papers
3594, National Bureau of Economic Research, Inc.
- Rivera-Batiz, Luis A. & Romer, Paul M., 1991. "International trade with endogenous technological change," European Economic Review, Elsevier, vol. 35(4), pages 971-1001, May.
- Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
- Wu, Jyh-Lin & Wu, Shaowen, 2001. "Is Purchasing Power Parity Overvalued?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(3), pages 804-12, August.
- Maddala, G S & Wu, Shaowen, 1999. " A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-52, Special I.
- Bowsher, Clive G., 2002. "On testing overidentifying restrictions in dynamic panel data models," Economics Letters, Elsevier, vol. 77(2), pages 211-220, October.
- Bruno Van Pottelsberghe & Dominique Guellec, 2003.
"The impact of public R&D expenditure on business R&D,"
ULB Institutional Repository
2013/6213, ULB -- Universite Libre de Bruxelles.
- Dominique Guellec & Bruno Van Pottelsberghe De La Potterie, 2003. "The impact of public R&D expenditure on business R&D," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 12(3), pages 225-243.
- Dominique Guellec & Bruno van Pottelsberghe de la Potterie, 2000. "The Impact of Public R&D Expenditure on Business R&D," OECD Science, Technology and Industry Working Papers 2000/4, OECD Publishing.
- Eduardo Borensztein & Jose De Gregorio & Jong-Wha Lee, 1995.
"How Does Foreign Direct Investment Affect Economic Growth?,"
NBER Working Papers
5057, National Bureau of Economic Research, Inc.
- Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
- Greenwood, J. & Smith, B.D., 1995.
"Financial Markets in Development, and the Development of Financial Markets,"
RCER Working Papers
406, University of Rochester - Center for Economic Research (RCER).
- Greenwood, Jeremy & Smith, Bruce D., 1997. "Financial markets in development, and the development of financial markets," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 145-181, January.
- Petri Rouvinen, 2002. "R&D-Productivity Dynamics: Causality, Lags, and "Dry Holes"," Journal of Applied Economics, Universidad del CEMA, vol. 5, pages 123-156, May.
- D. Frantzen, 2003. "The Causality between R&D and Productivity in Manufacturing: An international disaggregate panel data study," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(2), pages 125-146.
- Peter Klenow & Andrés Rodríguez-Clare, 1997. "The Neoclassical Revival in Growth Economics: Has It Gone Too Far?," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 73-114 National Bureau of Economic Research, Inc.
- José Miguel Benavente & Alexander Galetovic & Ricardo Sanhueza & Pablo Serra, 2005. "Estimando la Demanda Residencial por Electricidad en Chile: El Consumo es Sensible al Precio," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 42(125), pages 31-61.
- Robert J. Barro, 1989.
"Economic Growth in a Cross Section of Countries,"
NBER Working Papers
3120, National Bureau of Economic Research, Inc.
- Miller, Stephen M. & Upadhyay, Mukti P., 2000. "The effects of openness, trade orientation, and human capital on total factor productivity," Journal of Development Economics, Elsevier, vol. 63(2), pages 399-423, December.
- Sebastian Edwards, 1997.
"Openness, Productivity and Growth: What Do We Really Know?,"
NBER Working Papers
5978, National Bureau of Economic Research, Inc.
- Edwards, Sebastian, 1998. "Openness, Productivity and Growth: What Do We Really Know?," Economic Journal, Royal Economic Society, vol. 108(447), pages 383-98, March.
- Martin Falk, 2006. "What drives business Research and Development (R&D) intensity across Organisation for Economic Co-operation and Development (OECD) countries?," Applied Economics, Taylor & Francis Journals, vol. 38(5), pages 533-547.
- Wen-Cheng Lu & Jong-Rong Chen & Chia-Ling Wang, 2006. "Granger causality test on R&D spatial spillovers and productivity growth," Applied Economics Letters, Taylor & Francis Journals, vol. 13(13), pages 857-861.
- Zvi Griliches, 1998.
"Issues in Assessing the Contribution of Research and Development to Productivity Growth,"
in: R&D and Productivity: The Econometric Evidence, pages 17-45
National Bureau of Economic Research, Inc.
- 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.
- Cerrato, Mario & Sarantis, Nicholas, 2007. "A bootstrap panel unit root test under cross-sectional dependence, with an application to PPP," Computational Statistics & Data Analysis, Elsevier, vol. 51(8), pages 4028-4037, May.
- Jürgen Bitzer & Monika Kerekes, 2005.
"Does Foreign Direct Investment Transfer Technology Across Borders? A Reexamination,"
- Bitzer, Jürgen & Kerekes, Monika, 2005. "Does Foreign Direct Investment Transfer Technology Across Borders? A Reexamination," Discussion Papers 2005/7, Free University Berlin, School of Business & Economics.
- Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-38, July.
- Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
When requesting a correction, please mention this item's handle: RePEc:udc:wpaper:wp282. 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: (Tatiana Reyes)
If references are entirely missing, you can add them using this form.