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R&D Dynamics and Its Impact on Productivity and Export Demand in Swedish Manufacturing

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  • Vuong, Van Anh
  • Maican , Florin
  • Orth, Matilda
  • Roberts, Mark

Abstract

In this paper we develop a structural empirical model that allows us to estimate the impact of R&D on firm profitability through two channels. In the first channel, R&D investment by the firm can impact the firm's production efficiency and lower its marginal cost. This productivity channel raises the firm's sales and profits in both the domestic and export market. The second channel is specific to exporting firms where R&D acts to increase the demand for the firm's products in foreign markets. Using micro data for Swedish manufacturing firms from 2000-2010 we estimate the impact of R&D investment on the unobserved component of the firm's productivity and export market demand. Our empirical results show that firm R&D investment has a statistically significant, positive effect on both the future productivity and the future export demand of the firm. For high-tech industries, we find that the impact of R&D investments on the demand shocks is twice as large as its impact on productivity. On the other hand, the impact of R&D investments on productivity in the low-tech industries is higher than on demand shocks.

Suggested Citation

  • Vuong, Van Anh & Maican , Florin & Orth, Matilda & Roberts, Mark, 2016. "R&D Dynamics and Its Impact on Productivity and Export Demand in Swedish Manufacturing," VfS Annual Conference 2016 (Augsburg): Demographic Change 145945, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc16:145945
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    References listed on IDEAS

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    1. Adrian Pagan, 1986. "Two Stage and Related Estimators and Their Applications," Review of Economic Studies, Oxford University Press, vol. 53(4), pages 517-538.
    2. Crepon, B. & Duguet, E. & Mairesse, J., 1998. "Research Investment, Innovation and Productivity: An Econometric Analysis at the Firm Level," Papiers d'Economie Mathématique et Applications 98.15, Université Panthéon-Sorbonne (Paris 1).
    3. Jonathan Eaton & Samuel Kortum & Francis Kramarz, 2011. "An Anatomy of International Trade: Evidence From French Firms," Econometrica, Econometric Society, vol. 79(5), pages 1453-1498, September.
    4. Zvi Griliches, 1998. "Issues in Assessing the Contribution of Research and Development to Productivity Growth," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 17-45, National Bureau of Economic Research, Inc.
    5. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    6. Ackerberg, Daniel & Lanier Benkard, C. & Berry, Steven & Pakes, Ariel, 2007. "Econometric Tools for Analyzing Market Outcomes," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.),Handbook of Econometrics, edition 1, volume 6, chapter 63, Elsevier.
    7. Bronwyn H. Hall & Nathan Rosenberg (ed.), 2010. "Handbook of the Economics of Innovation," Handbook of the Economics of Innovation, Elsevier, edition 1, volume 1, number 1, 00.
    8. Bruno Crepon & Emmanuel Duguet & Jacques Mairesse, 1998. "Research, Innovation And Productivity: An Econometric Analysis At The Firm Level," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 7(2), pages 115-158.
    9. Gene M. Grossman & Elhanan Helpman, 1993. "Innovation and Growth in the Global Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262570971, September.
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    Cited by:

    1. Sam Tavassoli & Viroj Jienwatcharamongkhol, 2013. "Closing the Gap: An Empirical Evidence on Firm's Innovation, Productivity, and Export," ERSA conference papers ersa13p531, European Regional Science Association.
    2. Viroj Jienwatcharamongkhol & Sam Tavassoli, 2015. "Closing the gap: empirical evidence on firms’ innovation, productivity and exports," Chapters, in: Charlie Karlsson & Urban Gråsjö & Sofia Wixe (ed.),Innovation and Entrepreneurship in the Global Economy, chapter 12, pages 281-309, Edward Elgar Publishing.

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F10 - International Economics - - Trade - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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