Mapping The Two Faces Of R&D: Productivity Growth In A Panel Of OECD Industries
Institute for Fiscal Studies (IFS); University of Manchester; Centre for Economic Policy Research (CEPR)
Stephen J. Redding
John Van Reenen
London School of Economics - Centre for Economic Performance (CEP); Stanford Graduate School of Business; Institute for Fiscal Studies (IFS); Centre for Economic Policy Research (CEPR)
Many writers have claimed that R&D has two 'faces'. In addition to the conventional role of stimulating innovation, R&D enhances technology transfer by improving the ability of firms to learn about advances in the leading edge ('absorptive capacity'). In this paper we document that there has been convergence of TFP within a panel of industries across thirteen OECD countries since 1970. Furthermore, we find evidence that both R&D and human capital appear statistically and economically important in this catch up process as well as stimulating innovation directly. Trade, by contrast, plays a more modest role in productivity growth.
Number of Pages in PDF File: 74
JEL Classification: O0. O30. O40
Date posted: June 21, 2000
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