Evidence on the Impact of R&D and ICT Investment on Innovation and Productivity in Italian Firms

43 Pages Posted: 12 May 2012 Last revised: 27 Oct 2014

See all articles by Bronwyn H. Hall

Bronwyn H. Hall

University of California at Berkeley; National Bureau of Economic Research (NBER); Institute for Fiscal Studies (IFS); Max Planck Institute for Innovation and Competition

Francesca Lotti

Bank of Italy

Jacques Mairesse

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); Maastricht University - United Nations and Maastricht Economic Research Institute on Innovation and Technology (UNU-MERIT); National Bureau of Economic Research (NBER)

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Date Written: May 2012

Abstract

Both Research and Development (R&D) and Information and Communication Technology (ICT) investment have been identified as sources of relative innovation underperformance in Europe vis-à-vis the United States. In this paper we investigate R&D and ICT investment at the firm level in an effort to assess their relative importance and to what extent they are complements or substitutes. We use data on a large unbalanced panel data sample of Italian manufacturing firms constructed from four consecutive waves of a survey of manufacturing firms, together with a version of the CDM model (Crepon et al., 1998) that has been modified to include ICT investment and R&D as the two main inputs into innovation and productivity. We find that R&D and ICT are both strongly associated with innovation and productivity, with R&D being more important for innovation, and ICT investment being more important for productivity. For the median firm, rates of return to both investments are so high that they suggest considerably underinvestment in both these activities.

Suggested Citation

Hall, Bronwyn H. and Lotti, Francesca and Mairesse, Jacques, Evidence on the Impact of R&D and ICT Investment on Innovation and Productivity in Italian Firms (May 2012). NBER Working Paper No. w18053. Available at SSRN: https://ssrn.com/abstract=2056682

Bronwyn H. Hall (Contact Author)

University of California at Berkeley ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States

HOME PAGE: http://emlab.berkeley.edu/users/bhhall/index.html

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Francesca Lotti

Bank of Italy ( email )

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Jacques Mairesse

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

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Maastricht University - United Nations and Maastricht Economic Research Institute on Innovation and Technology (UNU-MERIT)

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