Firm Level Investment and R&D in France and the United States: A Comparison

48 Pages Posted: 12 Dec 2000 Last revised: 18 Dec 2013

See all articles by Benoit Mulkay

Benoit Mulkay

Université de Montpellier 1

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

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)

Date Written: December 2000

Abstract

This paper is a contribution to the small but growing literature that compares the investment and R&D behavior of manufacturing firms in large developed countries that have varying financial and capital market institutions. Specifically, we look at two similar samples of French and United States firms during the period 1982-1993. We estimate a dynamic specification of a simple error-corrected investment model for both ordinary investment and for R&D investment, a model that incorporates both output (sales or turnover) and cash flow as predictors for investment. Our focus is on two comparisons: France versus United States and physical investment versus R&D investment. In general, we do not find any significant differences between the two countries in the long run effects of demand (output) on investment. However, we do find that cash flow or profits appear to have a much larger impact on both R&D and investment in the U.S. Except for the well-known difference in the serial correlation of the two types of capital spending, we reject any significant differences between investment and R&D behavior for each country; the major differences are between countries.

Suggested Citation

Mulkay, Benoit and Hall, Bronwyn H. and Mairesse, Jacques, Firm Level Investment and R&D in France and the United States: A Comparison (December 2000). NBER Working Paper No. w8038. Available at SSRN: https://ssrn.com/abstract=253146

Benoit Mulkay (Contact Author)

Université de Montpellier 1 ( email )

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Bronwyn H. Hall

University of California at Berkeley ( email )

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National Bureau of Economic Research (NBER)

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Max Planck Institute for Innovation and Competition

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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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Malakoff Cedex, 1 92245
France

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

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Netherlands

National Bureau of Economic Research (NBER)

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United States

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