Growth Through Heterogeneous Innovations

56 Pages Posted: 29 Apr 2015 Last revised: 11 Jun 2015

See all articles by Ufuk Akcigit

Ufuk Akcigit

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); Center for Economic and Policy Research (CEPR)

William Kerr

Harvard University - Entrepreneurial Management Unit

Multiple version iconThere are 7 versions of this paper

Date Written: March 25, 2015

Abstract

We study how external versus internal innovations promote economic growth through a tractable endogenous growth framework with multiple innovation sizes, multi-product firms, and entry/exit. Firms invest in external R&D to acquire new product lines and in internal R&D to improve their existing product lines. A baseline model derives the theoretical implications of weaker scaling for external R&D versus internal R&D, and the resulting predictions align with observed empirical regularities for innovative firms. Quantifying a generalized model for the recent U.S. economy using matched Census Bureau and patent data, we observe a modest departure for external R&D from perfect scaling frameworks.

Keywords: Endogenous Growth, Innovation, External, Internal, Research and Development, Patents, Citations, Scientists, Entrepreneurs

JEL Classification: O31, O33, O41, L16

Suggested Citation

Akcigit, Ufuk and Kerr, William R., Growth Through Heterogeneous Innovations (March 25, 2015). PIER Working Paper No. 15-020. Available at SSRN: https://ssrn.com/abstract=2599657 or http://dx.doi.org/10.2139/ssrn.2599657

Ufuk Akcigit (Contact Author)

University of Chicago - Department of Economics ( email )

1126 E. 59th St
Chicago, IL 60637
United States

HOME PAGE: http://www.ufukakcigit.com

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Center for Economic and Policy Research (CEPR) ( email )

London
United Kingdom

William R. Kerr

Harvard University - Entrepreneurial Management Unit ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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