Growth Through Heterogeneous Innovations
56 Pages Posted: 29 Apr 2015 Last revised: 11 Jun 2015
There are 7 versions of this paper
Growth Through Heterogeneous Innovations
Growth Through Heterogeneous Innovations
Growth Through Heterogeneous Innovations
Growth Through Heterogeneous Innovations
Growth Through Heterogeneous Innovations
Growth Through Heterogeneous Innovations
Growth Through Heterogeneous Innovations
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: Suggested Citation