The Productivity Impact of R&D Investment: A Comparison between the EU and the US

29 Pages Posted: 1 Jun 2016

See all articles by Davide Castellani

Davide Castellani

University of Reading

Mariacristina Piva

Universita Cattolica del Sacro Cuore

Torben Schubert

Fraunhofer Institut für Systemtechnik und Innovationsforschung

Marco Vivarelli

Universita Cattolica del Sacro Cuore, Milano; IZA Institute of Labor Economics

Abstract

Using data on the US and EU top R&D spenders from 2004 until 2012, this paper investigates the sources of the US/EU productivity gap. We find robust evidence that US firms have a higher capacity to translate R&D into productivity gains (especially in the high-tech industries), and this contributes to explaining the higher productivity of US firms. Conversely, EU firms are more likely to achieve productivity gains through capital-embodied technological change at least in medium and low-tech sectors. Our results also show that the US/EU productivity gap has worsened during the crisis period, as the EU companies have been more affected by the economic crisis in their capacity to translate R&D investments into productivity. Based on these findings, we make a case for a learning-based and selective R&D funding, which – instead of purely aiming at stimulating higher R&D expenditures – works on improving the firms' capabilities to transform R&D into productivity gains.

Keywords: R&D, productivity, economic crisis, US, EU

JEL Classification: O33, O51, O52

Suggested Citation

Castellani, Davide and Piva, Mariacristina and Schubert, Torben and Vivarelli, Marco, The Productivity Impact of R&D Investment: A Comparison between the EU and the US. IZA Discussion Paper No. 9937. Available at SSRN: https://ssrn.com/abstract=2786021

Davide Castellani (Contact Author)

University of Reading ( email )

Whiteknights
Reading, Berkshire RG6 6AH
United Kingdom

Mariacristina Piva

Universita Cattolica del Sacro Cuore ( email )

Via Emilia Parmense, 84
Piacenza
Italy

Torben Schubert

Fraunhofer Institut für Systemtechnik und Innovationsforschung ( email )

Breslauer Str. 48
Karlsruhe, 76139
United States

Marco Vivarelli

Universita Cattolica del Sacro Cuore, Milano ( email )

Largo Gemelli 1
Milano, 20123
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
42
Abstract Views
289
PlumX Metrics