The Impact of Investment in Knowledge-Based Capital on Productivity: Firm-Level Evidence from Ireland

ESRI Working Paper No. 556, April 2017

42 Pages Posted: 22 Aug 2017

See all articles by Mattia Di Ubaldo

Mattia Di Ubaldo

Economic and Social Research Institute (ESRI)

Iulia Siedschlag

Economic and Social Research Institute Dublin; Trinity College Dublin - Department of Economics

Date Written: August 18, 2017

Abstract

This paper examines the impact of investment in knowledge-based capital on firm productivity. The analysis is based on a dynamic econometric model estimated with micro-data from Ireland over the period 2006-2012. We use broad measures of investment in knowledge-based capital which include expenditures on R&D, and on non-R&D intangible assets such as computer software, copyrights, patents and licences, royalties and organisational capital. The results indicate that on average, over and above other factors, an increase in investment in knowledge-based capital of 10 per cent increases firm productivity by 2 per cent. The research results indicate that productivity gains linked to investment in KBC are larger for Irish-owned firms in comparison to foreign-owned firms. Further, the estimates indicate that firms’ productivity is more responsive to investment in R&D than to investment in non-R&D intangible assets.

Keywords: Investment in intangible assets, productivity, firm heterogeneity

JEL Classification: F61, L22, O33

Suggested Citation

Di Ubaldo, Mattia and Siedschlag, Iulia, The Impact of Investment in Knowledge-Based Capital on Productivity: Firm-Level Evidence from Ireland (August 18, 2017). ESRI Working Paper No. 556, April 2017, Available at SSRN: https://ssrn.com/abstract=3021993 or http://dx.doi.org/10.2139/ssrn.3021993

Mattia Di Ubaldo

Economic and Social Research Institute (ESRI) ( email )

Whitaker square Sir john Rogerson's Quay
Dublin 2
Dublin
Ireland

Iulia Siedschlag (Contact Author)

Economic and Social Research Institute Dublin ( email )

Whitaker Square
Sir John's Rogerson Quay
Dublin
Ireland

Trinity College Dublin - Department of Economics ( email )

Dublin
Ireland

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