R&D heterogeneity and its implications for growth

Sigurd Galaasen and Alfonso Irarrazabal
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Alfonso Irarrazabal: Norwegian Business School (BI)

No 2016/15, Working Paper from Norges Bank

Abstract: This paper quantifies the determinants of heterogeneity in R&D investment and its implications for growth. Using a panel of Norwegian manufacturing firms we document a negative correlation between R&D intensity and firm size, driven mainly by small firms with high R&D intensity. We estimate a Schumpeterian growth model with heterogeneous firms, that differ with respect to innovation efficiency. The estimated model fits the shape of the R&D investment distribution as well as the negative correlation between R&D intensity and firm size. A larger selection effect contribution to aggregate growth is found when we include R&D moments in the estimation. Finally, we study the link between firm heterogeneity and R&D subsidies, and show that the growth effects of subsidies depend crucially on how the policy influences the equilibrium distribution of firms.

Keywords: R&D; Heterogeneous Firms; Subsidies; Growth (search for similar items in EconPapers)
JEL-codes: L11 O3 O4 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2016-09-29
New Economics Papers: this item is included in nep-cse, nep-ino, nep-sbm and nep-tid
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:bno:worpap:2016_15

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