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

Davide Castellani, Mariacristina Piva, Torben Schubert () and Marco Vivarelli ()
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Torben Schubert: Lund University

No 9937, IZA Discussion Papers from Institute of Labor Economics (IZA)

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 (search for similar items in EconPapers)
JEL-codes: O33 O51 O52 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2016-05
New Economics Papers: this item is included in nep-cse, nep-eff, nep-ent, nep-eur, nep-ino, nep-sbm and nep-tid
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Citations: View citations in EconPapers (1)

Published - published as 'R&D and Productivity in the US and the EU: Sectoral Specificities and Differences in the Crisis', Technological Forecasting and Social Change, 2019, 138, 279-291.

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