Is Corporate R&D Investment in High-tech Sectors more Efficient? Some Guidelines for European Research Policy

Ortega-Argilés, Raquel (), Piva, Maria-Cristina (), Lesley Potters and Marco Vivarelli ()
Additional contact information
Ortega-Argilés, Raquel: JRC-IPTS, http://ipts.jrc.ec.europa.eu/
Piva, Maria-Cristina: Universita Cattolica di Milano, http://www.unicatt.it/
Lesley Potters: JRC-IPTS, http://ipts.jrc.ec.europa.eu/

No 2009-9, Working Papers from Institute for Prospective and Technological Studies, Joint Research Centre

Abstract: This paper discusses the link between R&D and productivity across the European industrial and service sectors. The empirical analysis is based on both the European sectoral OECD data over the period 1987-2002 and on a unique micro longitudinal database consisting of 532 top European R&D investors over the six-year period 2000-2005. The main conclusions are as follows. First, the R&D stock has a significant positive impact on labour productivity; this general result is largely consistent with previous literature in terms of the sign, the significance and the magnitude of the estimated coefficients. More interestingly – both at sectoral and firm levels - the R&D coefficient increases monotonically (both in significance and magnitude) when we move from the low-tech to the medium and high-tech sectors. This outcome means that corporate R&D investment is more effective in the high-tech sectors and this may need to be taken into account when designing policy instruments (subsidies, fiscal incentives, etc.) in support of private R&D. However, R&D investment is not the sole source of productivity gains; technological change embodied in gross investment is of comparable importance on aggregate and it is the main determinant of the productivity increase in the low-tech sectors. Hence, an economic policy aiming to increase productivity in the low-tech sectors should support the overall capital formation.

Keywords: R&D; productivity; high-tech sectors; innovation and industrial policy (search for similar items in EconPapers)
JEL-codes: O33 (search for similar items in EconPapers)
Date: 2009-06

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