Is corporate R&D investment in high-tech sectors more effective? Some guidelines for European research policy

Raquel Ortega-Argiles (), Mariacristina Piva (), Lesley Potters and Marco Vivarelli ()
Additional contact information
Lesley Potters: European Commission, Joint Research Centre (JRC); Institute for Prospective Technological Studies (IPTS), Sevilla; Utrecht School of Economics, Utrecht

No 2009-038, Jena Economic Research Papers in Economics from Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics, Thueringer Universitaets- und Landesbibliothek

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 and on a unique micro longitudinal database consisting of 532 top European R&D investors. 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 is the main determinant of productivity increase in the low-tech sectors. Hence, an economic policy aiming to increase productivity in the low-tech sectors should support 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)
New Economics Papers: this item is included in nep-eec, nep-eff, nep-ino, nep-knm and nep-tid
Date: 2009-05-19

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Working Paper: Is Corporate R&D Investment in High-Tech Sectors More Effective? Some Guidelines for European Research Policy (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:jrp:jrpwrp:2009-038

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