On the Relationship between R&D and Productivity: a Treatment Effect Analysis
Giuseppe Medda (),
Claudio Piga () and
Donald Siegel ()
Rensselaer Working Papers in Economics from Rensselaer Polytechnic Institute, Department of Economics
This study uses firm level data from two detailed surveys of Italian manufacturing firms to study the relationship between R&D expenditures and productivity growth. The analysis considers the different contributions of various forms of R&D (product, process, internal, external in collaboration with universities, research centres and other firms) to Total Factor Productivity (TFP). Thus, this paper answers the call for more research on the links between a firm's external R&D and its productivity. In the cross-section econometric analysis, we estimate a Treatment Effects model based on the assumption that the decision to carry out R&D is endogenous. We found evidence supporting such a methodological approach. The main results reveal a positive and statistically significant relationship between the detailed measures of R&D and TFP. It is noteworthy that among external R&D investments, only expenditures for projects run in collaboration with other firms turn out to be highly significant, while cooperation in R&D with universities does not seem to lead to productivity enhancements. Because of the public good nature of research, firms may resort to do R&D within laboratories run by universities only when the outcome of the research does not have important strategic consequences.
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Working Paper: On the Relationship between R&D and Productivity: a Treatment Effect Analysis (2003)
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Persistent link: http://EconPapers.repec.org/RePEc:rpi:rpiwpe:0307
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