An exploration on policy uncertainty as a driver of R&D activity

Quang Nguyen and Huong Trang Kim

Research in International Business and Finance, 2023, vol. 64, issue C

Abstract: We explore the relationship between uncertainty in economic policy and R&D activity for the sample of 576 firms from seven countries in the world. We base our analysis on an index of newspaper-based economic policy uncertainty (EPU) following the approach of Baker et al.’s (2016). We observe a significantly negative link between EPU and R&D intensity. Interestingly, the negative effect of policy uncertainty has less effect on the R&D activities of firms with growth opportunities. Finally, firms in politically sensitive industries respond stronger to EPU as far as R&D intensity is taken into account.

Keywords: R&D activity; Economic policy uncertainty; Innovation; MNEs; Uncertainty (search for similar items in EconPapers)
JEL-codes: D21 F10 G30 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:64:y:2023:i:c:s0275531923000090

DOI: 10.1016/j.ribaf.2023.101883

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