R&D and Productivity in German Manufacturing Firms

Dietmar Harhoff ()

Economics of Innovation and New Technology, 1998, vol. 6, issue 1, 29-50

Abstract: This papcr uses a new firm panel data set to explore the relationship between R&D and productivity in German manufacturing firms for the period from 1979 to 1989. The results confirm the view that K&D is an important determinant of productivity growth. In the cross-section, the elasticity of sales with respect to R&D capital is on the order of 14 per cent. Using fixed-effects estimators yields R&D elasticities of about 8 per cent. Assuming different depreciation rates for R&D capital has virtually no effect on these results. Differencing estimates improve considerably when growth rates are computed over longer time periods, suggesting that the divergence between time-series and cross-sectional estimates is driven by random measurement errors. The paper also considers differences between high technology and other firms. Cross-section and panel elasticity estimates of the R&D effect diverge considerably for the two groups, while the corresponding rate of return estimators display far less variation. There is some evidence that the R&D elasticity increased during the early 1980s, and that it fell sharply back to its 1979 value during the period from 1985 to 1989.

Keywords: Research and development; productivity; innovation JEL Classification: 03; 04; 052 (search for similar items in EconPapers)
Date: 1998
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Citations: View citations in EconPapers (86)

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Working Paper: R&D and productivity in German manufacturing firms (1994)
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DOI: 10.1080/10438599800000012

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