Looking beyond the R&D effects on innovation: The contribution of non-R&D activities to total factor productivity growth in the EU

Jesus Lopez-Rodriguez and Diego Martínez

No E2014/5, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: Although non-R&D innovation activities account for a significant portion of innovation efforts carried out across very heterogeneous economies in Europe, how to incorporate them in to economic models is not always straightforward. For instance, the traditional macro approach to estimating the determinants of total factor productivity (TFP) does not handle them well. To counter these problems, this paper proposes applying an augmented macro-theoretical model to estimate the determinants of TFP by jointly considering the effects of R&D and the impact of non-R&D innovation activities on the productivity levels of firms. Estimations from a model of a sample of EU-26 countries covering the period 2004-2008 show that the distinction between R&D and non-R&D effects is significant for a number of different issues. First, the results show a sizeable impact on TFP growth, as the impact of R&D is twice that of non-R&D. Second, absorptive capacity is only linked to R&D endowments. And third, the two types of endowments cannot strictly been seen as complementary, at least for the case of countries with high R&D intensities or high non-R&D intensities.

Keywords: TFP; R&D; non-R&D expenditures; EU countries (search for similar items in EconPapers)
JEL-codes: O0 O3 O4 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2014-06
New Economics Papers: this item is included in nep-cse, nep-eff, nep-eur, nep-gro, nep-ino, nep-knm, nep-sbm and nep-tid
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Looking beyond the R&D effects on innovation: The contribution of non-R&D activities to total factor productivity growth in the EU (2017)
Working Paper: Looking beyond the R&D effects on innovation: The contribution of non-R&D activities to total factor productivity growth in the EU (2015)
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