Firm Level Investment and R&D in France and the United States: A Comparison

Benoît Mulkay, Bronwyn Hall and Jacques Mairesse

No 2001-W2, Economics Papers from Economics Group, Nuffield College, University of Oxford

Abstract: This paper is a contribution to the small but growing literature that compares the investment and R&D behavior of manufacturing firms in large developed countries that have varying financial and capital market institutions. Specifically, we look at two similar samples of French and United States firms during the period 1982-1993. We estimate a dynamic specification of a simple error-corrected investment model for both ordinary investment and for R&D investment, a model that incorporates both output (sales or turnover) and cash flow as predictors for investment. Our focus is on two comparisons: France versus the United States and physical investment versus R&D investment. In general, we do not find any significant differences between the two countries in the long run effects of demand (output) on investment. However, we do find that cash flow or profits appear to have a much larger impact on both R&D and investment in the U.S. Except for the well-known difference in the serial correlation of the two types of capital spending, we reject any signficant differences between investment and R&D behavior for each country; the major differences are between countries.

Keywords: Investment; R&D; financing constraint; liquidity constraint; cash flow sensitivity; international comparison (search for similar items in EconPapers)
Pages: 47pages
Date: 2001-01-25
New Economics Papers: this item is included in nep-eec, nep-ino and nep-tid
References: Add references at CitEc
Citations: View citations in EconPapers (58)

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Related works:
Working Paper: Firm Level Investment and R&D in France and the United States: A Comparison (2000)
Working Paper: Firm Level Investment and R&D in France and the United States: A Comparison (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:nuf:econwp:0102

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