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The source of the US /EU Productivity Gap:Less and less effective R&D

Davide Castellani, Mariacristina Piva (), Torben Schubert and Marco Vivarelli ()

LEM Papers Series from Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy

Abstract: Using data on the US and EU top R&D spenders from 2004 until 2012, this paper investigates the sources of the US/EU productivity gap. We find robust evidence that US firms have a higher capacity to translate R&D into productivity gains (especially in the high-tech industries), and this contributes to explaining the higher productivity of US firms. Conversely, EU firms are more likely to achieve productivity gains through capital-embodied technological change at least in medium and low-tech sectors. Our results also show that the US/EU productivity gap has worsened during the crisis period, as the EU companies have been more affected by the economic crisis in their capacity to translate R&D investments into productivity. Based on these findings, we make a case for a learning-based and selective R&D funding, which - instead of purely aiming at stimulating higher R&D expenditures - works on improving the firms' capabilities to transform R&D into productivity gains.

Keywords: R&D; productivity; economic crisis; US; EU (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cse, nep-eff, nep-ent, nep-ino, nep-sbm and nep-tid
Date: 2018-06-17
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Persistent link: https://EconPapers.repec.org/RePEc:ssa:lemwps:2018/16

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