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Is Corporate R&D Investment in High-tech Sectors more Effective? Some Guidelines for European Research Policy

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This paper discusses the link between R&D and productivity across the European industrial and service sectors. The empirical analysis is based on both the European sectoral OECD data over the period 1987-2002 and on a unique micro longitudinal database consisting of 532 top European R&D investors over the six-year period 2000-2005. The main conclusions are as follows. First, the R&D stock has a significant positive impact on labour productivity; this general result is largely consistent with previous literature in terms of the sign, the significance and the magnitude of the estimated coefficients. More interestingly both at sectoral and firm levels - the R&D coefficient increases monotonically (both in significance and magnitude) when we move from the low-tech to the medium and high-tech sectors. This outcome means that corporate R&D investment is more effective in the high-tech sectors and this may need to be taken into account when designing policy instruments (subsidies, fiscal incentives, etc.) in support of private R&D. However, R&D investment is not the sole source of productivity gains; technological change embodied in gross investment is of comparable importance on aggregate and it is the main determinant of the productivity increase in the low-tech sectors. Hence, an economic policy aiming to increase productivity in the low-tech sectors should support the overall capital formation.

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  • Raquel Ortega-Argilés & Maria-Cristina Piva & Lesley Potters & Marco Vivarelli, 2009. "Is Corporate R&D Investment in High-tech Sectors more Effective? Some Guidelines for European Research Policy," JRC Working Papers on Corporate R&D and Innovation 2009-9, Joint Research Centre.
    • Handle: RePEc:ipt:wpaper:20099
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    Cited by:

    1. Andre Steenkamp & Mark Schaffer & Wayde Flowerday & John Goddard, 2018. "Innovation activity in South Africa: Measuring the returns to R&D," WIDER Working Paper Series 42, World Institute for Development Economic Research (UNU-WIDER).
    2. Simachev, Yuri & Kuzyk, Mikhail & Ivanov, Denis, 2012. "Fostering innovation in Russian companies in the post-crisis period: Opportunities and constraints," MPRA Paper 41284, University Library of Munich, Germany.
    3. Jarle Møen & Helge Sandvig Thorsen, 2017. "Publication Bias in the Returns to R&D Literature," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 8(3), pages 987-1013, September.
    4. Rojas Cama, Freddy A. & Emara, Noha, 2022. "Financial inclusion and gross capital formation: A sectoral analysis approach for the MENA region and EMs," International Review of Financial Analysis, Elsevier, vol. 79(C).
    5. Simachev, Yuri & Kuzyk, Mikhail & Feygina, Vera, 2015. "Interaction between Business and Research Organizations in the Sphere of Innovations: The Russian Experience in Promoting Cooperation," Published Papers 431503, Russian Presidential Academy of National Economy and Public Administration.
    6. Hall, Bronwyn H. & Mairesse, Jacques & Mohnen, Pierre, 2010. "Measuring the Returns to R&D," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 1033-1082, Elsevier.
    7. Cucculelli, Marco & Ermini, Barbara, 2012. "New product introduction and product tenure: What effects on firm growth?," Research Policy, Elsevier, vol. 41(5), pages 808-821.
    8. Montresor, Sandro & Vezzani, Antonio, 2015. "The production function of top R&D investors: Accounting for size and sector heterogeneity with quantile estimations," Research Policy, Elsevier, vol. 44(2), pages 381-393.
    9. Fernandes, Cristina & Ferreira, João & Raposo, Mario, 2013. "Drivers to firm innovation and their effects on performance: An international comparison," MPRA Paper 46776, University Library of Munich, Germany.
    10. Raquel Ortega-Argilés, 2013. "R&D, knowledge, economic growth and the transatlantic productivity gap," Chapters, in: Frank Giarratani & Geoffrey J.D. Hewings & Philip McCann (ed.), Handbook of Industry Studies and Economic Geography, chapter 11, pages 271-302, Edward Elgar Publishing.
    11. Andre Steenkamp & Mark Schaffer & Wayde Flowerday & John Gabriel Goddard, 2018. "Innovation activity in South Africa: Measuring the returns to R&D," WIDER Working Paper Series wp-2018-42, World Institute for Development Economic Research (UNU-WIDER).
    12. Yu. Simachev & M. Kuzyk & V. Feygina., 2014. "R&D Cooperation between Russian Firms and Research Organizations: Is There a Need for State Assistance?," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 7.

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    More about this item

    Keywords

    R&D; productivity; high-tech sectors; innovation and industrial policy;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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