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Mapping the Two Faces of R&D: Productivity Growth in a Panel of OECD Industries

The Review of Economics and Statistics · 2004 · Vol. 86(4) · pp. 883–895

Rachel Griffith✉(Institute for Fiscal Studies)Stephen J. Redding(London School of Economics and Political Science)John Van Reenen

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Abstract

Many writers have claimed that research and development (R&D) has two faces. In addition to the conventional role of stimulating innovation, R&D enhances technology transfer (absorptive capacity). We explore this idea empirically using a panel of industries across twelve OECD countries. We find R&D to be statistically and economically important in both technological catch-up and innovation. Human capital also plays an major role in productivity growth, but we only find a small effect of trade. In failing to take account of R&D-based absorptive capacity, existing U.S.-based studies may underestimate the return to R&D.

Economic Growth and Productivity Innovation Policy and R&D Firm Innovation and GrowthAbsorptive capacityProductivityHuman capitalPanel dataEconomicsTechnology transferEconomic geographyInternational tradeIndustrial organizationEconometrics

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