DP2457 Mapping The Two Faces Of R&D: Productivity Growth In A Panel Of OECD Industries

Author(s): Rachel Griffith, Stephen J. Redding, John Van Reenen
Publication Date: May 2000
Keyword(s): Convergence, Human Capital, R&D, Total Factor Productivity
JEL(s): O0, O30, O40
Programme Areas: Industrial Organization, International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=2457

Many writers have claimed that R&D has two 'faces'. In addition to the conventional role of stimulating innovation, R&D enhances technology transfer by improving the ability of firms to learn about advances in the leading edge ('absorptive capacity'). In this paper we document that there has been convergence of TFP within a panel of industries across thirteen OECD countries since 1970. Furthermore, we find evidence that both R&D and human capital appear statistically and economically important in this catch up process as well as stimulating innovation directly. Trade, by contrast, plays a more modest role in productivity growth.