Productivity, Innovation Creation and Absorption, and R&D: Micro Evidence for Italy
Boston College Working Papers in Economics No. 526
35 Pages Posted: 25 Mar 2002
Date Written: February 14, 2002
Abstract
By exploiting a rich firm level data-base, this paper presents novel empirical evidence on the effect of process and product innovations on productivity, as well as on the role played by R&D and fixed capital investment in enhancing the likelihood of introducing innovations at the firm level. Our results imply that process innovation has a large impact on productivity. Furthermore, R&D spending is strongly positively associated with the probability of introducing a new product, whereas fixed capital spending increases the likelihood of introducing a process innovation. The latter result reflects the fact that new technologies are frequently embodied in new capital goods. However, the effect of fixed investment on the probability of introducing a process innovation is magnified by R&D spending internal to the firm. This implies that R&D affects productivity growth by facilitating the absorption of new technologies.
Keywords: Productivity, Innovation, Absorption, R&D
JEL Classification: D24, O31, O32, O33
Suggested Citation: Suggested Citation
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