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Further considerations on the link between adjustment costs and the productivity of R&D investment: evidence for Spain

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  • Desiderio Romero-Jordan
  • Jose Felix Sanz-Sanz
  • Inmaculada Alvarez-Ayuso

Abstract

This article constructs a dynamic model to estimate the impact of adjustment costs on the productivity of investment in R&D. In order to take into account the possible endogeneity of adjustment costs, the model is estimated by means of instrumental variables (IV), using a panel of Spanish companies. The results show that the elasticity of the productivity of R&D investment with regard to adjustment costs is high, with a value close to -1 (-0.96). This confirms that it is essential to include adjustment costs in the empirical analysis of R&D productivity, as suggested by Jones and Williams (1998) and Comin (2002, 2004).

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  • Desiderio Romero-Jordan & Jose Felix Sanz-Sanz & Inmaculada Alvarez-Ayuso, 2009. "Further considerations on the link between adjustment costs and the productivity of R&D investment: evidence for Spain," Applied Economics Letters, Taylor & Francis Journals, vol. 16(14), pages 1471-1476.
    • Handle: RePEc:taf:apeclt:v:16:y:2009:i:14:p:1471-1476
    DOI: 10.1080/13504850701564322
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    1. Kiyohiko G. Nishimura & Takanobu Nakajima & Kozo Kiyota, 2005. "Innovation Versus Diffusion: Determinants of Productivity Growth Among Japanese Firms," CIRJE F-Series CIRJE-F-350, CIRJE, Faculty of Economics, University of Tokyo.
    2. Bronwyn Hall, 2004. "The financing of research and development," Chapters, in: Anthony Bartzokas & Sunil Mani (ed.), Financial Systems, Corporate Investment in Innovation, and Venture Capital, chapter 2, Edward Elgar Publishing.
    3. Nadiri, M.I., 1993. "Innovations and Technological Spillovers," Working Papers 93-31, C.V. Starr Center for Applied Economics, New York University.
    4. Nadiri, M. Ishaq & Kim, Seongjun, 1996. "R&D, Production Structure & Productivity Growth: A Comparison of US, Japanese & Korean Manufacturing Sectors," Working Papers 96-11, C.V. Starr Center for Applied Economics, New York University.
    5. M. Ishaq Nadiri, 1993. "Innovations and Technological Spillovers," NBER Working Papers 4423, National Bureau of Economic Research, Inc.
    6. Diego Comin, 2004. "R&D: A Small Contribution to Productivity Growth," Journal of Economic Growth, Springer, vol. 9(4), pages 391-421, December.
    7. M. Ishaq Nadiri & Seongjun Kim, 1996. "R&D, Production Structure and Productivity Growth: A Comparison of the US, Japanese and Korean Manufacturing Sectors," NBER Working Papers 5506, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Desiderio Romero-Jordán & María Delgado-Rodríguez & Inmaculada Álvarez-Ayuso & Sonia Lucas-Santos, 2014. "Assessment of the public tools used to promote R&D investment in Spanish SMEs," Small Business Economics, Springer, vol. 43(4), pages 959-976, December.

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