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Financing constraints and R&D investments of large corporations in Europe and the USA

Author

Listed:
  • Michele Cincera

    (European Commission - JRC)

  • Julien Ravet

    (Solvay Brussels School of Economics and Management, Université Libre de Bruxelles)

Abstract

This paper explores the existence and importance of financing constraints for R&D investments in large EU and US manufacturing companies over the 2000 2007 period. The main results obtained by estimating error-correction equations suggest that the sensitivity of R&D investments to cash flow variations are important for European firms while US ones do not appear to be financially constrained. In terms of policy implications, these results suggest improving the conditions for access to external capital to finance R&D activities in the EU.

Suggested Citation

  • Michele Cincera & Julien Ravet, 2010. "Financing constraints and R&D investments of large corporations in Europe and the USA," JRC Working Papers on Corporate R&D and Innovation 2010-03, Joint Research Centre.
    • Handle: RePEc:ipt:wpaper:201003
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    File URL: https://publications.jrc.ec.europa.eu/repository/handle/JRC56505
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    Keywords

    Financial constraints; R&D investments; error-correction investment equations; system GMM panel data econometric models;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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