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Productivity growth and R & D expenditure in UK manufacturing firms

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  • Wakelin, Katharina

    (MERIT)

Abstract

This paper analyses the relationship between productivity growth and R&D expenditure at the firm level. A Cobb-Douglas function is estimated for 170 UK quoted firms including R&D intensity as well as the capital to labour ratio. A positive and significant role is found for the firm’s own R&D expenditure in influencing productivity growth from 1988-1992; the relationship is no longer significant when sector fixed effects are included. To capture these sector effects, two spillover variables are included: the R&D expenditure of other firms in the same sector, and the weighted R&D expenditure of innovation-supplying industries. The former is found to play a large positive role in productivity growth, increasing it by around 1%, while no significant role is found for the latter. The variation in technological opportunity across sectors appears to play an important role in the efficacy of R&D expenditure.

Suggested Citation

  • Wakelin, Katharina, 1997. "Productivity growth and R & D expenditure in UK manufacturing firms," Research Memorandum 012, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:umamer:1997012
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    References listed on IDEAS

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