Working Paper: CEPR ID: DP2457
Authors: Rachel Griffith; Stephen Redding; John Van Reenen
Abstract: 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.
Keywords: R&D; Human Capital; Total Factor Productivity; Convergence
JEL Codes: O00; O30; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| R&D (O32) | TFP growth (O49) |
| R&D (O32) | rates of innovation (O39) |
| R&D (O32) | technology transfer (O33) |
| human capital (J24) | TFP growth (O49) |
| human capital (J24) | rates of innovation (O39) |
| human capital (J24) | technology transfer (O33) |