Mapping the two faces of R&D: productivity growth in a panel of OECD industries

Rachel Griffith
Stephen Redding
John Van Reenen

Published on 2 January 2000

This Working Paper is an update of Mapping the two faces of R&D: productivity growth in a panel of OECD industries

In this paper we document that there has been convergence of TFP within a panel of industries across thirteen OECD countries since 1970.nonpara-metric statistical tests of stochastic dominance criteria to bivariate distributions.

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.