Journal Article

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

Date: 01 November 2004
Publisher: MIT Press
ISSN: 0034-6535
Published in: Review of Economics and Statistics , Vol. 86, No. 4, pp. 883 - 895

Many writers have claimed that research and development (R&D) has two faces. In addition to the conventional role of stimulating innovation, R&D enhances technology transfer (absorptive capacity). We explore this idea empirically using a panel of industries across twelve OECD countries. We find R&D to be statistically and economically important in both technological catch-up and innovation. Human capital also plays an major role in productivity growth, but we only find a small effect of trade. In failing to take account of R&D-based absorptive capacity, existing U.S.-based studies may underestimate the return to R&D.