Innovation,exports, productivity and investment climate; a study based on Indian manufacturing firm-level data

In this paper, we use univariate instrumental estimations to study the interactions between firm-level innovation, exports and productivity in the Indian manufacturing sector. To differentiate incentives to innovate from the ability to innovate, we distinguish the inputs of innovation (R&D and training) from the outputs. Our findings highlight a virtuous circle between the three components of innovation, as well as between firms’ R&D, innovation and exports. The productivity of Indian manufacturing firms is benefiting from this dynamics, as exports and innovation improve firms’ TFP. With respect to the investment climate, our results suggest that differences in the environment of Indian companies contribute to their performance gaps. These results are all the more important in the context of the Make in India campaign and the weaknesses of India’s business environment.     

Exports,productivity and innovation: new firm level empirical evidence

This article examines the determinants of Portuguese exports, applying data from 277 manufacturing firms for the period 2006–2010. In 2010, these firms accounted for about 47% of total Portugal’s exports. Both the static and dynamic results of the estimated models confirm the positive influence of productivity on variations in exports. The dynamic estimations also suggest that exports in the previous period hold a positive effect on contemporaneous exports, confirming the Roberts and Tybout (1997) sunk cost hypothesis for exports. In the dynamic analysis, the labour costs and the size of the firm do not have a statistically significant effect on Portuguese exports with the findings also pointing to increased expenditure on research and development (R&D) generating no statistically significant effect on exports. The lagged R&D expenditure was also insignificant in explaining the change of Portuguese exports. Thus, these results suggest that applying a product or process innovation measure returns better results than indirect measures such as R&D expenditure.     

Technological knowledge,spillover and productivity: evidence from Taiwanese firm level panel data

Using a panel data on Taiwanese manufacturing firms from 1990–1997, this study investigates the relationship among technological knowledge, spillover and productivity. In addition to R&D stock, we also employ patent counts to construct the output-side indicators of knowledge and spillover to explore the relationship between knowledge and productivity. We find a very significant contribution of R&D, patents and spillover stock to productivity. In addition, the magnitude of the patent stock coefficient is substantially larger than that estimated by R&D stock. Our results imply that innovative activity investment has been very productive in increasing output for Taiwanese manufacturing firms in the 1990s.     

E-commerce,R&D,and productivity: Firm-level evidence from Taiwan

This study investigates the impact of e-commerce and R&D on productivity, using a unique panel dataset obtained from Taiwanese manufacturing firms for the period from 1999 to 2002. We specifically consider the network externalities of e-commerce and employ the system generalized method of moment (GMM) technique to deal with the endogenous problem of e-commerce adoption. The empirical results show that both e-commerce and R&D capital have a positive influence on productivity, while R&D exhibits a larger productivity-enhancing effect. We also find a complementary relationship between e-commerce and R&D on enhancing productivity. Crucially, the inter-industry network externality of e-commerce significantly contributes to productivity.     

Knowledge spillovers,absorptive capacity and total factor productivity in China’s manufacturing firms

Applying the stochastic frontier framework, this study explores the diffusion and absorption of technological knowledge in China’s manufacturing firms, based on a panel of more than 10,000 local and foreign-invested firms over the period 1998–2001. Our empirical approach allows us to distinguish between technological progress (TP) and technical efficiency (TE) in analysing whether R&D, exports and the presence of foreign direct investment simultaneously enhance TP through knowledge spillovers in a single framework and whether different types of domestic absorptive capacity moderate external knowledge spillovers in relation to TE. The results show that there are positive inter-industry productivity spillovers from R&D and foreign presence, whereas evidence of intra-industry productivity spillovers from FDI to Chinese firms is less robust. We find evidence that absorptive capacity is one of the key determinants to quantitatively explain intra-industry differences in productivity of local Chinese firms. The findings have important policy implications.     

The Sun Also Rises: Productivity Convergence Between Japan and the USA

The growth process for a technological leader is different from that of a follower. While followers can grow through imitation and capital deepening, a leader must undertake original research. This suggests that as the gap between the leader and the follower narrows, the follower must undertake more genuinely innovative R&D and possibly face a slower overall growth rate. The results of a dynamic panel equilibrium-correction model of productivity growth suggest that the productivity gap with the USA had a strong effect on the growth of Japanese manufacturing, and that changes in R&D intensity also made a significant contribution. Moreover, the effect of the productivity gap was significantly higher in industries that had higher R&D intensities, higher levels of human capital, and were more open to exports. This paper is based upon Chapter 5 of my D.Phil. thesis at the University of Oxford. It was partly written while I was a Visiting Scholar at the Foundation for Advanced Information & Research, Tokyo, and was supported by a Sanwa Bank Foundation Research Fellowship and ESRC grants R000234954 and R000237500.     

Innovation and productivity in manufacturing and service firms in Catalonia: a regional approach

This article analyses the determinants of research and development (R&D) and the role of innovation on labour productivity in Catalan firms. Our empirical analysis found a considerable heterogeneity in firm performances between the manufacturing and service industries and between low- and high-tech industries. The frontiers that separate manufacturing and service industries are increasingly blurred. In Catalonia high-tech knowledge-intensive services (KIS) play a strategic role in promoting innovation in both manufacturing and service industries, and driving growth throughout the regional economy. Empirical results show new firms created during the period 2002–2004 that have a greater R&D intensity than incumbent firms (54.1% in high-tech manufacturing industries and 68.8% in high-tech KIS). Small and young firms in the high-tech KIS sector are very prone to carrying out R&D and they invest more in innovation projects. R&D expenditures, output innovation, investment in physical capital, market share and export have positive effects on labour productivity in both the manufacturing and service sectors. Firm size, on the other hand, has a positive effect on productivity in manufacturing industries but not in services.     

Multinationals,R&D and Endogenous Productivity Asymmetries

We analyze the influence of endogenous productivity asymmetries between firms, in terms of competitiveness and size, on multinational activity. In the model, productivity depends on cost-reducing R&D (research and development). We show that when firms differ on commitment power in R&D, the R&D leader, independently of being a multinational or a domestic firm, tends to invest more in R&D than the R&D follower. Because of these productivity advantages, the R&D leader can more easily become multinational. Therefore, in addition to the proximity-concentration trade-off, we identify another FDI (foreign direct investment) determinant: technological competition.     

R&D,public innovation policy,and productivity: The case of danish manufacturing

The purpose of this paper is to investigate the relationship between private R&D, public innovation support transferred to the private sector, and productivity in Danish manufacturing. Two main conclusions are established. First, public innovation support has a positive and significant effect on private R&D expenditures with an estimated elasticity of 0.062. Second, the indirect effect on productivity from public innovation support is reflected in a positive point estimate which is found to be robust to different specifications of R&D capital.     

FDI技术溢出渠道与中国制造业生产率增长研究:基于面板数据的分析

This paper analyses total factor productivity (TFP) of China’s manufacturing sector and its decomposed indexes, i.e., technological progress and technological efficiency by employing Malmquist productivity index based on the Data Envelopment Analysis (DEA) approach. Using panel data of domestic manufacturing sector in China from 2000 to 2005, we estimate the influences of horizontal and vertical linkages on TFP and its decomposition indexes by controlling R&D and exports indexes of domestic manufacturing sector. The empirical results show that R&D and exports have a positive effect on TFP and that FDI inflows lead to positive spillovers significantly in general mainly through technological progress resulting from backward linkages; however, forward linkages have no technology spillover effect while horizontal linkages promote TFP through technological efficiency which has quite different influencing modes compared to that of backward and forward linkages. The grouping regression results also show that FDI technology spillovers have different conductive mechanisms under different technological levels, industry concentrations and export dependency indexes. Translated and Revised from Shijie Jingji 世界经济 (The Journal of World Economy), 2008, (8): 20–31     

Evidence on the impact of R&D and ICT investments on innovation and productivity in Italian firms

Both research and development (R&D) and information and communication technology (ICT) investment have been identified as sources of relative innovation underperformance in Europe vis-à-vis the USA. In this article, we investigate the R&D and ICT investment at the firm level in an effort to assess their relative importance and to what extent they are complements or substitutes. We use data on a large unbalanced panel data sample of Italian manufacturing firms constructed from four consecutive waves of a survey of manufacturing firms, to estimate a version of the CDM model of R&D, innovation, and productivity [Crépon–Duguet–Mairesse 1998. Research, innovation and productivity: An econometric analysis at the firm level. Economics of Innovation and New Technology 7, no. 2: 115–58] that has been modified to include ICT investment and R&D as the two main inputs into innovation and productivity. We find that R&D and ICT are both strongly associated with innovation and productivity, with R&D being more important for innovation, and ICT investment being more important for productivity. For the median firm, rates of return to both investments are so high that they suggest considerably underinvestment in both these activities. We explore the possible complementarity between R&D and ICT in innovation and production, but find none, although we do find complementarity between R&D and worker skill in innovation.     

The productivity impact of R&D investment: are high-tech sectors still ahead?

Our aim is to investigate the relationship between a firm's R&D expenditures and its productivity, looking at sectoral peculiarities. We use a unique longitudinal database consisting of 1809 US and European manufacturing and service firms over the period 1990–2008. Our main findings can be summarised as follows. Consistently with previous literature, the knowledge stock has a significant positive impact on a firm's productivity. More interestingly, the coefficient turns out to be significantly larger in the R&D-user services and high-tech manufacturing sectors than in the non-high-tech manufacturing sectors. Contrary to the ‘latecomer advantage’ approach, these outcomes suggest that firms in high-tech sectors are still ahead in terms of impact on productivity of R&D investments.     

Productivity and R&D: an econometric evidence from Spanish firm-level data

This article analyses the relationship between productivity growth and R&D investments of Spanish manufacturing firms during the 1990s. The theoretical model is a version of the Cobb–Douglas production function in its growth rate form. The purpose is to estimate the rate of return to R&D expenditures. The econometric specification is a distributed lag model. The estimation applies the generalized method of moments method. The main empirical finding is that a positive and significant role is played by R&D expenditures on productivity growth. The rate of return to R&D expenditures is 26.598%.     

Persistence and economic effects of technological innovations: a dynamic and sequential analysis of Uruguayan manufacturing firms

This paper analyzes the long-term relationship between research and development (R&D), innovations and productivity in 400 Uruguayan manufacturing firms during the period 2001–2009 based on a modified version of the structural model of Crepon, Duguet and Mairesse. The paper also analyzes thoroughly the decision of these firms to engage in R&D activities by using a novel categorical dependent variable, which takes three values: non-performance R&D activities, occasional performance or continuous performance over the period. Furthermore, the study investigates whether these manufacturing ?rms innovate persistently or discontinuously over the period. The results suggest a positive link between the intensity of R&D activities and the generation of product and process innovations. They also indicate that innovation probability is temporally persistent at the ?rm-level only for product innovations. Finally, the empirical findings reveal that these technological innovations have a positive effect on firm’s productivity.     

The productivity effects of local R&D outsourcing: the moderating role of subsidiary mandate and internal R&D

This study examined the moderating effects of two kinds of internal R&D (parent R&D and subsidiary R&D) on the relationship between local R&D outsourcing and subsidiary productivity as internal R&D challenges the collaborative relationships in the local environment. Due to the specific feature of a subsidiary mandate, we further investigate whether two distinct kinds of internal R&D have different moderating effects between exploitation-oriented subsidiaries and exploration-oriented subsidiaries, based on a sample of longitudinal data set of 263 Taiwan-based manufacturing subsidiaries over the period 2006–2009. The empirical results show that for exploitation-oriented subsidiaries parent R&D plays a significant and negative moderating role on the impact of local R&D outsourcing based on local collaboration, while a positive moderating role is observed with parent R&D and subsidiary R&D for exploration-oriented subsidiaries.     

R&D and manufacturing production specialization in developed economies

A study of the relation between technology and manufacturing production specialization in a series of developed economies is performed by means of models relating indicators of revealed symmetric comparative advantage of value added and exports to similar measures of comparative performance of R&D expenditure, capital intensity, total factor productivity and wage costs. The production and R&D specialization are shown to be substantial and sticky. This contrasts with the evidence of a substantial degree of convergence in the patterns of the other variables. Regression estimates show that, although all variables play their part, the impact of comparative R&D efforts on production specialization is by far the strongest. This impact is found to be stronger in the smaller economies and it is especially important in research-intensive industries. The influence of comparative wages is, moreover, found to be positive here, suggesting the dominance of a labour skill and efficiency wage effect over a wage cost competitiveness effect. These findings are shown to conform quite well with the predictions of Schumpeterian theory and of certain contributions to ‘new trade theory’ that have stressed the importance of dynamic economies of scale.     

Productivity and R&D sources: evidence for Catalan firms

This paper draws on a sample of innovative Catalan firms to identify how two main sources of innovation – internal R&D and external R&D acquisition – affect productivity in the manufacturing and service industries. The sample comprises 1612 innovative firms from the fourth European Community Innovation Survey (CIS-4) during the period 2002–2004. We compare empirical results when applying the usual OLS and quantile regression techniques controlling with a non-parametric sample selection. Our results indicate the different patterns that are attributable to the two sources of innovation as we move up from lower to higher conditional quantiles. First, the marginal effect of internal R&D on productivity decreased as we moved up to higher productivity levels. Second, the marginal effect of external R&D acquisition increased as we moved up to higher productivity levels. Finally, empirical results show significant complementarities between internal and external R&D, which are higher for knowledge-intensive service sectors.     

Environmental regulation and the productivity of Japanese manufacturing industries

This paper attempts to provide empirical evidence on issues concerning: (a) the effect of the stringency of environmental regulations (as measured by pollution control expenditures) on innovative activity (as measured by R&D expenditures) and on the average age of capital stock and (b) the productivity enhancement effect of environmental regulations in Japanese manufacturing industries. The empirical findings in the paper show that the pollution control expenditures have a positive relationship with the R&D expenditures and have a negative relationship with the average age of capital stock. It is also shown that increases in R&D investment stimulated by the regulatory stringency have a significant positive effect on the growth rate of total factor productivity.     

Trade and the Transmission of Technology

This paper integrates earlier studies on the link of productivity and research and development (R&D) in different industries of a closed economy with the more recent emphasis on R&D-driven growth and international trade in open economies. In this framework, technology in the form of product designs is transmitted to other industries, both domestically as well as internationally, through trade in differentiated intermediate goods. I present empirical results based on a new industry-level data set that covers more than 65 percent of the worlds manufacturing output and most of the worlds R&D expenditures between 1970 and 1991. The analysis considers productivity effects from R&D in the domestic industry itself, from R&D in other domestic industries, as well as in the same and other foreign industries. I estimate strong productivity effects both from own R&D spending and R&D conducted elsewhere. The contribution of R&D in the industry itself is about 50 percent in this sample. Domestic R&D in other industries is the source of 30 percent of the productivity increases, and the remaining 20 percent are due to R&D expenditures in foreign industries.     

R&D and productivity in Danish firms: some empirical evidence

The aim of the paper is to examine the relationship between R&D capital and productivity using microdata for Danish manufacturing firms. The influence of factors such as ownership, innovative characteristics and source of funding accounted for. The return to accumulated R&D capital is estimated to be in the neighbourhood of 9–12%, whereas the short-run effect of R&D is insignificant. Furthermore, the direct influence from foreign ownership, source of funding accounted for, innovative characteristics and ownership dispersion on productivity are analysed. However, none of the factors seem to have an impact on firm productivity. The same is the case for the indirect influence coming from interaction with accumulated R&D capital.