Three cheers for industry: Is manufacturing linked to R&D, exports, and productivity growth?

Many industrialized countries in Europe and North America have experienced a steady decline in the manufacturing sector over the last few decades. Amid growing concerns that outsourcing and offshoring have destabilized European economies, policymakers have suggested that a large manufacturing sector can: i) boost R&D, ii) encourage exporting, and iii) raise productivity. We examine these claims. Non-parametric plots and regressions show a robust positive association between the manufacturing sector and Business R&D expenditures (BERD), while the relationship between manufacturing and exports or productivity is more elusive. Our results suggest that increasing the manufacturing value added share may lead to an overall higher R&D intensity, because the manufacturing sector generally has a higher R&D intensity than the nonmanufacturing business sector, although manufacturing sector R&D does not seem to create externalities leading to higher non-manufacturing R&D.

COAD Alexander;  VEZZANI Antonio; 

2019-08-21

ELSEVIER SCIENCE BV

JRC115792

0954-349X (online),   

https://www.sciencedirect.com/science/article/pii/S0954349X18302042,    https://publications.jrc.ec.europa.eu/repository/handle/JRC115792,   

10.1016/j.strueco.2019.04.006 (online),