Title: Capabilities and investment in R&D: An analysis on European data
Authors: BOGLIACINO FrancescoGÓMEZ CARDONA Sebastián
Citation: STRUCTURAL CHANGE AND ECONOMIC DYNAMICS vol. 31 p. 101-111
Publisher: ELSEVIER BV
Publication Year: 2014
JRC N°: JRC92072
ISSN: 0954-349X
URI: http://www.sciencedirect.com/science/article/pii/S0954349X14000502
http://publications.jrc.ec.europa.eu/repository/handle/JRC92072
DOI: 10.1016/j.strueco.2014.09.001
Type: Articles in periodicals and books
Abstract: In this paper we test the effect of technological capabilities (accumulated knowledge andorganization/production routines) on the R&D intensity for a panel of European indus-tries. Our proxy for capabilities is the distance from the technological frontier. Estimationis carried out with System Generalized Methods of Moments and is robust to variousspecifications. Our identification strategy is limited to the average (reduced form) effect.We find a strong effect of capabilities on the amount invested in R&D, after controllingfor demand pull, technology push, size, and cash constraints. The latter ones are the mainvariables used in the literature on the determinants of innovative expenditure, of which R&Dis one of the components. The elasticity of the distance from the technological frontier is10%, of similar magnitude (but opposite sign) with regard to the effect of internal resources.When we allow for heterogeneous impact, clustering the industries according to theirtechnological level, we see that the effect of capabilities is robust, but concentrated inMedium and Low Tech sectors. Moreover, the effect is stronger in the upswings of thebusiness cycle and is concentrated in peripheral countries. These latter stylized facts maysuggest that the divergence induced by lack of capabilities is somehow nonlinear andincreases when a critical mass is missing.
JRC Directorate:Growth and Innovation

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