Who’s doing who? Growth of sales, employment, assets, profits and R&D entangled in a curious five-way love triangle - IPTS Working Papers on Corporate R&D and Innovation No 03/2016
Understanding causal relationships among key economic variables is crucial for policy makers, who wish to e.g. stimulate private R&D growth. . To this end, we applied a technique recently imported from the Machine Learning community (Structural Vector Autoregressions (SVARs) identified using Independent Components Analysis (ICA)) to a set of the world’s largest R&D investors. Our analysis highlights the key role of sales growth, rather than profits growth, in stimulating R&D growth. R&D growth appears at the end of the causal ordering of the growth process. Our results suggest that policies to increase private R&D would do better to target sales rather than profits.
COAD Alexander;
GRASSANO Nicola;
2016-06-06
European Commission
JRC98745
https://publications.jrc.ec.europa.eu/repository/handle/JRC98745,
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