2018/16 | LEM Working Paper Series | ||||||||||||||||
The source of the US /EU Productivity Gap: Less and less effective R&D |
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Davide Castellani, Mariacristina Piva, Torben Schubert and Marco Vivarelli |
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Keywords | |||||||||||||||||
R&D; productivity; economic crisis; US; EU
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JEL Classifications | |||||||||||||||||
O33, O51, O52
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Abstract | |||||||||||||||||
Using data on the US and EU top R&D spenders from 2004 until 2012,
this paper investigates the sources of the US/EU productivity gap. We
find robust evidence that US firms have a higher capacity to translate
R&D into productivity gains (especially in the high-tech industries),
and this contributes to explaining the higher productivity of US
firms. Conversely, EU firms are more likely to achieve productivity
gains through capital-embodied technological change at least in medium
and low-tech sectors. Our results also show that the US/EU
productivity gap has worsened during the crisis period, as the EU
companies have been more affected by the economic crisis in their
capacity to translate R&D investments into productivity. Based on
these findings, we make a case for a learning-based and selective R&D
funding, which - instead of purely aiming at stimulating higher R&D
expenditures - works on improving the firms’ capabilities to transform
R&D into productivity gains.
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