Exploring the relationship between R&D and productivity in French manufacturing firms

Using a newly available dataset on the R&D investment of individual French manufacturing firms for the 1980s, we replicate and update a series of studies on French R&D and productivity at the firm level from the 1970s, and evaluate the robustness of methods currently used to measure the priv...

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Bibliographic Details
Published in:Journal of econometrics 1995, Vol.65 (1), p.263-293
Main Authors: Hall, Bronwyn H., Mairesse, Jacques
Format: Article
Language:English
Subjects:
Applied economics
Applied sciences
Capital investments
Econometrics
Economic theory
Exact sciences and technology
Firm level
France
History
Inventory control, production control. Distribution
Manufacturers
Manufacturing
Operational research and scientific management
Operational research. Management science
Panel data
Production functions
Productivity
R&D
Research & development
Research & development expenditures
Research and development
Return on investment
Statistical analysis
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Summary:Using a newly available dataset on the R&D investment of individual French manufacturing firms for the 1980s, we replicate and update a series of studies on French R&D and productivity at the firm level from the 1970s, and evaluate the robustness of methods currently used to measure the private returns to R&D. Our main findings are: Having a longer history of R&D expenditures helps improve the quality of the R&D elasticity estimates, but the choice of depreciation rate for R&D capital makes little difference. The correction for double-counting of R&D expenditures in capital and labor is important and may be interpreted under certain conditions as converting a measured ‘excess’ rate of return to a total rate of return to R&D. We show that the direct production function approach to measure returns to R&D capital is preferred on several grounds over the rate of return variation used in the past. Finally, as in the 1970s, the productivity of R&D capital for French manufacturing firms in the 1980s is positive; how strong and robust depends on whether we control for potential industry and firm effects.
ISSN:0304-4076
1872-6895
DOI:10.1016/0304-4076(94)01604-X