Impact of corporate R&D on efficiency in OECD industries

Abstract

Efficiency and productivity has always being a key issue in economic science. The analysis of the impact of R&D (Research and Development) has been extensively studied in industries and countries of more or less aggregated level. This paper aims to investigate the impact of corporate R&D in performance of low-tech industries, medium-tech and high-tech in OECD countries. This paper aims to answer the questions: Is the impact of R&D significant for all types of industries? If so, what are the differences and the magnitude of these effects in each of these types of industries? To this end, an unbalanced dataset from 2000 to 2011 was collected for the main countries of Europe and the United States concerning low, medium and high-tech to analysethe impact of the magnitude of corporate R&D and capital accumulation on productivity of these industries. The productivity of industries was measured by stochastic parametric frontier functions, in order to measure the efficiency of R&D and accumulation of capital on labour productivity. The main results highlight the impact of corporate R&D on productivity of high-tech industries, but for other industries those relations are not clear. However, capital accumulation became crucial on low technology to improve their performance. These results, although needing to include a more extensive dataset of industries across countries, refer the need for policy and decision makers to allocate public funds for R&D in high-tech industries, while the investment in capital seems crucial, particularly in low-tech industries to improve the productivity.