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- Title
R&D and Absorptive Capacity: Theory and Empirical Evidence.
- Authors
Griffith, Rachel; Redding, Stephen; Van Reenen, John
- Abstract
Abstract This paper presents a single unified framework that integrates the theoretical literature on Schumpeterian endogenous growth and major strands of the empirical literature on R&D, productivity growth and productivity convergence. Starting from a structural model of endogenous growth following Aghion and Howitt (1992, 1998), we provide microeconomic foundations for the reduced-form equations for total factor productivity (TFP) growth frequently estimated empirically using industry-level data. R&D affects both innovation and the assimilation of others’ discoveries (“absorptive capacity”). Long-run cross-country differences in productivity emerge endogenously, and the analysis implies that many existing studies underestimate R&D's social rate of return by neglecting absorptive capacity.
- Subjects
RESEARCH &; development contracts; ABSORPTIVE capacity (Economics)
- Publication
Scandinavian Journal of Economics, 2003, Vol 105, Issue 1, p99
- ISSN
0347-0520
- Publication type
Article
- DOI
10.1111/1467-9442.00007