R&D and productivity in OECD firms and industries: A hierarchical meta-regression analysis

Ugur, Mehmet and Trushin, Eshref and Solomon, Edna and Guidi, Francesco (2015): R&D and productivity in OECD firms and industries: A hierarchical meta-regression analysis.

Abstract

Effects of R&D investment on frim/industry productivity have been investigated widely thanks to pioneering contributions by Zvi Griliches and others in late 1970s and early 1980s. We aim to establish where the balance of the evidence lies and what factors may explain the variation in the research findings. Using 1,258 estimates from 65 primary studies and hierarchical meta-regression models, we report that the average elasticity and rate-of-return estimates are both positive, but smaller than those reported in prior narrative reviews and meta-analysis studies. We discuss the likely sources of upward bias in prior reviews, investigate the sources of heterogeneity in the evidence base, and discuss the implications for future research. Overall, this study contributes to existing knowledge by placing the elasticity and rate-of-return estimates under a critical spot light and providing empirically-verifiable explanations for the variation in the evidence base.

• Item Type: MPRA Paper
• Language: English
• Keywords: R&D, knowledge capital, productivity, meta-analysis
• Subjects: C - Mathematical and Quantitative Methods > C8 - Data Collection and Data Estimation Methodology ; Computer Programs; D - Microeconomics > D2 - Production and Organizations > D24 - Production ; Cost ; Capital ; Capital, Total Factor, and Multifactor Productivity ; Capacity; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O30 - General; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O32 - Management of Technological Innovation and R&D

References

Aghion, P., N. Bloom, R. Blundell, R. Griffith, and P. Howitt. (2005). Competition and Innovation: An Inverted-U Relationship. Quarterly Journal of Economics, 120(5), 701-728.

Bond, S., and I. Guceri (2012). Trends in UK BERD after the Introduction of R&D Tax Credits. Oxford University Centre for Business Taxation, Working Paper No. 12/01.

Card, D. and A. B. Krueger (1995). Time-series minimum-wage studies: a meta-analysis, American Economic Review, 85(2), 238–243.

Coe, D. T. and E. Helpman (1995). International R&D spillovers. European Economic Review, 39(5), 859-887.

Costa-Fonta, J., A. McGuire and T. Stanley (2013). Publication selection in health policy research: the winner’s curse hypothesis. Health Policy 109(1), 78–87.

Crépon, B., E. Duguet, and J. Mairesse (1998). Research, innovation, and productivity: An econometric analysis at the firm level, Economics of Innovation and New Technology 7, 115-156.

Cunéo, P. and J. Mairesse (1984). Productivity and R&D at the firm level in French manufacturing. In: Z. Griliches (ed.), R&D, Patents and Productivity. Chicago, IL: University of Chicago Press, 375- 392.

Demidenko, E. (2004). Mixed Models: Theory and Applications. Hoboken, NJ: Wiley.

Dickersin, K., & MIN, Y. I. (1993). Publication bias: the problem that won't go away. Annals of the New York Academy of Sciences, 703(1), 135-148.

Doucouliagos, C(H) and T. D. Stanley (2009). Publication selection bias in minimum-wage research? A meta-regression analysis, British Journal of Industrial Relations, 47(2), 406-429.

Doucouliagos, H(C) and T. D. Stanley (2013). Theory competition and selectivity: Are all economic facts greatly exaggerated?, Journal of Economic Surveys, 2013; 27: 316-39.

Doucouliagos, H(C)., T. D. Stanley and M. Giles (2012). Are estimates of the value of a statistical life exaggerated?, Journal of Health Economics, 31(1): 197-206.

Eberhardt, M. and C. Helmers (2010). Untested assumptions and data slicing: A critical review of firm-level production function estimators. Department of Economics Discussion Paper no. 513, University of Oxford.

Egger, M., G. D Smith, M. Scheider, and C. Minder (1997). Bias in meta-analysis detected by a simple, graphical test, British Medical Journal, 316: 629-34.

Gilbert, R. (2006), ‘Looking for Mr. Schumpeter: Where are we in the competition-innovation debate?’, in Adam B. Jaffe, Josh Lerner and Scott Stern (eds), Innovation Policy and the Economy – Volume 6, Cambridge, Mass.: MIT Press, pp. 159-215.

Goto, A. and K. Suzuki (1989). R&D capital, rate of return on R&D investment and spillover of R&D in Japanese manufacturing industries, Review of Economics and Statistics, 71(4), 555-564.

Griliches, Z. (1973). Research expenditures and growth accounting. In: Science and Technology in Economic Growth, R.B. Williams (ed.). John Wiley and Sons, New York.

Griliches, Z. (1979). Issues in assessing the contribution of research and development to productivity growth, Bell Journal of Economics, 10(1), 92-116.

Griliches, Z. (1980a). Returns to research and development expenditures in the private sector. In: New Developments in Productivity Measurement and Analysis, Ed. By J. W. Kendrick, and B. N. Vaccara. Chicago, Ill.: Chicago University Press, 419-462.

Griliches, Z. (1991). The search for R&D spillovers. National Bureau of Economic Research Working Paper, no. w3768.

Griliches, Z. (1994). Productivity, R&D and the data constraint, American Economic Review, 84(1), 1-23.

Griliches, Z. (1995). R&D and productivity: Econometric results and measurement issues, in P. Stoneman (ed.), Handbook of the Economics of Innovation and Technical Change, Blackwell Handbooks in Economics.

Griliches, Z. (1998). R&D and productivity: The econometric evidence. Chicago, IL: University of Chicago Press.

Griliches, Z., and F. R. Lichtenberg (1984). R&D and productivity growth at the industry level: Is there still a relationship? In: Z. Griliches (ed.), R&D, Patents, and Productivity. Chicago, Ill.: Chicago University Press, 465-501.

Hall, B. H. (1993). Industrial research during the 1980s: Did the rate of return fall?, Brookings Papers On Economic Activity, Micro (2), 289-344.

Hall, B. H. (1996). The private and social returns to research and development. In Bruce L.R. Smith and Claude E. Barfield (eds.), Technology, R&D, and the Economy, Brookings Institution, Washington D.C.

Hall, B. H., J. Mairesse and P. Mohnen (2010). Measuring the returns to R&D. In B. H. Hall and N. Rosenberg (eds.), Handbook of the Economics of Innovation, vol. 2, Elsevier, New York.

Higgins J.P.T. and S. G. Thompson (2002). Quantifying heterogeneity in meta-analysis. Statistics in Medicine, 21(11), 1539-1558.

Ioannidis, J. P. (2005). Contradicted and initially stronger effects in highly cited clinical research. Jama, 294(2), 218-228.

Klette, T. J. (1994). R&D, scope economies, and company structure: a 'not so fixed effect' model of plant performance. Oslo, Norway: Central Bureau of Statistics Discussion Paper No. 120.

Klette, T. J. (1996). The accumulation of R&D-Capital and the dynamic performance of manufacturing firms. Oslo, Norway: Central Bureau of Statistics.

Mairesse, J. and M. Sassenou (1991). R&D and productivity: a survey of econometric studies at the firm level, STI Review, OECD, 8, 9-46.

Mairesse, J., and P. Mohnen (1994). R&D and productivity growth: What have we learned from econometric studies?, Eunetic Conference on Evolutionary Economics of Technological Change: Assessment of Results and New Frontiers, 817-888, Strasbourg.

Mansfield, E. (1980). Basic Research and Productivity Increase in Manufacturing, American Economic Review, 70, 863-873.

McCulloch, C. E., S. R. Searle, and J. M. Neuhaus (2008). Generalized, Linear, and Mixed Models (2nd ed). Hoboken, NJ: Wiley.

Minasian, Jora R (1969). Research and development, production functions, and rates of return. American Economic Review, 59(2): 80-85.

Møen, J., & Thorsen, H. S. (2013). Publication bias in the returns to R&D literature, Institutt for Foretaksøkonomi Discussion Paper, No. 2013/12.

Moreno, S.G., A. J. Sutton, A. Ades, T. D. Stanley, K. R. Abrams, J. L. Peters, and N. J. Cooper (2009). Assessment of regression-based methods to adjust for publication bias through a comprehensive simulation study, BMC Medical Research Methodology, 9(2), 1–17.

OECD (2011). Business R&D. In OECD Science, Technology and Industry Scoreboard, OECD Publishing. http://dx.doi.org/10.1787/sti_scoreboard-2011-18-en

Pakes, A., and M. Schankerman (1984). The rate of obsolescence of patents, research gestation lags, and the private rate of return to research resources. in Z. Griliches (ed.), R&D, Patents, and Productivity, Chicago, IL: Chicago University Press, 73-88.

Park, W. G. (1995). International R&D spillovers and OECD economic growth, Economic Inquiry 33, 571-591.

Simmons, J. P., Nelson, L. D., & Simonsohn, U. (2011). False-positive psychology undisclosed flexibility in data collection and analysis allows presenting anything as significant. Psychological science, 22(11), 1359-1366.

Soete, L. and B. Verspagen (1993). Convergence and divergence in growth and technical change: an empirical investigation. Paper presented at the AEA annual meeting in Anaheim, Ca., January.

Stanley, T. D. (2005). Beyond publication bias, Journal of Economic Surveys, 19(3), 309-45.

Stanley, T. D. (2008). Meta-regression methods for detecting and estimating empirical effect in the presence of publication bias. Oxford Bulletin of Economics and Statistics; 2008; 70(1):103-127.

Stanley, T.D. and H(C) Doucouliagos (2014). Meta-regression approximations to reduce publication selection bias, Research Synthesis Methods, 5(1): 60-78.

Stanley, T.D. and H(C). Doucouliagos (2007). Identifying and correcting publication selection bias in the efficiency-wage literature: Heckman meta-regression, Deakin University Economics Working Paper No. 2007_11; 2007.

Stanley, T.D. and H. Doucouliagos (2012). Meta-regression analysis in Economics and Business. London and New York: Routledge.

Stanley, T.D. and S. B. Jarrell (1989). Meta-regression analysis: A quantitative method of literature surveys, Journal of Economic Surveys, 3(2): 161-170.

Terleckyj, N. E. (1974). Effects of R&D on the productivity growth of industries: An exploratory study (No. 140). Washington, DC: National Planning Association.