Mapping the Two Faces of R&D : Productivity Growth in a Panel of OECD Industries

The two aspects of research and development (R&D) involving the stimulation of innovation and the facilitation of technology transfer are examined. There has been little econometric work done that assesses the statistical significance and quantitative importance of the technology transfer aspect of R&D, and this study provides analysis of this area. Using a panel of industries spanning twelve OECD countries since 1970, the statistical significance and quantitative importance of facilitating technology transfer is examined.The data used is from the OECD International Sectoral Database, the OECD ANBERD data set, the OECD Bilateral Trade Database, the UNIDO database and other sources.The data covers twelve countries over the years 1974-1990. An empirical framework is used in which innovation and technology transfer provide two potential sources of productivity growth for countries behind the technological frontier. It is found that industries that have lagged behind in the productivity sector catch up quickly if they invest heavily in R&D. Findings provide evidence of R&D effects on both the rates of innovation and technology transfer across a wide range of specifications. Conclusions show econometric evidence that the impact of R&D and human capital is higher in countries that have lower levels of relative total factor productivity (TFP) and that are further from the industry-specific technological frontier. (JSD)