R&D and productivity growth: evidence from firm-level data for the Netherlands

This article presents evidence on the links between R&D and productivity for manufacturing firms in the Netherlands. The study provides estimates of the output elasticity of the R&D stock and of the private rate of return to R&D. The article applies the methodology used by Hall and Mairesse (1995) to a panel dataset of R&D performing firms in the Netherlands, with some minor modifications. First, a correction for sample selection bias is used in an attempt to adjust the results for possible bias arising when the basic methodology is applied to the R&D survey for the Netherlands. Next, more complete adjustment is made to the resource input data to correct for the ’double counting’ of R&D inputs. Lastly, an attempt is made to correct for heteroskedasticity in the error term of the basic model. The study makes use of linked files of the R&D surveys and the annual production statistics collected by Statistics Netherlands for the years 1985, 1989, and 1993.