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Home Publications Mapping the two faces of R&D: productivity growth in a panel of OECD industries

Mapping the two faces of R&D: productivity growth in a panel of OECD industries

Rachel Griffith, Stephen Redding and John Van Reenen
Journal article | Review of Economics and Statistics

Many writers have claimed that research and development (R&D) has two faces. In addition to the conventional role of stimulating innovation, R&D enhances technology transfer (absorptive capacity). We explore this idea empirically using a panel of industries across twelve OECD countries. We find R&D to be statistically and economically important in both technological catch-up and innovation. Human capital also plays an major role in productivity growth, but we only find a small effect of trade. In failing to take account of R&D-based absorptive capacity, existing U.S.-based studies may underestimate the return to R&D.