Evidence on the impact of R&D and ICT investments on innovation and productivity in Italian firms(Article)
- aDepartment of Economics, University of California at Berkeley, 549 Evans Hall, Berkeley, CA, 94720-3880, United States
- bDepartment of Economics/AE2, Maastricht University, Maastricht, Netherlands
- cNBER, Cambridge, MA, United States
- dIFS, London, United Kingdom
- eEconomic Research Department, Bank of Italy, via Nazionale 91, 00184, Rome, Italy
- fCREST (ENSAE, Paris), 15, Boulevard Gabriel Peri, 92245, Malakoff Cedex, France
- gDepartment of Quantitative Economics, Maastricht University, Maastricht, Netherlands
- hNBER, Cambridge, MA, United States
Abstract
Both research and development (R&D) and information and communication technology (ICT) investment have been identified as sources of relative innovation underperformance in Europe vis-à-vis the USA. In this article, we investigate the R&D and ICT investment at the firm level in an effort to assess their relative importance and to what extent they are complements or substitutes. We use data on a large unbalanced panel data sample of Italian manufacturing firms constructed from four consecutive waves of a survey of manufacturing firms, to estimate a version of the CDM model of R&D, innovation, and productivity [Crépon-Duguet-Mairesse 1998. Research, innovation and productivity: An econometric analysis at the firm level. Economics of Innovation and New Technology 7, no. 2: 115-58] that has been modified to include ICT investment and R&D as the two main inputs into innovation and productivity. We find that R&D and ICT are both strongly associated with innovation and productivity, with R&D being more important for innovation, and ICT investment being more important for productivity. For the median firm, rates of return to both investments are so high that they suggest considerably underinvestment in both these activities. We explore the possible complementarity between R&D and ICT in innovation and production, but find none, although we do find complementarity between R&D and worker skill in innovation. © 2013 Copyright Taylor and Francis Group, LLC.
Funding details
| Funding sponsor | Funding number | Acronym |
|---|---|---|
| Seventh Framework Programme | 248809 | FP7 |
| FP7 Socio-Economic Sciences and Humanities | SSH |
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We thank the Unicredit research department for having kindly supplied firm-level data for this project, in particular Elena D’Alfonso, Attilio Pasetto, and Toni Riti. We also thank Isabel Busom, Rachel Griffith, Steve Bond, Marco Vivarelli, seminar participants at the Politecnico di Milano and Universitat Autonoma de Barcelona, and participants in the Conference on the Economics of Information and Communication Technologies, Paris, and in the 10th IIOC Conference, for useful comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the Bank of Italy. This paper was in part produced as part of the SCIFI-GLOW Collaborative Project supported by the European Commission’s Seventh Framework Programme for Research and Technological Development, under the Socio-economic Sciences and Humanities theme (Contract no. SSH7-CT-2008-217436).
- ISSN: 10438599
- Source Type: Journal
- Original language: English
- DOI: 10.1080/10438599.2012.708134
- Document Type: Article
Hall, B. H.; Department of Economics, University of California at Berkeley, 549 Evans Hall, United States;
© Copyright 2013 Elsevier B.V., All rights reserved.
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