Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/142376 
Year of Publication: 
2016
Series/Report no.: 
IZA Discussion Papers No. 9937
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
Using data on the US and EU top R&D spenders from 2004 until 2012, this paper investigates the sources of the US/EU productivity gap. We find robust evidence that US firms have a higher capacity to translate R&D into productivity gains (especially in the high-tech industries), and this contributes to explaining the higher productivity of US firms. Conversely, EU firms are more likely to achieve productivity gains through capital-embodied technological change at least in medium and low-tech sectors. Our results also show that the US/EU productivity gap has worsened during the crisis period, as the EU companies have been more affected by the economic crisis in their capacity to translate R&D investments into productivity. Based on these findings, we make a case for a learning-based and selective R&D funding, which – instead of purely aiming at stimulating higher R&D expenditures – works on improving the firms' capabilities to transform R&D into productivity gains.
Subjects: 
R&D
productivity
economic crisis
US
EU
JEL: 
O33
O51
O52
Document Type: 
Working Paper

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