Vuong, Van Anh Maican , Florin Orth, Matilda Roberts, Mark
Year of Publication:
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2016: Demographischer Wandel - Session: Firm Investment and Innovation: Empirical Studies C24-V1
In this paper we develop a structural empirical model that allows us to estimate the impact of R&D on ﬁrm proﬁtability through two channels. In the ﬁrst channel, R&D investment by the ﬁrm can impact the ﬁrm's production eﬃciency and lower its marginal cost. This productivity channel raises the ﬁrm's sales and proﬁts in both the domestic and export market. The second channel is speciﬁc to exporting ﬁrms where R&D acts to increase the demand for the ﬁrm's products in foreign markets. Using micro data for Swedish manufacturing ﬁrms from 2000-2010 we estimate the impact of R&D investment on the unobserved component of the ﬁrm's productivity and export market demand. Our empirical results show that ﬁrm R&D investment has a statistically signiﬁcant, positive eﬀect on both the future productivity and the future export demand of the ﬁrm. For high-tech industries, we ﬁnd that the impact of R&D investments on the demand shocks is twice as large as its impact on productivity. On the other hand, the impact of R&D investments on productivity in the low-tech industries is higher than on demand shocks.