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CEP discussion paper
Mapping the Two Faces of R&D: Productivity Growth in a Panel of OECD Industries
Rachel Griffith, Stephen J. Redding and John Van Reenen May 2000
Paper No' CEPDP0458:
Full Paper (pdf)

Tags: r and d; human capital; total factor productivity; convergence

Many writers have claimed that R&D has two 'faces'. In addition to the conventional role of stimulating innovation, R&D enhances technology transfer by improving the ability of firms to learn about advances in the leading edge ('absorptive capacity'). In this paper we document that there has been convergence of TFP within a panel of industries across thirteen OECD countries since 1970. Furthermore, we find evidence that both R&D and human capital appear statistically and economically important in this catch up process as well as stimulating innovation directly. Trade, by contrast, plays a more modest role in productivity growth.