Productivity and R&D: An econometric evidence from Spanish firm-level data

Abstract

This paper analyses the relationship between productivity growth and R&D investments of Spanish manufacturing firms during the 1990s. The theoretical model is a version of the Cobb-Douglas production function in its growth rate form. The purpose is to estimate the rate of return to R&D expenditures. The econometric specification is a distributed lag model. The estimation applies the GMM method. The main empirical finding is that a positive and significant role is played by R&D expenditures on productivity growth. The rate of return to R&D expenditures is 26.598 per cent.