Variations in the effect of RD investment on firm productivity: UK evidence

摘要

Our research provides novel findings about the heterogenous effects of R&D on UK firm-level productivity. In our comprehensive analysis, the effect of R&D on UK productivity is broken down by type of R&D, sources of R&D funding, sector and Pavitt class. Our sample consists of a panel of 10,920 firms from 1998 to 2012. We find that R&D has a positive and significant effect on labour productivity in the UK. However, there is considerable heterogeneity in the results. The output elasticity of R&D capital is higher for firms in less competitive sectors and in more R&D intensive sectors. Finally, we find that applied R&D, experimental R&D, intramural R&D and R&D from private sources tend to have higher productivity impacts compared with basic R&D, extramural R&D or publicly-funded R&D.