Centre for Economic Performance (CEP)

Abstract for:

Corporate R&D and Productivity in Germany and the United Kingdom

Stephen  Bond,  Dietmar  Harhoff,  John  Van Reenen,  December 2003
Paper No' CEPDP0599: Full paper (pdf)
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Keywords: Corporate governance; R&D, productivity, financial constraints, panel data

JEL Classification: L13; O31; C25

Is hard copy/paper copy available? YES - Paper Copy Still In Print.
This Paper is published under the following series: CEP Discussion Papers
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This paper analyzes differences in R&D spending and in the impact of R&D on productivity between German and UK firms. We confirm that German firms spend significantly larger amounts on R&D than their UK counterparts, even after controlling for firm size and industry effects. Using a dynamic production function approach, we find that the R&D output elasticity is approximately the same in both countries, implying a much larger rate of return on R&D in the UK than in Germany. We discuss several explanations for this result.