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.

---

December 2003     Paper Number CEPDP0599

Download PDF - Corporate R&D and Productivity in Germany and the United Kingdom

This CEP discussion paper is published under the centre's Growth programme.