R&ampD, Patenting and Growth

This paper uses panel regression techniques to assess the policy determinants of private sector innovativeactivity – proxied by R&ampD expenditure and the number of new patents – across 19 OECD countries. Therelationship between innovation indicators and multifactor productivity (MFP) growth is also examinedwith a particular focus on the role of public policies in influencing the returns to new knowledge. Theresults establish an empirical link between R&ampD and patenting, as well as between these measures ofinnovation intensity and MFP growth. Innovation-specific policies such as R&ampD tax incentives, directgovernment support and patent rights are found to be successful in encouraging the innovative activitiesassociated with higher productivity growth. However, direct empirical evidence of the positive effects ofthese policies on productivity is less forthcoming. A pervasive theme from the analysis is the importance ofcoupling policies aimed at encouraging innovation or technological adoption with well designedframework policies that allow knowledge spillovers to proliferate. In particular, the settings of frameworkpolicies relating to product market regulation, openness to trade and debtor protection in bankruptcyprovisions are found to be important for the diffusion of new technologies.