R&amp;D expenditure in G7 countries and the implications for endogenous fluctuations and growth

Wälde, Klaus; Woitek, Ulrich

doi:10.1016/j.econlet.2003.07.014

Cited by 113 publications

(70 citation statements)

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“…This effect however is not statistically significant. 21 Walde and Woitek (2004) find that the level of R&D expenditure tends to be procyclical in the G7 countries between 1973 and 2000. (See also Walde, 2004.)…”

Section: Amplification Channelmentioning

confidence: 99%

Volatility and Growth: Credit Constraints and Productivity-Enhancing Investment

et al. 2005

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We examine how credit constraints affect the cyclical behavior of productivity-enhancing investment and thereby volatility and growth. We first develop a simple growth model where firms engage in two types of investment: a short-term one and a long-term productivity-enhancing one. Because it takes longer to complete, long-term investment has a relatively less procyclical return but also a higher liquidity risk. Under complete financial markets, long-term investment is countercyclical, thus mitigating volatility. But when firms face tight credit constraints, long-term investment turns procyclical, thus amplifying volatility. Tighter credit therefore leads to both higher aggregate volatility and lower mean growth for a given total investment rate. We next confront the model with a panel of countries over the period 1960-2000 and find that a lower degree of financial development predicts a higher sensitivity of both the composition of investment and mean growth to exogenous shocks, as well as a stronger negative effect of volatility on growth.

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Section: Amplification Channelmentioning

confidence: 99%

Volatility and Growth: Credit Constraints and Productivity-Enhancing Investment

et al. 2005

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“…In particular, Wälde and Woitek (2004) study the cyclical behaviour of R&D expenditures by business enterprises in G7 countries from 1973 to 2000 and they find evidence of procyclical rather than countercyclical R&D spending. Similarly, Domadenik, Prašnikar and Svejnar (2008) using data on more than 150 of the largest 4 A firm undertaking R&D investment is more likely to default when the research project fails so the value of the project as a collateral is riskier and harder acceptable than if the firm offers a real estate to a lender as a collateral.…”

Section: Introductionmentioning

confidence: 99%

Financial Constraints and the Cyclicality of R&D Investment: Evidence from Slovenia

Bovha-Padilla¹,

Damijan

Konings

2009

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractThis paper uses firm level data to show how R&D investment responds to shocks in sales growth in credit constrained firms. A credit constrained firm has to rely on its cash flow and borrowing capacity to survive its short-run liquidity shock when hit by a negative shock. This reduces the possibility for further borrowing in order to invest in non-tangible long term R&D, hence a negative shock should hit R&D investments more in firms that are more credit constrained.We find that in financially constrained firms sales growth is positively associated with R&D investment, suggesting procyclical behavior of R&D investment in credit constrained firms. In contrast, we find that in firms with no financial constraints R&D investment is negatively correlated with sales growth, suggesting countercyclical behavior of R&D, consistent with the Schumpeterian idea of restructuring.Furthermore, we find that the firm level response in R&D investment to sales growth is stronger in firms that are more financially dependent, such as firms that are no part of a multinational, firms not receiving subsidies or firms with less collateral.

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“…With few exceptions (Nickell et al, 2001;Francois and Lloyd-Ellis, 2008), the procyclicality of R&D and innovation has been observed over various business cycles and for a variety of countries (e.g. Griliches, 1990;Broda and Weinstein, 2010;Barlevy, 2002Barlevy, , 2007Comin and Gertler, 2006;Fatas, 2000;Francois and Lloyd-Ellis, 2008;Rafferty, 2003;Walde and Woitek, 2004).…”

Section: What To Expect Of Innovation As a Results Of The Crises?mentioning

confidence: 99%

Innovation in the crisis and beyond

2012

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Innovation in the crisis and beyond This chapter provides an overview of the impact of the global financial and public debt crises on innovation. The global financial crisis negatively affected business innovation and R&D. Enterprise creation seems not to have recovered and business bankruptcies have increased significantly. The chapter shows substantial differences in performance across countries, sectors, businesses and types of innovation. Future trends in innovation in most developed countries are uncertain. In particular, long-term damages to innovation systems occur when long-term skilled unemployment rises and public support of innovation is weakened. Finally, many countries have implemented policies to respond to the crisis that include innovation, although budgetary constraints have put pressure on governmental support of innovation.The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. 2. Emerging countries in Asia, including Korea and China, have used the opportunity to demonstrate their strengths in innovation. They continue to outperform developed countries, relying on structural strengths that helped them face the crisis. The crisis has also rewarded large high-technology innovating firms; markets for these innovations will continue to be strong.3. The crisis revealed the pre-crisis weaknesses of some countries (e.g. Greece and some southern and eastern European countries), sectors (e.g. the automobile sector) and types of innovations (e.g. financial innovations). Future prospects for innovation in these countries and industries will greatly depend on broader economic restructuring, which does not place innovation at the top of the immediate policy agenda although innovation will have to play a role in driving growth in the future. Many OECD countries (northern Europe, Japan and the United States) have recoveredsomewhat. Their future innovation performance remains uncertain; it will depend on macroeconomic conditions but also on their ability to maintain innovation as a policy priority.5. To date there is no evidence of a reallocation of resources towards more innovative businesses. While there have been more bankruptcies than before the crisis, new business entry has also been significantly depressed. Venture capital investment, which can help support entry of innovative firms, has yet to recover to its pre-crisis level.6. Uncertainties over market conditions in the currently unstable global macroeconomic situation have inhibited investment in innovation. Large companies and banks are engaged in a process of deleveraging and hoarding that is detrimental to all types of investment, including innovation. Financing constraints have also increased but are not the main explanation to date for the weakening of innovation activities. Experimenting further with these...

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R&D expenditure in G7 countries and the implications for endogenous fluctuations and growth

Cited by 113 publications

References 18 publications

Volatility and Growth: Credit Constraints and Productivity-Enhancing Investment

Volatility and Growth: Credit Constraints and Productivity-Enhancing Investment

Financial Constraints and the Cyclicality of R&D Investment: Evidence from Slovenia

Innovation in the crisis and beyond

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