UNU-MERIT Working Papers Series
Innovation and productivity
Bronwyn Hall #2011-028What do we know about the relationship between innovation and
productivity among firms? The workhorse model of this relationship is
presented and the implications of analysis using this model and the
usually available data on product and process innovation are derived.
The recent empirical evidence on the relationship between innovation and
productivity in firms is then surveyed. The conclusion is that there are
substantial positive impacts of product innovation on revenue
productivity, but that the impact of process innovation is more
ambiguous, suggesting some market power on the part of the firms being
analyzed.
JEL: O30, D20, L20
Keywords: innovation, TFP, revenue productivity, cross-country
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