Explaining differences in the returns to R&D in Argentina: The role of contextual factors and complementarities

ARZA, VALERIA; CIRERA, XAVIER; COLONNA, AGUSTINA; LÓPEZ, EMANUEL

Ciudad Autonoma de Buenos Aires

Seminario; Impulsando la productividad de las empresas en Argentina: determinantes y políticas para crecer en el largo plazo; 2019

Ministerio de Producción y Banco Mundial

Argentina?s private investment in research and developmentis well below that of its peers. One important reason may below and very heterogeneous returns to research and developmentactivities on productivity. This paper uses novelmicrodata to estimate the returns to research and developmentand understand the contextual factors that shape theirheterogeneity. The paper groups these context-based factorsinto knowledge complementary factors (that is, factors thataffect the returns via learning capabilities from externalsources of knowledge) and market complementary factors(factors that act via business capabilities to appropriate thereturns to research and development investments). Thepaper hypothesizes that the effects of contextual factorsdepend on firms? management capabilities and attitudes(innovative capacity), which determine firms? ability to benefitfrom the context. The findings suggest that the returnsare indeed heterogeneous across regions and sectors, andthese results depend on some context-based factors, whichcan boost or depress the returns to R&D. The results haveimportant policy implications, considering the effectivenessof innovation policies, need for adapting to specific regionsand sectors, and maximization of the impact of these factorson the returns to research and development.