Productivity and R&D at the Firm Level in French Manufacturing

In a companion study to that of Griliches and Mairesse for the United States, we have investigated the relationship between output, labor, and physical and R&D capital during the 1972-1977 period for a sample of 182 R&D performing firms in the French nnufacturing industries. Our results are quite comparable to those obtained for the U.S. The relationship between firm productivity and R&D appears both strong and robust in the cross-sectional dimension of the data; it is less so in the time dimension. However, the within-firm estimates are still significant and of a likely order of magnitude.In this respect, they are more satisfactory than the U.S. ones. We show that this is largely due to a better measurement of the variables: (1) the fact that we can use a value-added measure of output instead of sales (or equivalently that we include materials among the factors of the production function); (2) the fact that we can correct the measures of labor, physical capital and output for the double counting or expensing out of the labor, capital and materials components of R&D expenditures.