R&D, innovation, and growth: evidence from four manufacturing sectors in OECD countries

This paper provides an empirical analysis of the relationship between R&D intensity, rate of innovation and growth rate of output in four manufacturing sectors from 17 OECD countries. The findings suggest that the knowledge stock is the main determinant of innovation in all four manufacturing sectors and that R&D intensity increases the rate of innovation in the chemicals, electrical and electronics, and drugs and medicine sectors. In addition, the rate of innovation has a positive effect on the growth rate of output in all sectors. These findings lend strong support to non-scale endogenous growth theories. Copyright 2007 , Oxford University Press.