Research Discussion Papers, Bank of Finland
No 28/2013:
Growth through heterogeneous innovations
Ufuk Akcigit ()
and William R. Kerr ()
Abstract: We study how exploration versus exploitation innovations
impact economic growth through a tractable endogenous growth framework that
contains multiple innovation sizes, multi-product firms, and entry/exit.
Firms invest in exploration R&D to acquire new product lines and
exploitation R&D to improve their existing product lines. We model and show
empirically that exploration R&D does not scale as strongly with firm size
as exploitation R&D. The resulting framework conforms to many regularities
regarding innovation and growth differences across the firm size
distribution. We also incorporate patent citations into our theoretical
framework. The framework generates a simple test using patent citations
that indicates that entrants and small firms have relatively higher growth
spillover effects.
Keywords: endogenous growth; innovation; exploration; exploitation; research and development; patents; citations; scientists; entrepreneurs; (follow links to similar papers)
JEL-Codes: L16; O31; O33; O41; (follow links to similar papers)
80 pages, November 22, 2013
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