Effects of innovative effort on different components of productivity: Evidence for the Colombian manufacturing industry

Abstract

This document focuses on estimating the effect of innovative effort on productivity when it is disaggregated in terms of productive technical efficiency and other components associated with demand and unit input costs. These components are developed and estimated from panel data. I show that demand characteristics are the elements where the innovative effort affects in greater proportion. Thus, if the objective is to increase physical productivity, a strategy would be to increase by 1% amounts invested in internal R& D, technology transfer, and technical assistance, and consulting. Thus, the physical productivity (TFPQ, as named in productivity studies) would increase between 0.04% and 0.07%. The increase of amounts in the marketing of innovations, internal R & D, and the technical assistance, and consulting would increase the characteristics of demand between 0.40% and 0.43%; finally, increasing the acquisition of machinery and equipment by 1% for the promotion of innovation would generate a reduction in input costs between 0.07% and 0.05%. These results will be analyzed from the annual manufacturing survey (EAM, as it is named in Colombia) between 2003 and 2012 and the surveys of innovation and technological development for the manufacturing industry (EDIT, as it is named in Colombia) provided by the DANE between 2008 and 2012.