The purpose of this study is to explore the relationship between competitiveness, scale and R&D with the held of OECD databases and the ongoing work in the OECD on embodied technology flows. The analysis is based on data for ten OECD counteies and 22 industries in 1985. The results suggest that both direct R&D and R&D acquired indirectly through purchase of capital goods and intermediates have a significant, positive impact on competitiveness. Indirrect R&D from domestic sources appears to be more conducive to competitiveness than indirect R&D from aboard. On average the total (direct and indirect) impact of a given investment in R&D on exports is about twice as large as the impact of an investment of similar size in physical capital. The impact of R&D investment appears to be especially high in large countries and R&D intensive industries.
