In this article I demonstrate the relationship between research and development expenditure, and rm productivity. Using … data envelopment, I construct a measure of the firm-level distance from the industry-wide productivity frontier. Firms ex …-ante further from the productivity frontier invest more in R&D. On average, a 1% larger distance from the frontier causes a 0 …

The persistent downturn in productivity growth during the past two decades has cast doubts on global economic prospects …. Frequently cited causes include a dearth of productivity-enhancing ideas, an aging population, and a shift to service …-based economies. While we acknowledge the role each of these has played, our research shows that productivity is fundamentally driven …