Productivity, R&D and Entrepreneurship

How can labour productivity growth be raised in order to safeguard sustainable economic growth? This is the main question of this thesis. Labour productivity growth is the most important engine of economic growth in the OECD, and – in view of an ageing population – it will gain further importance for future prosperity. From this perspective, it is understandable that productivity is pushing the growth agenda in both academic and policymaking circles. If productivity is becoming increasingly important, then understanding differences in labour productivity patterns and its drivers becomes crucial. Predominantly, the role of two factors of labour productivity is considered in this book: research & development (R&D) and entrepreneurship. Although the importance of R&D for labour productivity development is deeply rooted in endogenous growth theory and the empirical literature, on many aspects of R&D both academics and policymakers are still in the dark. This thesis sheds light on a number of frequently asked questions: ‘How important exactly is R&D for productivity growth?’, ‘What determines R&D expenditure within a country?’, ‘Does the continuing internationalisation of R&D have consequences for economic growth in countries?’ and not in the least: ‘How can policy contribute to fostering R&D performance?’ Findings indicate that private, public and foreign R&D capital contribute as much as forty percent to labour productivity growth in the Netherlands. In addition, R&D expenditure is not exogenous and depends on a broad range of factors, such as the structure of the economy, the internationalisation process of R&D and institutional arrangements. Building on these results, the R&D shortfall of the Netherlands and the European Union is disentangled vis-à-vis the OECD and United States, respectively. The impact of entrepreneurship on labour productivity development is even more terra incognita than the role of R&D. Allegedly, entrepreneurship is an important conduit to reap the benefits of knowledge creation, but there are virtually no studies that show a long-run relationship between entrepreneurship and productivity development for an international panel of OECD countries. Empirical results in this book show that entrepreneurship has a stable and significant impact on the development of productivity levels. This thesis therefore provides new evidence of the important role that entrepreneurship and R&D play for our future welfare

Total Factor Productivity and the Role of Entrepreneurship

Total factor productivity of twenty OECD countries for a recent period (1971-2002) is explained using six different models based on the established literature. Traditionally, entrepreneurship is not dealt with in these models. In the present paper it is shown that – when this variable is added - in all models there is a significant influence of entrepreneurship while the remaining effects mainly stay the same. Entrepreneurship is measured as the business ownership rate (number of business owners per workforce) corrected for the level of economic development (GDP per capita)

Total factor productivity and the role of entrepreneurship

The absence of evidence in the scholarly literature for a tested long-term relationship between entrepreneurship and economic growth is at odds with the importance attributed to entrepreneurship in the policy arena. The present paper addresses this absence, introducing entrepreneurship using four different and accepted models explaining the total factor productivity of twenty OECD countries with data for the period 1969–2010. Traditionally, entrepreneurship is not addressed in these models. We show that in all models—as well as a joint one—entrepreneurship has a significant influence while the remaining effects largely stay the same. Entrepreneurship is measured as the business ownership rate (number of business owners per workforce) corrected for the level of economic development (GDP per capita)