Knowledge spillovers and productivity in Italian manufacturing firms

In this paper we analyze the relationship between R&D spillovers and productivity. To this aim, we use data from 9th and 10th “Indagine sulle imprese manifatturiere” (IMM) surveys carried out by Capitalia. These two surveys, which cover the period 2001-2006, contain both quantitative and qualitative information on a large sample of Italian firms. The main contribution of this paper is to stress the importance of replacing the traditional high-tech/low-tech industries with a classification more suitable to capture the nature of new technologies. Indeed, the industry data are summarised in a particular taxonomy, according to Pavitt methodology: Supplier dominated, Scale intensive, Specialized suppliers and Science based. This taxonomy accounts for differences in the knowledge intensity and innovative activities within sectors. The estimation method takes into account the endogeneity of regressors and simultaneity issue regarding firms’ decision to invest in R&D. The results provide evidence of higher productivity in R&D intensive industries and this can be interpreted as the signal of the relevance of spillover effects.