Innovative Sales, R&D And Total Innovation Expenditures: Panel Evidence On Their Dynamics

This paper studies the dynamic relationship between input and output of innovation in Dutch manufacturing using an unbalanced panel of enterprise data from five waves of the Com-munity Innovation Survey during 1994-2004. The authors estimate by maximum likelihood a dynamic panel data bivariate to bit with double-index sample selection accounting for individual effects. They find persistence of innovation input and innovation output, a lag effect of the former on the latter and a feedback effect of the latter on the former. The lag effect remains significant in the high-tech sector even after four years. Firm and industry effects are also important.