Innovation and productivity in services and manufacturing: The role of ICT

Abstract

Several studies have highlighted information and communications technologies (ICTs) as a driver for firms' innovation and productivity in developed countries. However, the evidence about the impacts of ICTs vis-a-vis other innovation activities on technological and nontechnological innovation and productivity for developing countries is extremely scarce. This scarcity of research is particularly acute for the services sector, especially when it comes to assessing how it fares in comparison with the manufacturing sector. Our research contributes to closing this knowledge gap by estimating a Crépon, Duguet and Mairesse (CDM)-type three-stage model for Uruguayan data. The results show that ICTs play a bigger role for innovation and productivity in services than in manufacturing. At the same time, nontechnological innovations provide a more important contribution to firm productivity in the services sector than in the manufacturing sector.