Explaining Differences in the Returns to R&D in Argentina - The Role of Contextual Factors

Jul 19, 2026

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Argentinean firms’ investments in R&D are far below regional peers, potentially due to low and uneven payoffs. Using novel microdata, the study estimates R&D returns and evaluates how contextual factors shape their heterogeneity. Results show returns are genuinely heterogeneous and vary with market-context conditions, including uncertainty, and knowledge-context conditions, including knowledge spillovers. Recognizing context-dependent heterogeneity is essential to design innovation policies that raise private R&D returns.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages68

Reading Time2 h 51 min

Abstract

Motivation

Contextual factors and research aim

Public Disc losure Authorized Economics of Innovation and New Technology Pub lic Disc losure Authorized Explaining differences in the returns to R&D in Argentina. The role of contextual factors . | Journal: | Economics of Innovation and New Technology | | --- | --- | | Manuscript ID | GEIN-2021-0268.R3 | | Manuscript Type: | Research Article | | Keywords: | productivity, R&D, Argentina, knowledge context, market context | | | | URL: [http://mc.manuscriptcentral.com/gein GEIN-peerreview@journals.tandf.co.uk](http://mc.manuscriptcentral.com/gein GEIN-peerreview@journals.tandf.co.uk) Page 1 of 67 Economics of Innovation and New Technology 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 Explaining differences in the returns to R&D in Argentina. The role of contextual factors Abstract Argentinean firms’investments in R&D are well below its regional peers. One potential explanation for this fact is the existence of low and heterogeneous returns for these investments. This paper uses novel microdata to estimate the returns to R&D and analyse the role of contextual factors in shaping its heterogeneity. The findings confirm that returns are indeed heterogeneous and depend on some important factors related to the market context, such as measures of uncertainty; and the knowledge context, such as knowledge spillovers. Acknowledging that heterogeneity of returns depends on firms’ context is crucial for designing innovation policies to boost private R&D returns. Keywords: productivity; R&D; Argentina; knowledge context; market context JEL codes: L25; O25; O33; O54 1 URL: [http://mc.manuscriptcentral.com/gein GEIN-peerreview@journals.tandf.co.uk](http://mc.manuscriptcentral.com/gein GEIN-peerreview@journals.tandf.co.uk) Economics of Innovation and New Technology Page 2 of 67 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 Explaining differences in the returns to R&D in Argentina. The role of contextual factors 1. Motivation Investments in knowledge capital and other innovation related activities are considered a key enabling factor in the catching up process; both in terms of climbing the technological ladder and promoting the processes of reallocation and “creative destruction” (Schumpeter 1942; Griffith, Redding, and Reenen 2004) . Since the early 1990s there has been a wide consensus in the economic literature on the link between investments in innovation, productivity and economic growth. Evidence on this link has been produced at a macro (e.g. Teixeira and Queirós 2016), sectoral (e.g. Strobel 2012) and micro (e.g. Crespi and Zuniga 2012) levels. The creation of new knowledge involved in innovation is a cumulative process, and past performance has an important influence on firms’ knowledge efforts and subsequent yields. In addition, heterogeneity could exist in the effectiveness in which investments in innovation are converted into productivity or sales growth – its returns (Fung 2004; Marín and Petralia 2018; Ngai and Samaniego 2011) . For instance, consider wine production in Cuyo region, the traditional location for wine production in Argentina, compared to Patagonia region, where new ventures are emerging, and some experimentation is taking place. It is likely that one peso invested in research and development (R&D) may not enhance productivity equally in both regions since knowledge and infrastructure conditions, access to inputs, and the market context are different; creating distinct opportunities in complementing private ef

FAQs

Why do returns to R&D differ across Argentine firms according to the document?

Returns are heterogeneous and depend on contextual conditions. The paper links differences to market uncertainty and to knowledge-context factors such as knowledge spillovers.

What does the paper use to estimate R&D returns?

It uses novel microdata to estimate the returns to R&D and then analyze the role of contextual factors in generating that heterogeneity.

How can understanding contextual factors improve innovation policy?

Policies should target not only increasing R&D investment but also the returns to those investments. Since returns depend on firm context, incentives will fail if policymakers cannot influence payoff-determining conditions.

Jul 19, 2026

Upload by Violet