This study explores the channels through which technological investments affect productivity performance of industrialized economies. Using a Stochastic Frontier Model (SFM) we estimate the productivity effects of R&D and ICT for a large sample of OECD industries between 1973 and 2007, identifying four channels of transmission: input accumulation, technological change, technical efficiency and spillovers. Our results show that ICT has been particularly effective in reducing production inefficiency and in generating inter-industry spillovers, while R&D has raised the rate of technical change and favoured knowledge spillovers within sectors. We also quantify the contribution of technological investments to output and TFP growth documenting that R&D and ICT accounted for almost 95% of TFP growth in the OECD area.

Keywords: Research & Development; Information and Communication Technology; Productivity; Stochastic frontier models

JEL classification: O14, O32, O47

(Published in Research Policy, 2018, 47 (9), 1842-1852: https://doi.org/10.1016/j.respol.2018.06.013)