Persistence and economic efforts of technological innovations: a dynamic and sequential analysis of Uruguayan manufacturing firms

This paper analyzes the long-term relationship between research and development (R&D), innovations and productivity in 400 Uruguayan manufacturing firms during the period 2001-2009 based on a modified version of the structural model of Crepon, Duguet and Mairesse. The paper also analyzes thoroughly the decision of these firms to engage in R&D activities by using a novel categorical dependent variable, which takes three values: non-performance R&D activities, occasional performance or continuous performance over the period. Furthermore, the study investigates whether these manufacturing firms innovate persistently or discontinuously over the period. The results suggest a positive link between the intensity of R&D activities and the generation of product and process innovations. They also indicate that innovation probability is temporally persistent at the firm-level only for product innovations. Finally, the empirical findings reveal that these technological innovations have a positive effect on firm's productivity.