Innovation Inputs and Outputs in Argentine Manufacturing Firms in Bad times (1998-2001) Innovation Inputs and Outputs in Argentine Manufacturing Firms in Bad times (1998-2001)

This paper aims to learn about the determinants and impacts of innovative activities on manufacturing firms’ productivity performance during 1998-2001 in Argentina, a period characterized by a long stagnation that finally led to the worst crisis in the country’s history. The results show that even in a very hostile scenario, a large number of Argentine manufacturing firms maintained their in house R&D activities (at the same time that they drastically cut their expenditures in embodied and disembodied technologies). More notably, this effort seemingly has had a payoff in terms of innovative outputs, which, in turn, have positively impacted on firms’ productivity levels. In other words, firms carried out and preserved their R&D activities mainly for good microeconomic reasons. Our results also suggest that in a country like Argentina R&D activities are needed to innovate, while technology acquisition defines the magnitude of the innovative output. On the other hand, while R&D needs to be a permanent activity to have positive impacts, firms may temporarily discontinue their technology acquisition expenditures in bad times without necessarily hurting their innovative possibilities. In other words, while learning is a continuous process, technology modernization may be a discrete process. Paper prepared for the 1st GLOBELICS conference, Rio de Janeiro, 2-6 November 2003