Innovation and productivity in services and manufacturing firms: the case of Peru

This article analyses the relationship between investment decisions, investment intensity, innovation outcomes and labour productivity for a sample of services and manufacturing firms from Peru in 2004, on the basis of an adjusted CDM model (Crepon, Duguet and Mairesse, 1998). The estimates of the model indicate that firm size was a key factor in the investment decision. Firm size and investment intensity were also key determinants in increasing, respectively, the probability of producing technological and non-technological innovation outputs and labour productivity across services and manufacturing sectors. By contrast, public financial support seemed to have a stronger effect in terms of investment inducement than in terms of investment intensity in services and low-tech manufacturing firms. These results suggest that horizontal science, technology and innovation (STI) policies that encourage firms to increase STI investment intensity may well produce some gains in firms' labour productivity.