Is R&D an antidote to the economic crisis?

Laurent Cousin

An October 2009 strategic newswatch from the French Centre d'Analyses Stratégiques presents an analysis entitled “Corporate Investment in R & D and Economic Cycles in OECD countries.”

Noting the current low level of corporate R&D investment in Europe as well as the United State, the authors of the report analyze the link between R & D expenditure and production expenditure. They in particular show that companies that maintain their R & D efforts in a recession limit the long-term negative effects of economic crises.

Among the points made in the report:

-  R & D and innovation activities over the past 20 years has tended to be procyclical in the OECD zone

-  R & D evolutions in an economic cycle can differ according to country

-  R & D expenditure and investments in production activities appear to be complementary during an economic cycle

-  Economic cycle and investment in R & D: a procyclicity of varying intensity depending on the channels of transmission

The Centre d'Analyses Stratégiques replaced the Commissariat Général du Plan in 2006 and works directly under the Prime Minister’s office. Its aim is to provide the government with information that will enable it to orient its strategy in economic, social, environmental and cultural matters.