The Impact of R&D and ICT Investment on Innovation and Productivity in Chilean Firms

This technical note examines the impact of information and communication technology (ICT) and research and development (R&D) investment on innovation and productivity in Chilean firms, in particular those in the services industry. It provides new evidence on this topic for a developing country and also for firms in the services sector, areas in which existing evidence is limited. The findings for services industries are relevant because this sector in Latin America has a large productivity gap when compared to the sector in developed countries. The results show that ICT contributes positively to innovation and productivity in both the total sample and the services industry. They also confirm that ICT investment increases productivity directly and not only through innovation, suggesting how hard is to disentangle the indirect and direct effects of ICT investment on productivity.