In this paper we explore the R&D-innovation-productivity linkage for the Colombian manufacturing industry, paying special attention to the role of human capital. Using data from two firm-level surveys such as the Survey of Development and Technological Innovation (EDIT) and the Annual Manufacturing Survey, we extended the model of Crepon, Duget and Mairesse (hereafter CDM) due to Crepon et al. [1998] by including human capital at the investment decision stage. We implement an instrumental variable methodology to correct the potential endogeneity that may arise when including human capital into the model. Our results suggest that human capital has a causal effect on the research and development (R&D) investment decisions and the innovation behavior of the firm and, finally increasing the labor productivity of the firm. The conclusions of our work highlight the relevance of human capital in the CDM-type of literature and contrast with the relative little importance that this variable has received in this kind of models.
