Table 12 presents our first set of results. All the regressions in table 12 contain interactions of the industry characteristics with the productivity gap. The first four columns report variants of equation 17 where the R&D and human capital effects enter either in differences or levels. The fifth column tests whether R&D capital should enter in levels or differences. Regression 1 estimates a productivity gap effect (log theta) of 0.039, and an R&D elasticity (log R&D) of 0.078, both of which are significant, while the human capital (log atc) effect is negative and insignificant. The pattern of the interaction terms is interesting. The capital to labour ratio and the human capital ratio have negative but insignificant coefficients. The energy to capital ratio; the R&D to capital ratio; import to output ratio and export to output ratio interactions, all have positive coefficients, but the energy to capital ratio and import to output ratio are insignificant.