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Building the Knowledge Stock: Lags, Depreciation, and Uncertainty in R&D Investment and Link with Productivity Growth

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  • Roberto Esposti
  • Pierpaolo Pierani

Abstract

The search for an appropriate methodology to investigate the relation between R&D investment, knowledge stock and productivity growth is the main purpose of the paper. In analogy with physical assets, we present a model of knowledge capital formation which allows the calculation of the relevant user cost, as well. The proposed model accumulates R&D investment based on a stochastic gestation lag and a geometric depreciation of the stock. The basic parameters underlying the lag structure differ according to the types of research expenditure. The approach is applied to public R&D investment in Italian agriculture; the results provide interesting information about the economic structure of public research effort in Italian agriculture and plausible estimates of its internal rate of return. Copyright Kluwer Academic Publishers 2003

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  • Roberto Esposti & Pierpaolo Pierani, 2003. "Building the Knowledge Stock: Lags, Depreciation, and Uncertainty in R&D Investment and Link with Productivity Growth," Journal of Productivity Analysis, Springer, vol. 19(1), pages 33-58, January.
    • Handle: RePEc:kap:jproda:v:19:y:2003:i:1:p:33-58
    DOI: 10.1023/A:1021818019626
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    Cited by:

    1. Wang, Shanchao & Alston, Julian M. & Pardey, Philip G., 2023. "R&D Lags in Economic Models," Staff Papers 330085, University of Minnesota, Department of Applied Economics.
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    3. Sulser, Timothy & Wiebe, Keith D. & Dunston, Shahnila & Cenacchi, Nicola & Nin-Pratt, Alejandro & Mason-D’Croz, Daniel & Robertson, Richard D. & Willenbockel, Dirk & Rosegrant, Mark W., 2021. "Climate change and hunger: Estimating costs of adaptation in the agrifood system," Food policy reports 9780896294165, International Food Policy Research Institute (IFPRI).
    4. Mason-D'Croz, Daniel & Sulser, Timothy B. & Wiebe, Keith & Rosegrant, Mark W. & Lowder, Sarah K. & Nin-Pratt, Alejandro & Willenbockel, Dirk & Robinson, Sherman & Zhu, Tingju & Cenacchi, Nicola & Duns, 2019. "Agricultural investments and hunger in Africa modeling potential contributions to SDG2 – Zero Hunger," World Development, Elsevier, vol. 116(C), pages 38-53.
    5. Jurgen Bitzer & Andreas Stephan, 2007. "A Schumpeter-inspired approach to the construction of R&D capital stocks," Applied Economics, Taylor & Francis Journals, vol. 39(2), pages 179-189.
    6. Esposti, Roberto & Pierani, Pierpaolo, 2008. "Price-induced technical progress in Italian agriculture," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 89(4).
    7. Nin-Pratt, Alejandro & Falconi, César A., 2018. "The agricultural R&D investment gap in Latin America and the Caribbean," IFPRI discussion papers 1749, International Food Policy Research Institute (IFPRI).
    8. Mika Maliranta, 2005. "R&D, International Trade and Creative Destruction—Empirical Findings from Finnish Manufacturing Industries," Journal of Industry, Competition and Trade, Springer, vol. 5(1), pages 27-58, January.
    9. Binlei Gong, 2020. "New Growth Accounting," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(2), pages 641-661, March.
    10. Michael A. Verba, 2022. "Growth and innovation in the presence of knowledge and R&D accumulation dynamics," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 31(6), pages 485-510, August.
    11. Gaétan de Rassenfosse & Adam B. Jaffe, 2017. "Econometric Evidence on the R&D Depreciation Rate," NBER Working Papers 23072, National Bureau of Economic Research, Inc.
    12. Sirio Cividino & Gianluca Egidi & Ilaria Zambon & Andrea Colantoni, 2019. "Evaluating the Degree of Uncertainty of Research Activities in Industry 4.0," Future Internet, MDPI, vol. 11(9), pages 1-21, September.
    13. Cristian Barra & Nazzareno Ruggiero, 2023. "Quality of Government and Types of Innovation—Empirical Evidence for Italian Manufacturing Firms," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 1749-1789, June.
    14. Alejandro Nin Pratt & Eduardo Magalhaes, 2018. "Revisiting Rates of Return to Agricultural R&D Investment," Working Papers id:12723, eSocialSciences.
    15. Octavian Åžerban, 2020. "From Endogenous Growth Theory to Knowledge Economy Pyramid - Comparative Analysis of Knowledge as an Endogenous Factor of Development," Book chapters-LUMEN Proceedings, in: Marcin Waldemar STANIEWSKI & Valentina VASILE & Adriana Grigorescu (ed.), International Conference Innovative Business Management & Global Entrepreneurship (IBMAGE 2020), edition 1, volume 14, chapter 9, pages 108-128, Editura Lumen.
    16. Nin-Pratt, Alejandro, 2016. "Comparing apples to apples: A new indicator of research and development investment intensity in agriculture:," IFPRI discussion papers 1559, International Food Policy Research Institute (IFPRI).
    17. Okunade, Albert A., 2004. "Concepts, measures, and models of technology and technical progress in medical care and health economics," The Quarterly Review of Economics and Finance, Elsevier, vol. 44(3), pages 363-368, July.
    18. Chan-Yuan Wong & Kim-Leng Goh, 2012. "The pathway of development: science and technology of NIEs and selected Asian emerging economies," Scientometrics, Springer;Akadémiai Kiadó, vol. 92(3), pages 523-548, September.
    19. Benfica, Rui, 2022. "Agricultural R&D investments and development goals in sub-Saharan Africa: Assessing prioritisation of value chains in Senegal," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 17(2), June.
    20. Maliranta, Mika & Rouvinen, Petri, 2003. "Productivity Effects of ICT in Finnish Business," Discussion Papers 852, The Research Institute of the Finnish Economy.
    21. de Rassenfosse, Gaétan & Jaffe, Adam B., 2018. "Econometric evidence on the depreciation of innovations," European Economic Review, Elsevier, vol. 101(C), pages 625-642.

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