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Depreciation Estimation, R&D Capital Stock, and North American Manufacturing Productivity Growth

In: Contributions in Memory of Zvi Griliches

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  • Jeffrey Bernstein
  • Theofanis P. Mamuneas

Abstract

This paper estimates R&D depreciation rates for the U.S. and Canadian manufacturing sectors. We find that R&D capital depreciates at a rate of 25 percent in the U.S., and in Canada the rate is 24 percent. Thus R&D capital depreciates at virtually the same rate in both countries. We also estimate similar user costs of R&D capital. This result implies that the marginal returns to R&D are equal in the two countries. Based on the new measures of R&D capital, factor price elasticities are estimated. For U.S. manufacturing a 1 percent increase in the R&D user cost leads to a 0.80 percent reduction in the demand for R&D capital, while for Canada the own R&D elasticity is significantly more inelastic at 0.14 percent. R&D growth contributes to TFP growth. In the U.S., R&D accounts for about 10 percent of annual productivity, while in Canada the contribution is around 6 percent.
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Suggested Citation

  • Jeffrey Bernstein & Theofanis P. Mamuneas, 2010. "Depreciation Estimation, R&D Capital Stock, and North American Manufacturing Productivity Growth," NBER Chapters, in: Contributions in Memory of Zvi Griliches, pages 383-404, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:12240
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    Cited by:

    1. Tim Buyse & Freddy Heylen & Ruben Schoonackers, 2015. "On The Role Of Public Policies And Wage Formation For Private Investment In R&D: A Long-Run Panel Analysis," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 15/911, Ghent University, Faculty of Economics and Business Administration.
    2. Beck, Mathias & Junge, Martin & Kaiser, Ulrich, 2017. "Public Funding and Corporate Innovation," IZA Discussion Papers 11196, Institute of Labor Economics (IZA).
    3. Thomas Strobel, 2012. "New evidence on the sources of EU countries’ productivity growth—industry growth differences from R&D and competition," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 39(3), pages 293-325, August.
    4. Bettina Becker, 2013. "The Determinants of R&D Investment: A Survey of the Empirical Research," Discussion Paper Series 2013_09, Department of Economics, Loughborough University, revised Sep 2013.
    5. Chinloy, Peter & Jiang, Cheng & John, Kose, 2020. "Investment, depreciation and obsolescence of R&D," Journal of Financial Stability, Elsevier, vol. 49(C).
    6. Manzoor Ahmad & Jianghuai Zheng, 2023. "The Cyclical and Nonlinear Impact of R&D and Innovation Activities on Economic Growth in OECD Economies: a New Perspective," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(1), pages 544-593, March.

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