Innovative Slowdown, Productivity Reversal? - Estimating the Impact of R&D on Technological Change
AbstractMotivated by the recent reversal in labor productivity growth, this paper is analyzing the relationship between R&D expenditures and productivity. Time series data of the German manufacturing industry is used to estimate a variable cost function, with the stock of knowledge being modeled as a quasifix input. The estimates show that the extracted yield is non-constant over the observation period. Current rates of return on own R&D are found to be significantly lower than during the sixties, and no signs of a significant reversal are detected. The long-term elasticity of production costs with respect to R&D reduced from –0.04 to just -0.02, the elasticity of labor demand from –0.40 to -0.15. Since the growth rates of research expenditures were also declining, the contribution of R&D to productivity growth is currently stagnating at the lowest level since 1960.
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Bibliographic InfoPaper provided by Universitaet Augsburg, Institute for Economics in its series Discussion Paper Series with number 218.
Date of creation: Mar 2002
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technology; innovation; research and development; productivity;
Find related papers by JEL classification:
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-03-14 (All new papers)
- NEP-DEV-2002-03-14 (Development)
- NEP-INO-2002-03-14 (Innovation)
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