Measuring the Returns of Research and Development: An Empirical Study of the German Manufacturing Sector over 45 Years
AbstractMotivated by recent statistics that show significant growth in labor productivity, this paper seeks to analyze the relationship between domestic R&D, knowledge stock and productivity dynamics. Time series data of the German manufacturing industry is used to estimate a variable cost function with the stock of knowledge being dependent upon current and past R&D spending. The estimates indicate that 50 percent of the effects of R&D on the knowledge stock appear within four years. However, the rate of return on R&D are shown to be drastically declining; recent rates of return on R&D are estimated to have reached an all-time low spanning the last 45 years. Current yields of R&D are only one third compared to the sixties. In conclusion, though the productivity slowdown of the seventies seems to have been overcome, this is not attributed to R&D investments.
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Bibliographic InfoPaper provided by The German University in Cairo, Faculty of Management Technology in its series Working Papers with number 10.
Length: 24 pages
Date of creation: May 2008
Date of revision:
Productivity; innovation; research; development; technology; productivity slowdown;
Find related papers by JEL classification:
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
- 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-2008-05-31 (All new papers)
- NEP-EFF-2008-05-31 (Efficiency & Productivity)
- NEP-INO-2008-05-31 (Innovation)
- NEP-KNM-2008-05-31 (Knowledge Management & Knowledge Economy)
- NEP-TID-2008-05-31 (Technology & Industrial Dynamics)
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