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R&D Investment and International Productivity Differences

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Frank R. Lichtenberg

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Abstract

This paper extends previous research on the effect of investment on labor productivity at the country level by accounting for investment in R&D, as well as for investment in fixed and human capital. Privately-funded R&D investment is found to have a significant positive effect on productivity. Moreover, this effect appears to be quite large. The estimated social (national) rate of return to private R&D investment is about seven times as large as the return to investment in equipment and structures. The elasticity of GNP with respect to the privately-funded research capital stock is about 7 %--about 1(3 as large as the physical-capital elasticity (whose estimate is substantially reduced when R&D is accounted for). These findings do not support the hypothesis that there arecomplete, or at least instantaneous, international R&D spillovers. The social marginal product of government-funded research capital appears to be much lower than that of private research capital.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4161.

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Date of creation: Sep 1993
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Handle: RePEc:nbr:nberwo:4161

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Find related papers by JEL classification:
H5 - Public Economics - - National Government Expenditures and Related Policies
E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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  1. Jacques Mairesse & Mohamed Sassenou, 1991. "R&D Productivity: A Survey of Econometric Studies at the Firm Level," NBER Working Papers 3666, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Paul M. Romer, 1987. "Crazy Explanations for the Productivity Slowdown," NBER Chapters, in: NBER Macroeconomics Annual 1987, Volume 2, pages 163-210 National Bureau of Economic Research, Inc. [Downloadable!]
  3. Bronwyn H. Hall., 1992. "Investment and Research and Development at the Firm Level: Does the Source of Financing Matter?," Economics Working Papers 92-194, University of California at Berkeley.
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  4. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May. [Downloadable!] (restricted)
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  5. Benhabib, Jess & Spiegel, Mark M., 1991. "Growth Accounting with Physical and Human Capital Accumulation," Working Papers 91-66, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
  6. Lichtenberg, Frank R, 1988. "The Private R&D Investment Response to Federal Design and Technical Competitions," American Economic Review, American Economic Association, vol. 78(3), pages 550-59, June. [Downloadable!] (restricted)
  7. Charles P. Himmelberg & Bruce C. Petersen, 1991. "R&D and internal finance: a panel study of small firms in high-tech industries," Working Paper Series, Macroeconomic Issues 91-25, Federal Reserve Bank of Chicago.
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  8. De Long, J Bradford & Summers, Lawrence H, 1991. "Equipment Investment and Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 445-502, May. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jens Krueger & Uwe Cantner & Horst Hanusch, 1998. "Explaining International Productivity Differences," Discussion Paper Series 179, Universitaet Augsburg, Institute for Economics. [Downloadable!]
  2. Yuen Ping Ho & Poh Kam Wong & Mun Heng Toh, 2005. "The Impact of R&D on the Singapore Economy:An Empirical Evaluation," Macroeconomics 0508003, EconWPA. [Downloadable!]
    Other versions:
  3. Hugo Erken & Piet Donselaar & Roy Thurik, . "Total Factor Productivity and the Role of Entrepreneurship," Tinbergen Institute Discussion Papers 09-034/3, Tinbergen Institute. [Downloadable!]
    Other versions:
  4. Nuno Torres & Oscar Afonso, 2008. "Re-evaluating the impact of natural resources on economic growth," FEP Working Papers 278, Universidade do Porto, Faculdade de Economia do Porto. [Downloadable!]
  5. Angel de la Fuente, 2002. "Convergence across countries and regions: theory and empirics," UFAE and IAE Working Papers 555.02, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
    Other versions:
  6. Stryszowski, Piotr, 2006. "Intellectual property rights, globalization and growth," Discussion Paper 76, Tilburg University, Center for Economic Research. [Downloadable!]
  7. Jonathan Eaton & Samuel Kortum, 1994. "International Patenting and Technology Diffusion," NBER Working Papers 4931, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  8. Steve Dowrick, 2003. "Ideas and Education: Level or Growth Effects?," NBER Working Papers 9709, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Keller, Wolfgang, 2001. "Geographic Localization of International Technology Diffusion," CEPR Discussion Papers 2706, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  10. Dominique Guellec & Bruno Van Pottelsberghe, 2004. "From R&D to Productivity Growth: Do the Institutional Settings and the Source of Funds of R&D Matter?," Working Papers CEB 04-010.RS, Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB). [Downloadable!]
    Other versions:
  11. Jonathan Eaton & Samuel Kortum, 1995. "Engines of Growth: Domestic and Foreign Sources of Innovation," NBER Working Papers 5207, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  12. Razzak, Weshah & Stillman, Steve & Johnson, Robin, 2005. "Has New Zealand benefited from its investments in research & development?," MPRA Paper 1887, University Library of Munich, Germany. [Downloadable!]
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  13. Jonathan Temple, 1995. "Testing the augmented Solow Model," Economics Papers 18 & 106., Economics Group, Nuffield College, University of Oxford. [Downloadable!]
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  14. Lederman, Daniel & Maloney, William F., 2003. "Research and development (R&D) and development," Policy Research Working Paper Series 3024, The World Bank. [Downloadable!]
  15. Paloma López-García & Sergio Puente & Ángel Luis Gómez, 2007. "Firm productivity dynamics in Spain," Banco de España Working Papers 0739, Banco de España. [Downloadable!]
  16. Peter Howitt, 2004. "Endogenous Growth, Productivity and Economic Policy: A Progress Report," International Productivity Monitor, Centre for the Study of Living Standards, vol. 8, pages 3-15, Spring. [Downloadable!]
  17. Peter Howitt, 2000. "Endogenous Growth and Cross-Country Income Differences," American Economic Review, American Economic Association, vol. 90(4), pages 829-846, September. [Downloadable!] (restricted)
  18. Jonathan Eaton & Samuel Kortum, 1997. "Trade in Ideas: Patenting and Productivity in the OECD," NBER Working Papers 5049, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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