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Productivity Growth and R&D Expenditure in Taiwan's Manufacturing Firms

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  • Jiann-Chyuan Wang
  • Kuen-Hung Tsai
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    Abstract

    This study sets out to estimate the impact of R&D on productivity within the private sector, with further analysis of the different impacts of R&D in high-tech and conventional firms. The study also aims to estimate the rates of return on R&D investment and total factor productivity at firm level. Based on a sample of 136 large manufacturing firms listed on the Taiwan Stock Exchange over the period 1994-2000, our findings suggest that Taiwan's R&D investment had a significant impact on firm productivity growth, with output elasticity standing at around 0.18. When the sample is divided into high-tech and conventional firms, the R&D output elasticity in high-tech firms is significantly greater than that of conventional firms. In addition, the average rate of return in high-tech firms is much larger than that estimated in other industries. Our empirical findings further show that although there was a dramatic decline in TFP in 1998 for all selected industries, this nevertheless started to climb again in 1999.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9724.

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    Date of creation: May 2003
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    Publication status: published as Ito, Takatoshi and Andrew K. Rose (eds.) Growth and productivity in East Asia, NBER--East Asia Seminar on Economics, vol. 13. Chicago and London: University of Chicago Press, 2003.
    Handle: RePEc:nbr:nberwo:9724

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    1. Bronwyn H. Hall & Jacques Mairesse, 1992. "Exploring the Relationship Between R&D and Productivity in French Manufacturing Firms," NBER Working Papers 3956, National Bureau of Economic Research, Inc.
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    4. Goto, Akira & Suzuki, Kazuyuki, 1989. "R&D Capital, Rate of Return on R&D Investment and Spillover of R&D in Japanese Manufacturing Industries," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 555-64, November.
    5. Zvi Griliches, 1998. "Patent Statistics as Economic Indicators: A Survey," NBER Chapters, National Bureau of Economic Research, Inc, in: R&D and Productivity: The Econometric Evidence, pages 287-343 National Bureau of Economic Research, Inc.
    6. Zvi Griliches & Jacques Mairesse, 1981. "Productivity and R and D at the Firm Level," NBER Working Papers 0826, National Bureau of Economic Research, Inc.
    7. Agénor,Pierre-Richard & Miller,Marcus & Vines,David & Weber,Axel (ed.), 1999. "The Asian Financial Crisis," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521770804.
    8. Ariel Pakes & Mark Schankerman, 1984. "The Rate of Obsolescence of Patents, Research Gestation Lags, and the Private Rate of Return to Research Resources," NBER Chapters, National Bureau of Economic Research, Inc, in: R & D, Patents, and Productivity, pages 73-88 National Bureau of Economic Research, Inc.
    9. Mansfield, Edwin, 1969. "Industrial Research and Development: Characteristics, Costs, and Diffusion of Results," American Economic Review, American Economic Association, American Economic Association, vol. 59(2), pages 65-71, May.
    10. John Bound & Clint Cummins & Zvi Griliches & Bronwyn H. Hall & Adam B. Jaffe, 1984. "Who Does R&D and Who Patents?," NBER Chapters, National Bureau of Economic Research, Inc, in: R & D, Patents, and Productivity, pages 21-54 National Bureau of Economic Research, Inc.
    11. Philippe Cuneo & Jacques Mairesse, 1983. "Productivity and R&D at the Firm Level in French Manufacturing," NBER Working Papers 1068, National Bureau of Economic Research, Inc.
    12. Salter, Ammon J. & Martin, Ben R., 2001. "The economic benefits of publicly funded basic research: a critical review," Research Policy, Elsevier, Elsevier, vol. 30(3), pages 509-532, March.
    13. Scherer, F M, 1983. "R&D and Declining Productivity Growth," American Economic Review, American Economic Association, American Economic Association, vol. 73(2), pages 215-18, May.
    14. Wakelin, Katharine, 2001. "Productivity growth and R&D expenditure in UK manufacturing firms," Research Policy, Elsevier, Elsevier, vol. 30(7), pages 1079-1090, August.
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    Cited by:
    1. Bronzini, Raffaello & Piselli, Paolo, 2009. "Determinants of long-run regional productivity with geographical spillovers: The role of R&D, human capital and public infrastructure," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 39(2), pages 187-199, March.
    2. Alex Warren-Rodríguez, 2008. "Linking technology development to Enterprise Growth: Evidence from the Mozambican manufacturing sector," Working Papers, Department of Economics, SOAS, University of London, UK 161, Department of Economics, SOAS, University of London, UK.
    3. Wen-Chung Hsu & Xingbo Gao & Jianhua Zhang & Hsin Mei Lin, 2011. "The effects of outward FDI on home-country productivity: Do location of investment and market orientation matter?," Journal of Chinese Economic and Foreign Trade Studies, Emerald Group Publishing, Emerald Group Publishing, vol. 4(2), pages 99-116, June.
    4. Raffaello Bronzini & Paolo Piselli, 2005. "What determines productivity level in the long run? Evidence from Italians regions," ERSA conference papers ersa05p267, European Regional Science Association.
    5. Fung, Loretta & Liu, Jin-Tan, 2009. "The impact of real exchange rate movements on firm performance: A case study of Taiwanese manufacturing firms," Japan and the World Economy, Elsevier, Elsevier, vol. 21(1), pages 85-96, January.
    6. Kafouros, Mario I., 2008. "Economic returns to industrial research," Journal of Business Research, Elsevier, Elsevier, vol. 61(8), pages 868-876, August.
    7. Paul Boothe & Richard Roy, 2008. "Business Sector Productivity in Canada: What Do We Know?," International Productivity Monitor, Centre for the Study of Living Standards, Centre for the Study of Living Standards, vol. 16, pages 3-13, Spring.
    8. Wang, Chengqi & Kafouros, Mario I., 2009. "What factors determine innovation performance in emerging economies? Evidence from China," International Business Review, Elsevier, Elsevier, vol. 18(6), pages 606-616, December.
    9. Cruz-Cázares, Claudio & Bayona-Sáez, Cristina & García-Marco, Teresa, 2013. "You can’t manage right what you can’t measure well: Technological innovation efficiency," Research Policy, Elsevier, Elsevier, vol. 42(6), pages 1239-1250.
    10. Gustav Ranis, 2011. "Technology and Human Development," Working Papers, Economic Growth Center, Yale University 1004, Economic Growth Center, Yale University.
    11. Raffaello Bronzini & Paolo Piselli, 2006. "Determinants of long-run regional productivity: the role of R&D, human capital and public infrastructure," Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area 597, Bank of Italy, Economic Research and International Relations Area.
    12. Sharma, Chandan, 2011. "R&D and productivity in the Indian pharmaceutical firms," MPRA Paper 31681, University Library of Munich, Germany.
    13. Bronwyn H. Hall & Jacques Mairesse & Pierre Mohnen, 2010. "Measuring the Returns to R&D," CIRANO Working Papers, CIRANO 2010s-02, CIRANO.
    14. Møen, Jarle & Thorsen, Helge Sandvig, 2013. "Publication bias in the returns to R&D literature," Discussion Papers, Department of Business and Management Science, Norwegian School of Economics 2013/12, Department of Business and Management Science, Norwegian School of Economics.

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