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R & D Behaviour of Indian Firms: A Stochastic Control Model

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  • L. K. Raut

    (University of California-San Diego)

Abstract

This paper develops a dynamic stochastic model to explain the observed pattern of R&D input choices of Indian private firms in terms of firm size, market structure, and science base. The inputs to the production of technological knowledge are taken to be in house R&D activities, and purchase of technology and know-how from foreign and domestic suppliers. The model is estimated with firm level data from light, petro-chemical, and heavy industries. In all three industries larger firms tend to substitute domestic for foreign purchase of technology and technical knowhow; and in heavy industry, larger firms also do more in-house R&D. Monopoly power of a firm in the light industry has no significant effect on its R&D activities; in the heavy industry, higher monopoly power to a firm reduces its purchase of technology, without affecting other R&D activities; in the petro chemical industry, higher monopoly power to a firm reduces its purchase of technology, but this but this reduction is partially offset by an increase in in-house R&D expenditures.

Suggested Citation

  • L. K. Raut, 1988. "R & D Behaviour of Indian Firms: A Stochastic Control Model," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 23(2), pages 207-229, July.
  • Handle: RePEc:dse:indecr:v:23:y:1988:i:2:p:207-229
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    Cited by:

    1. M. Parameswaran, 2007. "International trade, R & D spillovers and productivity: Evidence from Indian manufacturing industry," Centre for Development Studies, Trivendrum Working Papers 385, Centre for Development Studies, Trivendrum, India.
    2. Lakshmi K. Raut, 2005. "Firm's R & D Behavior Under Rational Expectations," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 40(2), pages 127-144, December.
    3. Rana Hasan, 2000. "The Impact of Imported and Domestic Technologies on Productivity: Evidence from Indian Manufacturing Firms," Economics Study Area Working Papers 06, East-West Center, Economics Study Area.
    4. Hasan, Rana, 2002. "The impact of imported and domestic technologies on the productivity of firms: panel data evidence from Indian manufacturing firms," Journal of Development Economics, Elsevier, vol. 69(1), pages 23-49, October.
    5. Vishwasrao, Sharmila & Bosshardt, William, 2001. "Foreign ownership and technology adoption: evidence from Indian firms," Journal of Development Economics, Elsevier, vol. 65(2), pages 367-387, August.

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