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Productivity Growth and R&D at the Business Level: Results from the PIMS Data Base

In: R&D and Productivity: The Econometric Evidence

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  • Zvi Griliches

Abstract

This paper presents the results of a study of productivity growth and R&D in the 1970s using data on narrowly defined 'business units within a firm. Estimates are developed under different assumptions about technology ,industry effects, and changes in the return to R&D over time. The R&D data are broken down into process and product expenditures, and some information is available on past success in developing proprietary technology, andontheincidenceofma3or changes in technology in the recent past. The results suggest a significant relationship between R&D and the growth of productivity; in versions using total factor productivity as the dependent variable, the estimated rate of return to R&D investment is about 20 percent. We find some evidence that R&D has its biggest effect on productivity in those markets where major changes in technology have occurred in the recent past. Previous success in developing proprietary process technology affects total factor productivity directly, but appears to have little effect on estimated returns to R&D. The notion that the productivity of R&D declined in the l970sfinds Little support in this data. Irrespective of model specification, trends in the R&D coefficient are substantively arid statistically insignificant. Our calculations suggest that reduced investment in R&D may have accounted for at least 10 percent of the decline in total factor productivity growth in the l970s.
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(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Zvi Griliches, 1998. "Productivity Growth and R&D at the Business Level: Results from the PIMS Data Base," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 134-156, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:8344
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    References listed on IDEAS

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    1. Pakes, Ariel & Schankerman, Mark A., 1978. "The Rate of Obsolescence of Knowledge, Research Gestation Labs, and the Private Rate of Return to Research Resources," Working Papers 78-13, C.V. Starr Center for Applied Economics, New York University.
    2. Zvi Griliches, 1998. "R&D and Productivity Growth at the Industry Level: Is There Still a Relationship?," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 213-240, National Bureau of Economic Research, Inc.
    3. Zvi Griliches & Jacques Mairesse, 1981. "Productivity and R and D at the Firm Level," NBER Working Papers 0826, National Bureau of Economic Research, Inc.
    4. Griliches, Zvi, 1980. "R & D and the Productivity Slowdown," American Economic Review, American Economic Association, vol. 70(2), pages 343-348, May.
    5. Zvi Griliches, 1998. "Issues in Assessing the Contribution of Research and Development to Productivity Growth," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 17-45, National Bureau of Economic Research, Inc.
    6. 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, in: R&D, Patents, and Productivity, pages 73-88, National Bureau of Economic Research, Inc.
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