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R&D and Productivity Growth: Comparing Japanese and U.S. Manufacturing Firms

In: R&D and Productivity: The Econometric Evidence

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  • Zvi Griliches

Abstract

We compute rates of growth in labor productivity during the 1973-80 period for samples of individual manufacturing firms, in both Japan and the U.S., and relate them to differences in the rates of growth in their capital-labor ratios and in their intensities of R&D effort. Japanese firms spent about as much of their own money on R&D, relative to sales, as did similar U.S.firms. An econometric analysis of R&D performing firms leads to the acceptance of the hypothesis that the contribution of such expenditures to productivity growth was about the same in both countries. Hence, the rather large differences on the observed rates of productivity growth between the two countries can not be accounted for by differences in either the intensity or fecundity of such expenditures. We do find two important differences between the two countries which help to explain a significant fraction of the observed differences in productivity but require in turn, an explanation of their own: 1) Japanese firms reduced their employment levels significantly during this period while US firms were increasing theirs. This, by itself, accounts for the twice as fast growth in capital-labor ratio in Japanese manufacturing. 2) The estimated effect of the growth in the capital-labor ratio on firm productivity is approximately twice as large in Japan than in the US. The two factors together can account for about half of the observed differences in the average rates of productivity growth between the two countries.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Zvi Griliches, 1998. "R&D and Productivity Growth: Comparing Japanese and U.S. Manufacturing Firms," NBER Chapters,in: R&D and Productivity: The Econometric Evidence, pages 187-210 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:8346
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    1. Zvi Griliches, 1998. "Comparing Productivity Growth: An Exploration of French and U.S. Industrial and Firm Data," NBER Chapters,in: R&D and Productivity: The Econometric Evidence, pages 157-186 National Bureau of Economic Research, Inc.
    2. Bronwyn H. Hall & Clint Cumminq & Elizabeth S. Laderman & Joy Mundy, 1988. "The R&D Master File Documentation," NBER Technical Working Papers 0072, National Bureau of Economic Research, Inc.
    3. Pierre A. Mohnen & M. Ishaq Nadiri & Ingmar R. Prucha, 1984. "R&D, Production Structure, and Productivity Growth in the U.S., Japaneseand German Manufacturing Sectors," NBER Working Papers 1264, National Bureau of Economic Research, Inc.
    4. Pakes, Ariel, 1985. "On Patents, R&D, and the Stock Market Rate of Return," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 390-409, April.
    5. 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.
    6. 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 555-564, November.
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    8. John Bound & Clint Cummins & Zvi Griliches & Bronwyn H. Hall & Adam B. Jaffe, 1984. "Who Does R&D and Who Patents?," NBER Chapters,in: R&D, Patents, and Productivity, pages 21-54 National Bureau of Economic Research, Inc.
    9. Philippe Cuneo & Jacques Mairesse, 1984. "Productivity and R&D at the Firm Level in French Manufacturing," NBER Chapters,in: R&D, Patents, and Productivity, pages 375-392 National Bureau of Economic Research, Inc.
    10. Jacques Mairesse & Alan K. Siu, 1984. "An Extended Accelerator Model of R&D and Physical Investment," NBER Chapters,in: R&D, Patents, and Productivity, pages 271-298 National Bureau of Economic Research, Inc.
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    1. Capolupo, Rosa, 2009. "The New Growth Theories and Their Empirics after Twenty Years," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 3, pages 1-72.
    2. Dirk Czarnitzki & Hanna Hottenrott & Susanne Thorwarth, 2011. "Industrial research versus development investment: the implications of financial constraints," Cambridge Journal of Economics, Oxford University Press, vol. 35(3), pages 527-544.
    3. Melvyn Fuss & Leonard Waverman, 1991. "Productivity Growth in the Motor Vehicle Industry, 1970-1984: A Comparison of Canada, Japan, and the United States," NBER Chapters,in: Productivity Growth in Japan and the United States, pages 85-108 National Bureau of Economic Research, Inc.
    4. Ugur, Mehmet & Trushin, Eshref & Solomon, Edna & Guidi, Francesco, 2016. "R&D and productivity in OECD firms and industries: A hierarchical meta-regression analysis," Research Policy, Elsevier, vol. 45(10), pages 2069-2086.
    5. Bronwyn H. Hall & Jacques Mairesse & Benoit Mulkay, 1998. "Does cash flow cause investment and R&D: an exploration using panel data for French, Japanes and United States scientific firms," IFS Working Papers W98/11, Institute for Fiscal Studies.
    6. Marc-Andreas Muendler, 2004. "Trade, Technology, and Productivity: A Study of Brazilian Manufacturers, 1986-1998," CESifo Working Paper Series 1148, CESifo Group Munich.
    7. Zheng, Yan, 2004. "R&D inputs and productivity growth in China," MPRA Paper 242, University Library of Munich, Germany, revised 25 May 2004.
    8. Boeing, Philipp & Mueller, Elisabeth & Sandner, Philipp, 2016. "China's R&D explosion—Analyzing productivity effects across ownership types and over time," Research Policy, Elsevier, vol. 45(1), pages 159-176.
    9. Takechi, Kazutaka, 2011. "R&D intensity and domestic and cross-border M&A of Japanese firms before domestic M&A deregulation," Japan and the World Economy, Elsevier, vol. 23(2), pages 112-118, March.
    10. Seiichi Katayama & Sajal Lahiri & Eiichi Tomiura, 2005. "Cost Heterogeneity and the Destination of Foreign Direct Investment," Discussion Paper Series 166, Research Institute for Economics & Business Administration, Kobe University.
    11. Nauro F. Campos & Mariana Iootty, 2005. "Firm Entry And Exit In Brazil: Cross-Sectoral Evidence From Manufacturing Industry," Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33rd Brazilian Economics Meeting] 095, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    12. Robert Wieser, 2001. "R&D and Productivity: Empirical Evidence at the Firm Level," WIFO Working Papers 158, WIFO.
    13. M. Ishaq Nadiri, 1993. "Innovations and Technological Spillovers," NBER Working Papers 4423, National Bureau of Economic Research, Inc.
    14. Roberto Fontana & Lionel Nesta, 2009. "Product Innovation and Survival in a High-Tech Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 34(4), pages 287-306, June.
    15. Robert Gibbons, 2010. "Inside Organizations: Pricing, Politics, and Path Dependence," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 337-365, September.
    16. Takechi, Kazutaka, 2013. "Understanding the productivity effect of M&A in Japan: An empirical analysis of the electronics industry from 1989 to 1998," Japan and the World Economy, Elsevier, vol. 25, pages 1-9.
    17. G Cameron, 1996. "Innovation and Economic Growth," CEP Discussion Papers dp0277, Centre for Economic Performance, LSE.
    18. Baggs, Jennifer, 2004. "Changing Trade Barriers and Canadian Firms: Survival and Exit After the Canada-U.S. Free Trade Agreement," Analytical Studies Branch Research Paper Series 2004205e, Statistics Canada, Analytical Studies Branch.
    19. Joze P. Damijan & Marko Glaznar & Janez Prasnikar & Saso Polanec, 2004. "Export vs. FDI Behavior of Heterogenous Firms in Heterogenous Markets: Evidence from Sovenia," LICOS Discussion Papers 14704, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    20. Calomiris, Charles W.*Himmelberg, Charles P., 1995. "Government credit policy and industrial performance : Japanese machine tool producers, 1963-91," Policy Research Working Paper Series 1434, The World Bank.

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