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On the Long run Determinants of Industry TFP Growth Rates

  • Ngai, Liwa Rachel
  • Samaniego, Roberto

We develop a multi-sector general equilibrium model in which productivity growth is driven by the generation of knowledge. In the model, firms allocate resources towards the production of goods and the production of new knowledge, in response to industry-specific factors of demand and technology. In equilibrium, we find that long run differences in research intensity and productivity growth are primarily driven by the parameters of the production function for knowledge -- particularly the extent to which the production of new knowledge benefits from prior knowledge, which we term receptivity. Conditional on receptivity, whether the production of knowledge relies on prior knowledge that is internally generated by the firm or whether it instead "spills over" from its competitors does not appear to be quantitatively important. The results are consistent with a number of empirical findings on the relationship between research intensity and rates of technical change.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6408.

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Date of creation: Jul 2007
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Handle: RePEc:cpr:ceprdp:6408
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  1. James D. Adams & Adam B. Jaffe, 1996. "Bounding the Effects of R&D: An Investigation Using Matched Establishment-Firm Data," NBER Working Papers 5544, National Bureau of Economic Research, Inc.
  2. Pakes, Ariel & Schankerman, Mark, 1980. "An Exploration Into the Determinants of Research Intensity," Working Papers 80-02, C.V. Starr Center for Applied Economics, New York University.
  3. BOUCEKKINE, Raouf & del RIO, Fernando & LICANDRO, Omar, 2002. "Obsolescence and modernization in the growth process," CORE Discussion Papers 2002067, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Nelson, R.R. & Wolff, E.N., 1992. "Factors Behind Cross-Industry Differences in Technical Progress," Working Papers 92-27, C.V. Starr Center for Applied Economics, New York University.
  5. Daron Acemoglu & Veronica Guerrieri, 2008. "Capital Deepening and Nonbalanced Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 116(3), pages 467-498, 06.
  6. Samaniego, Roberto M., 2007. "R D And Growth: The Missing Link?," Macroeconomic Dynamics, Cambridge University Press, vol. 11(05), pages 691-714, November.
  7. Bernstein, Jeffrey I & Nadiri, M Ishaq, 1988. "Interindustry R&D Spillovers, Rates of Return, and Production in High-Tech Industries," American Economic Review, American Economic Association, vol. 78(2), pages 429-34, May.
  8. Charles I. Jones, 2002. "Sources of U.S. Economic Growth in a World of Ideas," American Economic Review, American Economic Association, vol. 92(1), pages 220-239, March.
  9. Samuel S. Kortum, 1997. "Research, Patenting, and Technological Change," Econometrica, Econometric Society, vol. 65(6), pages 1389-1420, November.
  10. Paul M Romer, 1999. "Endogenous Technological Change," Levine's Working Paper Archive 2135, David K. Levine.
  11. Alvin K. Klevorick & Richard C. Levin & Richard R. Nelson & Sidney G. Winter, 1993. "On the Sources and Significance of Interindustry Differences in Technological Opportunities," Cowles Foundation Discussion Papers 1052, Cowles Foundation for Research in Economics, Yale University.
  12. Nelson, Richard R. & Winter, Sidney G., 1993. "In search of useful theory of innovation," Research Policy, Elsevier, vol. 22(2), pages 108-108, April.
  13. Ricardo J. Caballero & Adam B. Jaffe, 1993. "How High are the Giants' Shoulders: An Empirical Assessment of Knowledge Spillovers and Creative Destruction in a Model of Economic Growth," NBER Chapters, in: NBER Macroeconomics Annual 1993, Volume 8, pages 15-86 National Bureau of Economic Research, Inc.
  14. Krusell, Per, 1998. " Investment-Specific R&D and the Decline in the Relative Price of Capital," Journal of Economic Growth, Springer, vol. 3(2), pages 131-41, June.
  15. Bernstein, Jeffrey I. & Nadiri, M. Ishaq, 1988. "Research and Development and Intraindustry Spillovers: An Empirical Application of Dynamic Duality," Working Papers 88-06, C.V. Starr Center for Applied Economics, New York University.
  16. Bronwyn H. Hall & Adam B. Jaffe & Manuel Trajtenberg, 2001. "The NBER Patent Citation Data File: Lessons, Insights and Methodological Tools," NBER Working Papers 8498, National Bureau of Economic Research, Inc.
  17. Greenwood, J. & Hercowitz, Z. & Krusell, P., 1996. "Long-Run Implications of Investment-Specific Technological Change," RCER Working Papers 420, University of Rochester - Center for Economic Research (RCER).
  18. Ngai, Liwa Rachel & Pissarides, Christopher, 2004. "Structural Change in a Multi-Sector Model of Growth," CEPR Discussion Papers 4763, C.E.P.R. Discussion Papers.
  19. Cohen, Wesley M. & Levin, Richard C., 1989. "Empirical studies of innovation and market structure," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 18, pages 1059-1107 Elsevier.
  20. Evangelia Vourvachaki, 2006. "Information and Communication Technologies in a Multi-Sector Endogenous Growth Model," CEP Discussion Papers dp0750, Centre for Economic Performance, LSE.
  21. Klenow, Peter J., 1996. "Industry innovation: where and why," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 44(1), pages 125-150, June.
  22. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-84, August.
  23. Mansfield, Edwin, 1980. "Basic Research and Productivity Increase in Manufacturing," American Economic Review, American Economic Association, vol. 70(5), pages 863-73, December.
  24. Wesley M. Cohen & Richard C. Levin & David C. Mowery, 1987. "Firm Size and R&D Intensity: A Re-Examination," NBER Working Papers 2205, National Bureau of Economic Research, Inc.
  25. Dale Jorgenson & Mun Ho & Jon Samuels & Kevin Stiroh, 2007. "Industry Origins of the American Productivity Resurgence," Economic Systems Research, Taylor & Francis Journals, vol. 19(3), pages 229-252.
  26. Rosenberg, Nathan, 1969. "The Direction of Technological Change: Inducement Mechanisms and Focusing Devices," Economic Development and Cultural Change, University of Chicago Press, vol. 18(1), pages 1-24, Part I Oc.
  27. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
  28. Richard R. Nelson, 1988. "Modelling the Connections in the Cross Section between Technical Progress and R&D Intensity," RAND Journal of Economics, The RAND Corporation, vol. 19(3), pages 478-485, Autumn.
  29. Bernstein, Jeffrey I. & Nadiri, M. Ishaq, 1988. "Interindustry R&D, Rates of Return and Production in High-Tech Industries," Working Papers 88-04, C.V. Starr Center for Applied Economics, New York University.
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