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Debt, R&D Investment and Technological Progress: A Panel Study of Japanese Manufacturing Firms in the 90s

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  • Kazuo Ogawa

Abstract

Based on a panel data set of Japanese manufacturing firms in research-intensive industries, we investigate quantitatively the extent to which debt outstandings in the 90s affected the firm's R&D activities. We find that massive debt outstandings had significantly negative effect on R&D investment in the 90s. We also find that investment on R&D was closely linked to the firm-level total factor productivity growth in the 90s. In fact, ten-percentage-point increase of debt-asset ratio lowered the firm-level total factor productivity growth rate by 0.72 percentage point for 1999-2001 by way of withering R&D activities, while the firm-level TFP growth rate remains almost intact for 1988-91.

Suggested Citation

  • Kazuo Ogawa, 2004. "Debt, R&D Investment and Technological Progress: A Panel Study of Japanese Manufacturing Firms in the 90s," ISER Discussion Paper 0607, Institute of Social and Economic Research, The University of Osaka.
    • Handle: RePEc:dpr:wpaper:0607
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    Cited by:

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    2. Álvarez, Inmaculada C. & Kao, Chihwa & Romero-Jordán, Desiderio, 2016. "Long run effect of public grants on the R&D investment: A non-stationary panel data approach," Efficiency Series Papers 2016/04, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    3. Hidemichi Fujii & Kazuyuki Iwata & Shinji Kaneko & Shunsuke Managi, 2013. "Corporate Environmental and Economic Performance of Japanese Manufacturing Firms: Empirical Study for Sustainable Development," Business Strategy and the Environment, Wiley Blackwell, vol. 22(3), pages 187-201, March.
    4. Álvarez-Ayuso, Inmaculada C. & Kao, Chihwa & Romero-Jordán, Desiderio, 2018. "Long run effect of public grants and tax credits on R&D investment: A non-stationary panel data approach," Economic Modelling, Elsevier, vol. 75(C), pages 93-104.
    5. Egor Leonidovich Domnich, 2012. "The Scientific and Technological Reserve of the Far Eastern Federal District and the Northeast Asia Countries," Spatial Economics=Prostranstvennaya Ekonomika, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia), issue 3, pages 79-110.
    6. Allard Bruinshoofd & Leo de Haan, 2005. "Financing the New Economy: Are ICT Firms Really That Different?," DNB Working Papers 077, Netherlands Central Bank, Research Department.
    7. Ogawa, Kazuo & Wan, Junmin, 2007. "Household debt and consumption: A quantitative analysis based on household micro data for Japan," Journal of Housing Economics, Elsevier, vol. 16(2), pages 127-142, June.
    8. Kazuo Ogawa, 2007. "Credit Allocation of Japanese Banks in the 1990s: Evidence from the Short-term Economic Survey of Enterprises," ISER Discussion Paper 0680, Institute of Social and Economic Research, The University of Osaka.

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