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On the Decline of R&D Efficiency

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  • MIYAGAWA Tsutomu
  • ISHIKAWA Takayuki

Abstract

Following Bloom et al. (2019), we measure R&D efficiency at the industry level with a simple knowledge production function. We use not only the latest version of the Japan Industrial Productivity (JIP) database but also the EUKLEMS database. We find that R&D efficiency measured directly remains positive in the Japanese manufacturing sector, as would be expected under a simple endogenous growth theory. When we divide the period for estimation into two decades, we find that the direct measure of R&D efficiency declined in the second decade in many advanced countries. In particular, there is significant decline of R&D efficiency in the Japanese information service industry. However, we are not able to confirm the decline of R&D efficiency in the Japanese manufacturing sector in the econometric studies. From these results, there are two implications. First, the decline of R&D efficiency means decreasing returns with differences in scale in a knowledge production function. Second, the R&D policies that focus on the scale of R&D are insufficient. The government should implement R&D policies that address the decline and R&D efficiency differences between industries.

Suggested Citation

  • MIYAGAWA Tsutomu & ISHIKAWA Takayuki, 2019. "On the Decline of R&D Efficiency," Discussion papers 19052, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:19052
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    File URL: https://www.rieti.go.jp/jp/publications/dp/19e052.pdf
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    References listed on IDEAS

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    1. Rachel Ngai & Roberto Samaniego, 2011. "Accounting for Research and Productivity Growth Across Industries," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(3), pages 475-495, July.
    2. Joonkyung Ha & Peter Howitt, 2007. "Accounting for Trends in Productivity and R&D: A Schumpeterian Critique of Semi-Endogenous Growth Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(4), pages 733-774, June.
    3. KAWAKAMI Atsushi & MIYAGAWA Tsutomu, 2010. "Product Switching and Firm Performance in Japan," Discussion papers 10043, Research Institute of Economy, Trade and Industry (RIETI).
    4. Griliches, Zvi, 1998. "R&D and Productivity," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226308869.
    5. Atsushi Kawakami & Tsutomu Miyagawa, 2013. "Product Switching and Firm Performance in Japan - Empirical Analysis Based on the Census of Manufacturers," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 9(2), pages 287-314, March.
    6. Ikeuchi, Kenta & Kim, Young Gak & Kwon, Hyeog Ug & Fukao, Kyoji, 2013. "Productivity Dynamics and R&D Spillovers in the Japanese Manufacturing lndustry : An Empirical Analysis Based on Micro-level Data," Economic Review, Hitotsubashi University, vol. 64(3), pages 269-285, July.
    7. MIYAGAWA Tsutomu & EDAMURA Kazuma & KAWAKAMI Atsushi, 2017. "R&D and Product Dynamics," Discussion papers 17101, Research Institute of Economy, Trade and Industry (RIETI).
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    Cited by:

    1. Gennady Shkliarevsky, 2022. "Is Our Research Productivity In Decline? A New Approach in Resolving the Controversy," Papers 2203.01235, arXiv.org.
    2. THW Ziesemer, 2020. "Japan’s Productivity and GDP Growth: The Role of Private, Public and Foreign R&D 1967–2017," Economies, MDPI, vol. 8(4), pages 1-25, September.

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