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How R&D Expenditures Influence Total Factor Productivity and Technical Efficiency?

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  • Alexander Yu. Apokin

    (National Research University Higher School of Economics)

  • Irina Ipatova

    (National Research University Higher School of Economics)

Abstract

In this paper we estimate the impact of R&D expenditures on the total factor productivity (TFP) and technical efficiency of two panels of countries in the period 1990-2011. We obtain TFP decomposition estimates using one- and two-step Stochastic Frontier Analysis (SFA) and a modified (O’Donnell, 2008) Data Envelopment Analysis (DEA) framework. Our estimates of TFP growth rates correlate highly with those of OECD, The Conference Board and PWT. The efficiency-based rankings of the countries are similar to those from the results of other studies. The estimates of R&D’s impact on TFP and technical efficiency were obtained controlling for various factors, including the structure of the economy, institutional and infrastructural development and R&D expenditures over a total of five hundred possible model specifications. We found that the increase in total R&D expenditures by 1% of GDP in five years raises the average TFP growth rate by 5.0 to 7.7 percentage points, depending on the sample. Also, raising total R&D expenditures by $1,000 per researcher raises TFP growth five years later by 0.013 to 0.025 percentage points, depending on the sample. Also we have identified a significant impact of lagged R&D expenditures (up to ten years) on the dynamics of the global technology frontier component in the presence of a number of control variables.

Suggested Citation

  • Alexander Yu. Apokin & Irina Ipatova, 2016. "How R&D Expenditures Influence Total Factor Productivity and Technical Efficiency?," HSE Working papers WP BRP 128/EC/2016, National Research University Higher School of Economics.
    • Handle: RePEc:hig:wpaper:128/ec/2016
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    References listed on IDEAS

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    1. D. R. Belousov & K. V. Mikhailenko & E. M. Sabel’nikova & O. G. Solntsev, 2021. "The Role of Digitalization in the Target Scenario of Russian Economic Development," Studies on Russian Economic Development, Springer, vol. 32(4), pages 374-382, July.

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    More about this item

    Keywords

    DEA; SFA; total factor productivity; technical efficiency; R&D expenditures;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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