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R&D Investment and International Productivity Differences

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  • Frank R. Lichtenberg

Abstract

This paper extends previous research on the effect of investment on labor productivity at the country level by accounting for investment in R&D, as well as for investment in fixed and human capital. Privately-funded R&D investment is found to have a significant positive effect on productivity. Moreover, this effect appears to be quite large. The estimated social (national) rate of return to private R&D investment is about seven times as large as the return to investment in equipment and structures. The elasticity of GNP with respect to the privately-funded research capital stock is about 7 %--about 1(3 as large as the physical-capital elasticity (whose estimate is substantially reduced when R&D is accounted for). These findings do not support the hypothesis that there arecomplete, or at least instantaneous, international R&D spillovers. The social marginal product of government-funded research capital appears to be much lower than that of private research capital.

Suggested Citation

  • Frank R. Lichtenberg, 1992. "R&D Investment and International Productivity Differences," NBER Working Papers 4161, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:4161
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    1. Lichtenberg, Frank R, 1988. "The Private R&D Investment Response to Federal Design and Technical Competitions," American Economic Review, American Economic Association, vol. 78(3), pages 550-559, June.
    2. J. Bradford De Long & Lawrence H. Summers, 1991. "Equipment Investment and Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 445-502.
    3. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    4. Jacques Mairesse & Mohamed Sassenou, 1991. "R&D Productivity: A Survey of Econometric Studies at the Firm Level," NBER Working Papers 3666, National Bureau of Economic Research, Inc.
    5. Bronwyn H. Hall, 1992. "Investment and Research and Development at the Firm Level: Does the Source of Financing Matter?," NBER Working Papers 4096, National Bureau of Economic Research, Inc.
    6. Paul M. Romer, 1987. "Crazy Explanations for the Productivity Slowdown," NBER Chapters,in: NBER Macroeconomics Annual 1987, Volume 2, pages 163-210 National Bureau of Economic Research, Inc.
    7. Himmelberg, Charles P & Petersen, Bruce C, 1994. "R&D and Internal Finance: A Panel Study of Small Firms in High-Tech Industries," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 38-51, February.
    8. Benhabib, Jess & Spiegel, Mark M., 1991. "Growth Accounting with Physical and Human Capital Accumulation," Working Papers 91-66, C.V. Starr Center for Applied Economics, New York University.
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