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A Review of the Literature on R&D and Productivity

Uytun, Basak (2009)
Department of Economic History
Abstract (Swedish)
This paper reviews the literature on R&D and productivity to provide a guideline to readers by combining all the findings in one title. According to the results, empirical studies analyse R&D spending from different angles by considering the characteristic of such spending. The results show that return to basic research is higher than return to applied R&D. Furthermore, in order to estimate the R&D elasticity in a more accurate way, double counting issues should be fixed. Evidence from earlier studies have shown that R&D input is double counted if labour and physical capital are not separated from labour and capital inputs. Empirical studies also show that returns to public funded R&D are lower than returns to firm financed R&D. There are... (More)
This paper reviews the literature on R&D and productivity to provide a guideline to readers by combining all the findings in one title. According to the results, empirical studies analyse R&D spending from different angles by considering the characteristic of such spending. The results show that return to basic research is higher than return to applied R&D. Furthermore, in order to estimate the R&D elasticity in a more accurate way, double counting issues should be fixed. Evidence from earlier studies have shown that R&D input is double counted if labour and physical capital are not separated from labour and capital inputs. Empirical studies also show that returns to public funded R&D are lower than returns to firm financed R&D. There are two reasons behind this differentiation. First, government funded R&D might not be correlated with productivity because of its development nature. Second, the relation between public financed R&D and productivity might be indirect, such as it may increase the efficiency of private returns, leading productivity growth. Another point is the link between a reduction on R&D spending and the 1970s oil crisis. The correlation is most prominent for sectors such as chemical and petroleum refining due to the intensiveness of R&D operations in these sectors. Finally, empirical studies are consistent not only at the firm level but also at the industry level. (Less)
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author
Uytun, Basak
supervisor
organization
year
type
H1 - Master's Degree (One Year)
subject
keywords
Research and Development (R&D), productivity, measurement problems
language
English
id
9030679
date added to LUP
2020-10-08 12:16:50
date last changed
2020-10-08 14:27:25
@misc{9030679,
  abstract     = {This paper reviews the literature on R&D and productivity to provide a guideline to readers by combining all the findings in one title. According to the results, empirical studies analyse R&D spending from different angles by considering the characteristic of such spending. The results show that return to basic research is higher than return to applied R&D. Furthermore, in order to estimate the R&D elasticity in a more accurate way, double counting issues should be fixed. Evidence from earlier studies have shown that R&D input is double counted if labour and physical capital are not separated from labour and capital inputs. Empirical studies also show that returns to public funded R&D are lower than returns to firm financed R&D. There are two reasons behind this differentiation. First, government funded R&D might not be correlated with productivity because of its development nature. Second, the relation between public financed R&D and productivity might be indirect, such as it may increase the efficiency of private returns, leading productivity growth. Another point is the link between a reduction on R&D spending and the 1970s oil crisis. The correlation is most prominent for sectors such as chemical and petroleum refining due to the intensiveness of R&D operations in these sectors. Finally, empirical studies are consistent not only at the firm level but also at the industry level.},
  author       = {Uytun, Basak},
  keyword      = {Research and Development (R&D),productivity,measurement problems},
  language     = {eng},
  note         = {Student Paper},
  title        = {A Review of the Literature on R&D and Productivity},
  year         = {2009},
}