NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

R&D Investment and International Productivity Differences

Frank R. Lichtenberg

NBER Working Paper No. 4161 (Also Reprint No. r1813)
Issued in September 1992
NBER Program(s):Productivity, Innovation, and Entrepreneurship, Economic Fluctuations and Growth

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.

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Document Object Identifier (DOI): 10.3386/w4161

Published: Economic Growth in the World Economy, Symposium 1992, edited by Horst Siebert, pp. 89-110.

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