NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Productivity Growth and R&D Expenditure in Taiwan's Manufacturing Firms

Jiann-Chyuan Wang, Kuen-Hung Tsai

NBER Working Paper No. 9724
Issued in May 2003
NBER Program(s):   PR

This study sets out to estimate the impact of R&D on productivity within the private sector, with further analysis of the different impacts of R&D in high-tech and conventional firms. The study also aims to estimate the rates of return on R&D investment and total factor productivity at firm level. Based on a sample of 136 large manufacturing firms listed on the Taiwan Stock Exchange over the period 1994-2000, our findings suggest that Taiwan's R&D investment had a significant impact on firm productivity growth, with output elasticity standing at around 0.18. When the sample is divided into high-tech and conventional firms, the R&D output elasticity in high-tech firms is significantly greater than that of conventional firms. In addition, the average rate of return in high-tech firms is much larger than that estimated in other industries. Our empirical findings further show that although there was a dramatic decline in TFP in 1998 for all selected industries, this nevertheless started to climb again in 1999.

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Document Object Identifier (DOI): 10.3386/w9724

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