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

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.

[1]  Zvi Griliches,et al.  Productivity and R and D at the Firm Level , 1981 .

[2]  A. Salter,et al.  The economic benefits of publicly funded basic research: a critical review , 2001 .

[3]  Zvi Griliches,et al.  R&D and Productivity: The Unfinished Business , 1998 .

[4]  E. Mansfield.  Industrial Research and Development: Characteristics, Costs, and Diffusion of Results , 1969 .

[5]  J. Schumpeter,et al.  Capitalism, Socialism and Democracy , 1943 .

[6]  Edwin Mansfield,et al.  Basic Research and Productivity Increase in Manufacturing , 1980 .

[7]  F. Lichtenberg,et al.  The Impact of R&D Investment on Productivity - New Evidence Using Linked R&D-Lrd Data , 1989 .

[8]  Mark Schankerman,et al.  The effects of double-counting and expensing on the measured returns to r&d , 1981 .

[9]  Synnöve Vuori.  Interindustry Technology Flows and Productivity in Finnish Manufacturing , 1997 .

[10]  Yehuda Baruch,et al.  High technology organization - what it is, what it isn't , 1997 .

[11]  Katharina Wakelin,et al.  Productivity growth and R&D expenditure in UK manufacturing firms , 2001 .

[12]  Z. Griliches,et al.  R&D and Productivity Growth: Comparing Japanese and U.S. Manufacturing Firms , 1985 .

[13]  Jacques Mairesse,et al.  Productivity and R&D at the Firm Level in French Manufacturing , 1983 .

[14]  A. Pakes,et al.  The Rate of Obsolescence of Knowledge, Research Gestation Lags, and the Private Rate of Return to Research Resources , 1979 .

[15]  A. Pakes,et al.  Patents and R&D at the Firm Level: A First Look , 1984 .

[16]  Lagging Productivity Growth: Measurement, Technology, and Shock Effects , 1993 .

[17]  Z. Griliches.  Patent Statistics as Economic Indicators: a Survey , 1990 .

[18]  Zvi Griliches,et al.  Productivity, R&D, and Basic Research at the Firm Level in the 1970s , 1985 .

[19]  J. Barney.  Firm Resources and Sustained Competitive Advantage , 1991 .

[20]  F. Scherer.  R&D and Declining Productivity Growth , 1983 .

[21]  H. Meijl.  Measuring Intersectoral Spillovers: French Evidence , 1997 .

[22]  Margaret A. Peteraf.  The cornerstones of competitive advantage: A resource‐based view , 1993 .

[23]  B. Wernerfelt,et al.  A Resource-Based View of the Firm , 1984 .

[24]  Zvi Griliches,et al.  Issues in Assessing the Contribution of Research and Development to Productivity Growth , 1979 .

[25]  Jacques Mairesse,et al.  Exploring the Relationship between R&D and Productivity in French Manufacturing Firms , 1992 .

[26]  F. Martin,et al.  The economic impact of Canadian university R&D , 1998 .

[27]  Zvi Griliches,et al.  R&D and the Productivity Slowdown , 1980 .

[28]  C. Begg,et al.  Publication bias : a problem in interpreting medical data , 1988 .

[29]  Akira Goto,et al.  R&D Capital, Rate of Return on R&D Investment and Spillover of R&D in Japanese Manufacturing Industries , 1989 .

[30]  R. Rosenthal.  The file drawer problem and tolerance for null results , 1979 .

[31]  Zvi Griliches,et al.  R&D and Productivity Growth at the Industry Level: Is There Still a Relationship? , 1998 .

[32]  Z. Griliches,et al.  Who Does R&D and Who Patents? , 1982 .

[33]  P. Hanel.  R&D, Interindustry and International Technology Spillovers and the Total Factor Productivity Growth of Manufacturing Industries in Canada, 1974-1989 , 2000 .

[34]  J. Hausman.  Specification tests in econometrics , 1978 .

[35]  J. Schumpeter.  Capitalism, Socialism and Democracy , 1943 .