How R&D Expenditures Influence Total Factor Productivity and Technical Efficiency?

Alexander Apokin () and Irina Ipatova
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Alexander Apokin: National Research University Higher School of Economics

HSE Working papers from National Research University Higher School of Economics

Abstract: In this paper we estimate the impact of R&D expenditures on the total factor productivity (TFP) and technical efficiency of two panels of countries in the period 1990-2011. We obtain TFP decomposition estimates using one- and two-step Stochastic Frontier Analysis (SFA) and a modified (O’Donnell, 2008) Data Envelopment Analysis (DEA) framework. Our estimates of TFP growth rates correlate highly with those of OECD, The Conference Board and PWT. The efficiency-based rankings of the countries are similar to those from the results of other studies. The estimates of R&D’s impact on TFP and technical efficiency were obtained controlling for various factors, including the structure of the economy, institutional and infrastructural development and R&D expenditures over a total of five hundred possible model specifications. We found that the increase in total R&D expenditures by 1% of GDP in five years raises the average TFP growth rate by 5.0 to 7.7 percentage points, depending on the sample. Also, raising total R&D expenditures by $1,000 per researcher raises TFP growth five years later by 0.013 to 0.025 percentage points, depending on the sample. Also we have identified a significant impact of lagged R&D expenditures (up to ten years) on the dynamics of the global technology frontier component in the presence of a number of control variables.

Keywords: DEA; SFA; total factor productivity; technical efficiency; R&D expenditures (search for similar items in EconPapers)
JEL-codes: O11 O33 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2016
New Economics Papers: this item is included in nep-cse, nep-ino and nep-sbm
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Citations: View citations in EconPapers (2)

Published in WP BRP Series: Economics / EC, March 2016, pages 1-52

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Persistent link: https://EconPapers.repec.org/RePEc:hig:wpaper:128/ec/2016

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