Increasing returns to scale, technological catch-up and research intensity: endogenising the Verdoorn coefficient

João P. Romerojpromero and Gustavo Britto
Authors registered in the RePEc Author Service: João Prates Romero ()

Cambridge Journal of Economics, 2017, vol. 41, issue 2, 391-412

Abstract: This paper examines the importance of output growth and research intensity for productivity growth. Two hypotheses are tested. First, the paper investigates the impact of the two variables on productivity growth when simultaneously considered, assessing whether the basic Kaldorian and Schumpeterian models can be combined. Second, it examines whether research intensity impacts on the magnitude of returns to scale, assessing if countries with higher research intensity benefit from higher returns to scale. The tests reported in the paper provide strong evidence of the importance of demand growth for productivity growth, and on the existence of increasing returns to scale in manufacturing, while also recognizing the relevance of research intensity for productivity growth. Most importantly, the test results suggest that research intensity has a more relevant impact on the magnitude of returns to scale than on productivity growth directly.

Keywords: Increasing returns; Productivity growth; Research intensity; Technological catch-up; Kaldor-Verdoorn’s Law (search for similar items in EconPapers)
JEL-codes: O11 O30 O47 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (19)

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