R&D, Production Structure, and Productivity Growth in the U.S., Japaneseand German Manufacturing Sectors

Pierre Mohnen, M. Ishaq Nadiri and Ingmar Prucha

No 1264, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The paper analyzes the production structure and the demand for inputs in three major industrialized countries, the U.S., Japan and Germany. A dynamic factor demand model with two variable inputs (labor and energy)and two quasi-fixed inputs (capital and R&D) is derived directly from an intertemporal cost-minimization problem formulated in discrete time. Adjustment costs are explicitly specified. The model is estimated for the manufacturing sector of the three countries using annual data from 1965 to 1977. Particular attention is given to the role of R&D. For all countries the rate of return on R&D is found to be higher than that on capital. Their respective magnitudes are similar across countries.We find considerable differences in factor demand schedules; we also find that for all countries the speed of adjustment for capital is higher than that of R&D. Adjustment costs are of importance in the demand equations for capital and R&D, but play a minor role in the decomposition of total factor productivity growth.

Date: 1984-01
Note: PR
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Published as Mohnen, P., M.I. Nadiri and I Prucha. "R&D, Production Structure, and Rates of Growth in the U.S., Japanese and German Manufacturing Sectors, Actes, du Colleque sur l'Econometrie de la Recherche, 1983, pp. 171-221, Paris: Institut National de la Statistique et des Etudes Economiques.
Published as Mohnen, Pierre, M. Ishaq Nadiri and Ingmar R. Prucha. "R&D, Production Structure, and Productivity Growth in the U.S., Japanese and German Maunfacturing Sectors," European Economic Review, Vol. 30, 1986, pp. 749-771.

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