Productivity Growth and R&D at the Business Level: Results from the PIMS Data Base

Keywords

R&D, productivity, investment

Abstract

The recent slowdown in productivity growth in the United States and elsewhere has increased interest in understanding its determinants. Among the determinants commanding attention have been expenditures for research and development. R&D investment has attracted attention because a slowdown in its growth seemed to coincide with the productivity slowdown, and because earlier studies of the R&D-productivity connection had found R&D to be an important determinant of productivity growth. Recent work on R&D and productivity growth, however, presents a relatively mixed picture. While studies on 1950s and 1960s data generally found positive effects, productivity equations for the 1970s found the coefficient alternately collapsing (Griliches 1980; Agnew and Wise 1978; Scherer 1981; Terleckyj (1980) and reviving (Griliches and Lichtenberg, this volume; Scherer 1981), depending on the data used and, in particular, on the level of aggregation. Where disaggregated data were explored, a relatively sizeable effect of R&D was found, even in the turbulent 1970s. This paper presents the results of a study of productivity growth and R&D in the 1970s using data on narrowly defined "business units" within a firm. The principal focus of the analysis is estimation of the productivity of R&D at the margin. Estimates are developed under different assumptions about technology, industry effects, and changes in the return to R&D over time. Our R&D data are classified into process and product expenditures, and we examine the effect of proprietary technology and technological opportunity on R&D productivity.

Original Publication Citation

"""Productivity, Growth and R&D at the Business Level: Results from the PIMS Data Base"" (1984). In Z. Griliches (Ed.), R&D, Patents, and Productivity. Chicago: University of Chicago Press. (With Z. Griliches)"

Document Type

Peer-Reviewed Article

Publication Date

1984

Publisher

University of Chicago Press

Language

English

College

Marriott School of Business

Department

Marketing

University Standing at Time of Publication

Full Professor

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