On the Long Run Determinants of Industry TFP Growth Rates

42 Pages Posted: 29 May 2008

See all articles by Rachel Ngai

Rachel Ngai

London School of Economics & Political Science (LSE) - Department of Economics; Hong Kong University of Science & Technology (HKUST) - HKUST School of Business and Management

Roberto M. Samaniego

George Washington University - Department of Economics

Date Written: July 2007

Abstract

We develop a multi-sector general equilibrium model in which productivity growth is driven by the generation of knowledge. In the model, firms allocate resources towards the production of goods and the production of new knowledge, in response to industry-specific factors of demand and technology.

In equilibrium, we find that long run differences in research intensity and productivity growth are primarily driven by the parameters of the production function for knowledge - particularly the extent to which the production of new knowledge benefits from prior knowledge, which we term receptivity. Conditional on receptivity, whether the production of knowledge relies on prior knowledge that is internally generated by the firm or whether it instead spills over from its competitors does not appear to be quantitatively important. The results are consistent with a number of empirical findings on the relationship between research intensity and rates of technical change.

Keywords: Multi-sector growth, R&D Intensity, Technological Opportunity, Total Factor Productivity

JEL Classification: D24, O31, O41, O47

Suggested Citation

Ngai, Liwa Rachel and Samaniego, Roberto M., On the Long Run Determinants of Industry TFP Growth Rates (July 2007). , Vol. , pp. -, 2007. Available at SSRN: https://ssrn.com/abstract=1138521

Liwa Rachel Ngai (Contact Author)

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 207 955 7017 (Phone)
+44 207 831 1840 (Fax)

Hong Kong University of Science & Technology (HKUST) - HKUST School of Business and Management ( email )

Clear Water Bay
Kowloon
Hong Kong

Roberto M. Samaniego

George Washington University - Department of Economics ( email )

2115 G St NW Suite 340
Washington, DC 20052
United States

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