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

37 Pages Posted: 27 Jun 2004 Last revised: 5 Jul 2010

See all articles by Kim B. Clark

Kim B. Clark

Harvard Business School; National Bureau of Economic Research (NBER); Brigham Young University Idaho

Zvi Griliches

(Deceased)

Date Written: June 1982

Abstract

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. Estimates are developed under different assumptions about technology ,industry effects, and changes in the return to R&D over time. The R&D data are broken down into process and product expenditures, and some information is available on past success in developing proprietary technology, andontheincidenceofma3or changes in technology in the recent past. The results suggest a significant relationship between R&D and the growth of productivity; in versions using total factor productivity as the dependent variable, the estimated rate of return to R&D investment is about 20 percent. We find some evidence that R&D has its biggest effect on productivity in those markets where major changes in technology have occurred in the recent past. Previous success in developing proprietary process technology affects total factor productivity directly, but appears to have little effect on estimated returns to R&D. The notion that the productivity of R&D declined in the l970sfinds Little support in this data. Irrespective of model specification, trends in the R&D coefficient are substantively arid statistically insignificant. Our calculations suggest that reduced investment in R&D may have accounted for at least 10 percent of the decline in total factor productivity growth in the l970s.

Suggested Citation

Clark, Kim and Griliches, Zvi, Productivity Growth and R&D at the Business Level: Results from the Pims Data Base (June 1982). NBER Working Paper No. w0916, Available at SSRN: https://ssrn.com/abstract=299793

Kim Clark (Contact Author)

Harvard Business School ( email )

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Brigham Young University Idaho

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Zvi Griliches

(Deceased)

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