The R&D Puzzle in U.S. Manufacturing Productivity Growth

Abstract

In a previous post, we provided evidence for a broad-based slowdown in productivity growth across industries and firms in the U.S. manufacturing sector starting in 2010. Since firms’ investment in research and development (R&D) for new technologies constitutes a central driver of productivity growth, in this post we ask if the observed slowdown in productivity may be due to a decline in R&D. We find that “R&D intensity” has been increasing at both the firm and industry level, even as productivity growth declines. This points to a decline in the effectiveness of R&D in generating productivity growth in U.S. manufacturing.

To view post: https://libertystreeteconomics.newyorkfed.org/2025/01/the-rd-puzzle-in-u-s-manufacturing-productivity-growth/

Keywords: productivity, manufacturing, innovation, competition, economic growth

JEL Classification: O33, O44