| By: |
Guenter Lang (Faculty of Management Technology, The German University in Cairo) |
| Abstract: |
Motivated by recent statistics that show significant growth in labor
productivity, this paper seeks to analyze the relationship between domestic
R&D, knowledge stock and productivity dynamics. Time series data of the German
manufacturing industry is used to estimate a variable cost function with the
stock of knowledge being dependent upon current and past R&D spending. The
estimates indicate that 50 percent of the effects of R&D on the knowledge
stock appear within four years. However, the rate of return on R&D are shown
to be drastically declining; recent rates of return on R&D are estimated to
have reached an all-time low spanning the last 45 years. Current yields of R&D
are only one third compared to the sixties. In conclusion, though the
productivity slowdown of the seventies seems to have been overcome, this is
not attributed to R&D investments. |
| Keywords: |
Productivity, innovation, research, development, technology, productivity slowdown |
| JEL: |
D24 L60 O31 |
| Date: |
2008–05 |
| URL: |
http://d.repec.org/n?u=RePEc:guc:wpaper:10&r=tid |