Friday, September 28, 2007

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[IWS] BLS Working Paper: R&D & PRODUCTIVITY GROWTH: A REVIEW OF THE LITERATURE [28 September 2007]

IWS Documented News Service
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations
-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor
---------------------- Stuart Basefsky
New York, NY 10016
-------------------------------Director, IWS News Bureau
________________________________________________________________________

BLS WORKING PAPERS
U.S. Department of Labor
U.S. Bureau of Labor Statistics
Working Paper 408
September 2007
Office of Productivity and Technology

R&D and Productivity Growth: A Review of the Literature
by Leo Sveikauskas
http://www.bls.gov/ore/pdf/ec070070.pdf
[full-text, 56 pages]

ABSTRACT:

    This paper reviews the literature on R&D to provide guidelines for
recent efforts to include R&D in the national income accounts. The
main conclusions are:

    1. Measures of R&D as an asset held by a particular owner must be
complemented by estimates of the spillover effect of R&D in order to
obtain a reliable measure of the overall effect of R&D on productivity
growth.

    2. If research financed by the government and research financed by
business are both counted as investment, some double counting occurs
and growth accounting analysis overstates the role of research
relative to other factors.

    3. The overall rate of return to R&D is very large, perhaps 25 percent
as a private return and a total of 65 percent for social returns.
However, these returns apply only to privately financed R&D in
industry. Returns to many forms of publicly financed R&D are near
zero.

    4. Firm R&D should be allocated to the different industries in which a
firm produces, rather than all credited to the firm�s main industry.
An allocation procedure is proposed.

    5. Much further work needs to be carried out to understand how R&D
conducted in the richest countries is transmitted to developing
countries. Detailed microeconomic data on firms or establishments in
developing nations will be necessary to understand the channels of
technology transfer more fully.
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Stuart Basefsky                   
Director, IWS News Bureau                
Institute for Workplace Studies 
Cornell/ILR School                        
16 E. 34th Street, 4th Floor             
New York, NY 10016                        
                                   
Telephone: (607) 255-2703                
Fax: (607) 255-9641                       
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