4.8 Article

Effective R&D capital and total factor productivity: Evidence using spatial panel data models

Journal

Publisher

ELSEVIER SCIENCE INC
DOI: 10.1016/j.techfore.2022.121886

Keywords

Time-varying endogenous weights; R&D capital stocks; Knowledge spillovers; Total-factor productivity

Funding

  1. National Natural Science Foundation of China [72174117]
  2. key program of Shanghai Soft Science Foundation [21692181000]

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It is widely accepted that R&D investment improves technological progress. This paper empirically examines the effects of effective R&D capital on a firm's productivity, considering internal R&D input, R&D collaboration, and accessible knowledge capital. Using spatial panel data models, the study finds that knowledge spillovers have a greater impact on total-factor productivity (TFP) than internal R&D input and R&D collaboration. The results suggest the need for a better environment for R&D collaboration and technology exchange.
It is widely accepted that R&D investment improves technological progress. The R&D capital that boosts a firm's production efficiency has various sources. This paper uses effective R&D capital, which represents not only a firm's internal R&D input but also the benefit derived from R&D collaboration and accessible knowledge capital, to empirically examine its effects on a firm's productivity. Accounting for technological distance and the endogeneity problem of weights matrices, we use spatial panel data models to estimate the return of R&D capital within the framework of the production function. We estimate the production function using the firm-year data of Shanghai technological enterprises from 2009 to 2017. The results show positive, significant relationships between each element of effective R&D capital and total-factor productivity (TFP). Knowledge spillovers have greater impacts on a firm's TFP than its internal R&D input and R&D collaboration. The contribution of R&D collaboration to TFP is less than that of internal R&D, indicating that R&D collaboration is not fully internalized. The results imply that a better environment for R&D collaboration and technology exchange is needed.

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