A Report on the Determinants of Research and Development Expenditures and Their Effects on Labor Productivity of the Firm

摘要

The report examines the relationships between R&D activities and productivity at the level of the individual firm. A dynamic model of the determinants of investment, employment, and R&D is used. The main findings are: (1) The firm's employment, capital accumulation, and R&D decisions are closely intertwined, and a dynamic interaction process seems to underlie these decisions. (2) The R&D activities of lthe firm, like its demand for labor and capital, are influenced significantly by both output and relative input prices and by degree of capacity utilization. (3) Both labor productivity and investment demand of the firms are affected significantly by their R&D expenditures, and labor productivity is significantly affected by capital accumulation. (4) The model is a good predictor of investment, employment, and R&D investment of individual firms.