IDEAS home Printed from https://ideas.repec.org/p/fer/dpaper/388.html
   My bibliography  Save this paper

RD and Productivity Growth in Finnish ICT Manufacturing

Author

Listed:
  • Berghäll, Elina

Abstract

A stochastic frontier model is applied to firm level panel data from the Finnish ICT manufacturing sector to explore the role of R&D and technological progress in the outstanding productivity growth Finland demonstrated in the latter half of the 1990's. The sample is representative of over 90 % of the R&D carried out in the sector, which in turn represents about half of corporate R&D in Finland. Constant returns to scale production functions are clearly inappropriate and labour productivity provides a biased view of TFP. Results show increasing returns to scale and output growth to have been, until recent years, more important than technical change in TFP growth. Like all inputs, physical and R&D capital appear to be substitutes to some extent, reducing concern over low overall investment. The technology policy mix appears to have been R&D investment and R&D employment enhancing, at the expense of non-R&D labour and physical capital. Meanwhile, technical change has been R&D saving and labour using, with large and surprisingly persistent firm-specific differences in R&D productivity.

Suggested Citation

  • Berghäll, Elina, 2006. "RD and Productivity Growth in Finnish ICT Manufacturing," Discussion Papers 388, VATT Institute for Economic Research.
    • Handle: RePEc:fer:dpaper:388
    as

    Download full text from publisher

    File URL: https://www.doria.fi/handle/10024/148368
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    2. Piekkola, Hannu, . "Knowledge and Innovation Subsidies as Engines for Growth. The Competitiveness of Finnish Regions," ETLA B, The Research Institute of the Finnish Economy, number 216, June.
    3. Zvi Griliches, 1998. "Comparing Productivity Growth: An Exploration of French and U.S. Industrial and Firm Data," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 157-186, National Bureau of Economic Research, Inc.
    4. Kleinknecht, Alfred, 1987. "Measuring R&D in Small Firms: How Much Are We Missing?," Journal of Industrial Economics, Wiley Blackwell, vol. 36(2), pages 253-256, December.
    5. James D. Adams & Adam B. Jaffe, 1996. "Bounding the Effects of R&D: An Investigation Using Matched Establishment-Firm Data," RAND Journal of Economics, The RAND Corporation, vol. 27(4), pages 700-721, Winter.
    6. Maliranta, Mika, 2001. "Productivity Growth and Micro-level Restructuring. Finnish experiences during the turbulent decades," Discussion Papers 757, The Research Institute of the Finnish Economy.
    7. Zvi Griliches, 1998. "Issues in Assessing the Contribution of Research and Development to Productivity Growth," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 17-45, National Bureau of Economic Research, Inc.
    8. Francesco Daveri & Olmo Silva, 2004. "Not only Nokia: what Finland tells us about new economy growth [‘The role of Nokia in the Finnish economy’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 19(38), pages 118-163.
    9. Bronwyn Hall, 2004. "The financing of research and development," Chapters, in: Anthony Bartzokas & Sunil Mani (ed.), Financial Systems, Corporate Investment in Innovation, and Venture Capital, chapter 2, Edward Elgar Publishing.
    10. John W. Kendrick & Beatrice N. Vaccara, 1980. "New Developments in Productivity Measurement and Analysis," NBER Books, National Bureau of Economic Research, Inc, number kend80-1.
    11. Zvi Griliches, 1998. "Productivity and R&D at the Firm Level," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 100-133, National Bureau of Economic Research, Inc.
    12. Zvi Griliches, 1984. "R&D, Patents, and Productivity," NBER Books, National Bureau of Economic Research, Inc, number gril84-1.
    13. Cristiano Antonelli, 2006. "Diffusion as a Process of Creative Adoption," The Journal of Technology Transfer, Springer, vol. 31(2), pages 211-226, March.
    14. Zvi Griliches, 1998. "Returns to Research and Development Expenditures in the Private Sector," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 49-81, National Bureau of Economic Research, Inc.
    15. Sangho Kim & Gwangho Han, 2001. "A Decomposition of Total Factor Productivity Growth in Korean Manufacturing Industries: A Stochastic Frontier Approach," Journal of Productivity Analysis, Springer, vol. 16(3), pages 269-281, November.
    16. Heikkilä, Tuomo & Kiander, Jaakko & Hjerppe, Reino & Berghäll, Elina & Kilponen, Juha & Lavrac, Vladimir & Stanovnik, Peter, 2002. "The Role of Science and Technology Policy in Small Economies," Research Reports 91, VATT Institute for Economic Research.
    17. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
    18. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    19. Goto, Akira & Suzuki, Kazuyuki, 1989. "R&D Capital, Rate of Return on R&D Investment and Spillover of R&D in Japanese Manufacturing Industries," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 555-564, November.
    20. David B. Audretsch, 1995. "Innovation and Industry Evolution," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011468, April.
    21. Bernstein, Jeffrey I. & Mamuneas, Theofanis P., 2006. "R&D depreciation, stocks, user costs and productivity growth for US R&D intensive industries," Structural Change and Economic Dynamics, Elsevier, vol. 17(1), pages 70-98, January.
    22. Bosworth, D L, 1978. "The Rate of Obsolescence of Technical Knowledge-A Note," Journal of Industrial Economics, Wiley Blackwell, vol. 26(3), pages 273-279, March.
    23. Francesco Daveri & Olmo Silva, "undated". "Not Only Nokia," Working Papers 222, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    24. Paul Stoneman & Otto Toivanen, 2001. "The Impact of Revised Recommended Accounting Practices on R&D Reporting by UK Firms," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 8(1), pages 123-136.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Berghäll, Elina, 2006. "Technical Efficiency in an RD Intensive Industry: Finnish ICT Manufacturing," Discussion Papers 389, VATT Institute for Economic Research.
    2. Hall, Bronwyn H. & Mairesse, Jacques & Mohnen, Pierre, 2010. "Measuring the Returns to R&D," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 1033-1082, Elsevier.
    3. Berghäll, Elina, 2006. "Technical Change, Efficiency, Firm Size and Age in an RD Intensive Sector," Discussion Papers 390, VATT Institute for Economic Research.
    4. Kafouros, Mario I. & Buckley, Peter J., 2008. "Under what conditions do firms benefit from the research efforts of other organizations?," Research Policy, Elsevier, vol. 37(2), pages 225-239, March.
    5. Kafouros, Mario I., 2008. "Economic returns to industrial research," Journal of Business Research, Elsevier, vol. 61(8), pages 868-876, August.
    6. Ugur, Mehmet & Trushin, Eshref & Solomon, Edna & Guidi, Francesco, 2016. "R&D and productivity in OECD firms and industries: A hierarchical meta-regression analysis," Research Policy, Elsevier, vol. 45(10), pages 2069-2086.
    7. Robert Wieser, 2005. "Research And Development Productivity And Spillovers: Empirical Evidence At The Firm Level," Journal of Economic Surveys, Wiley Blackwell, vol. 19(4), pages 587-621, September.
    8. M. Ishaq Nadiri, 1993. "Innovations and Technological Spillovers," NBER Working Papers 4423, National Bureau of Economic Research, Inc.
    9. Tsai, Kuen-Hung & Wang, Jiann-Chyuan, 2005. "Does R&D performance decline with firm size?--A re-examination in terms of elasticity," Research Policy, Elsevier, vol. 34(6), pages 966-976, August.
    10. Giuseppe Medda & Claudio Piga, 2014. "Technological spillovers and productivity in Italian manufacturing firms," Journal of Productivity Analysis, Springer, vol. 41(3), pages 419-434, June.
    11. Markus Eberhardt & Christian Helmers & Hubert Strauss, 2013. "Do Spillovers Matter When Estimating Private Returns to R&D?," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 436-448, May.
    12. Berghäll, Elina, 2008. "Revealing Agglomeration Economies with Stochastic Frontier Modelling in the Finnish ICT Industry," Discussion Papers 435, VATT Institute for Economic Research.
    13. Ana Lara GÓMEZ, 2015. "Technological Spillovers of Research Infrastructures," Departmental Working Papers 2015-18, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    14. Luh, Yir-Hueih & Chang, Sheng-Kai, 1997. "Building the dynamic linkages between R & D and productivity growth," Journal of Asian Economics, Elsevier, vol. 8(4), pages 525-545.
    15. Jacques Mairesse & Mohamed Sassenou, 1991. "R&D Productivity: A Survey of Econometric Studies at the Firm Level," NBER Working Papers 3666, National Bureau of Economic Research, Inc.
    16. O'Mahony, Mary & Vecchi, Michela, 2009. "R&D, knowledge spillovers and company productivity performance," Research Policy, Elsevier, vol. 38(1), pages 35-44, February.
    17. Cohen, Wesley M., 2010. "Fifty Years of Empirical Studies of Innovative Activity and Performance," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 129-213, Elsevier.
    18. G Cameron, 1996. "Innovation and Economic Growth," CEP Discussion Papers dp0277, Centre for Economic Performance, LSE.
    19. Wakelin, Katharine, 2001. "Productivity growth and R&D expenditure in UK manufacturing firms," Research Policy, Elsevier, vol. 30(7), pages 1079-1090, August.
    20. de Rassenfosse, Gaetan & van Pottelsberghe de la Potterie, Bruno, 2009. "A policy insight into the R&D-patent relationship," Research Policy, Elsevier, vol. 38(5), pages 779-792, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fer:dpaper:388. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Anita Niskanen (email available below). General contact details of provider: https://edirc.repec.org/data/vatttfi.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.