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The R&D Puzzle in U.S. Manufacturing Productivity Growth

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Abstract

In a previous post, we provided evidence for a broad-based slowdown in productivity growth across industries and firms in the U.S. manufacturing sector starting in 2010. Since firms’ investment in research and development (R&D) for new technologies constitutes a central driver of productivity growth, in this post we ask if the observed slowdown in productivity may be due to a decline in R&D. We find that “R&D intensity” has been increasing at both the firm and industry level, even as productivity growth declines. This points to a decline in the effectiveness of R&D in generating productivity growth in U.S. manufacturing.

Suggested Citation

  • Danial Lashkari & Jeremy Pearce, 2025. "The R&D Puzzle in U.S. Manufacturing Productivity Growth," Liberty Street Economics 20250106, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:99374
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    More about this item

    Keywords

    productivity; manufacturing; innovation; competition; economic growth;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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