Working paper Series

Research and Development Composition and Labour Productivity Growth in 16 OECD Countries
by Ram C. Acharya and Serge Coulombe.

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Abstract

Using data for 16 OECD countries from 1973 to 2000, we show that growth in labor productivity is highly responsive to business research and development (R&D;) expenditures. Increasing business R&D; intensity by 10 percent increases labor productivity in the long run by 2.4 to 5 percent. R&D; expenditures on higher education also have a significant positive effect on labor productivity growth. In our decomposition of the sectoral R&D; into a pure R&D; intensity effect and a sectoral size effect, results show that elasticity of labor productivity with respect to these variables differs by sector. The positive size effect dominates the high-tech manufacturer, whereas it is the intensity effect that drives the positive correlation between medium-low-tech manufacturer R&D; and labor productivity.

Key words: R&D;, labor productivity convergence, spillover, R&D; size effect, R&D; intensity effect