ESRI Discussion Paper Series No.44
R&D and Productivity Growth in Japanese Manufacturing Firms

June, 2003
Hyeog Ug Kwon
(Research Associate,
Graduate School of Economics, Hitotsubashi University, Tokyo, Japan)
Tomohiko Inui
College of Economics, Nihon University and Cabinet Office, Tokyo, Japan)


The relationship between the R&D and the productivity improvement in Japanese manufacturing firms is examined. Using more accurate and the more recent data on the individual firm's R&D activity rather than the data used in the previous research, we estimated a Cobb-Douglas production function, including R&D stock, for more than 3,000 Japanese firms for the period between 1995 and 1998.

A positive and significant role is found on R&D expenditure and productivity, and the roles are different by the firms' sizes and characteristics of technology, although the rates of return on R&D stock are lower than those in the previous research. Our results indicate that the inter-firm differences are more important in explaining the differences in productivity growth than are the inter-industry differences. We also found that the effects of R&D on productivity improvement are larger for the large sized and high-tech firms than they are for the smaller sized and the low-tech firms.

Structure of the whole text(PDF-Format 1file)

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  2. Abstract
  3. page1
    1. Introduction
  4. page2
    2. Data and Descriptive Statistics
  5. page4
    3. The Empirical Specification
  6. page8
    4. Empirical Results
  7. page11
    5. Conclusion
  8. page14
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