The R&;D and productivity relationship of Korean listed firms |
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Authors: | Almas Heshmati Hyesung Kim |
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Institution: | (1) Department of Food and Resource Economics, College of Life Sciences and Biotechnology, Korea University, East Building Room #217, Anam-dong Seongbuk-gu, Seoul, 136-701, Korea;(2) Department of Political Science, University of Rochester, Harkness Hall, Rochester, NY 14627-0146, USA |
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Abstract: | This study analyzes the relationship between R&D investment and the productivity of Korean R&D-engaged firms. An interdependent
chain of equations including the propensity to invest, R&D investment and productivity are estimated in a multi-step procedure
accounting for selectivity and simultaneity biases. Using Korean firm level panel data of listed firms from 1986 to 2002,
we find four main empirical results. First, there is a two-way causal relationship between R&D investment and productivity
for Korean listed firms. Second, Chaebol firms were associated with lower R&D growth as well as lower labor productivity growth in comparison to non-Chaebol firms. Third, there was a substantial reduction in growth rates both in R&D investment and labor productivity in 1997-1998,
immediately following the Asian financial crisis. Fourth, considering the positive feedback effect from productivity growth
to R&D growth, a decrease in R&D investment growth after the Asian financial crisis should have been harmful by further decreasing
productivity growth. |
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