| Abstract: | This study sets out to estimate the impact of R&D on productivity within the private sector, with further analysis of the different impacts of R&D within high‐tech and traditional manufacturing firms. We also attempt to examine the spillover effects from R&D investment in the high‐tech sector on productivity growth within the traditional industries. Using a sample of 136 large manufacturing firms during the period 1994–2000, we develop an extended version of the Cobb‐Douglas production function model, and our findings suggest that Taiwan's R&D investment had a significant impact on firm productivity growth, with output elasticity standing at around 0.18. When the sample is divided into high‐tech and traditional firms, the R&D output elasticity in high‐tech firms is significantly greater than that found in traditional firms. In addition, the average rate of return in high‐tech firms is much greater than that estimated for other industries. Besides, our empirical results show that, although significant, the impact of R&D investment from the high‐tech sector, on the productivity growth of traditional firms, is rather limited. |
