Advanced Economic Seminars 167:The Dynamics of R&D Organization and Productivity Growth

Publisher: Time:2016-12-26 16:07:00

Topic: The Dynamics of R&D Organization and Productivity Growth

Lecturer:LIN Shuheng, Assistant Professor, Xiamen University

Time: 01:30pm-03:00pm, Dec.29(Thur),  2016

Venue: B423, Zhixin Building

Abstract: This paper uses a dynamic structural model to study firms' decisions on whether to conduct research in house, with external units or via both modes. Productivity is modeled to evolve endogenously according to firms' internal and external R&D decisions, while the costs of starting and continuing research are random and differ by R&D modes. Model estimates from a panel of Chinese manufacturing firms show that startup cost for either mode is significantly more than continuation cost; in house R&D is cheaper to maintain but costs more at startup than external R&D. These estimates can explain the observed cross-sectional differences in firm size by research status and can match the persistence and transition dynamics in R&D modes overlooked in existing studies. Lastly, simulation exercises show that continuation cost reduction induces more changes in R&D organization, but start up cost reduction leads to the most aggregate productivity gain, more than half of which comes from adjustment along external R&D.