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CEP discussion paper
Accounting for Research and Productivity Growth Across Industries
L. Rachel Ngai and Roberto M. Samaniego
March 2009
Paper No' CEPDP0914:
Full Paper (pdf)

JEL Classification: D24; O3; O41

Tags: multisector growth; total factor productivity; r&d intensity; technological opportunity

What factors underlie industry differences in research intensity and productivity growth? We develop a multi-sector endogenous growth model allowing for industry specific parameters in the production functions for output and knowledge, and in consumer preferences. We find that industry differences in both productivity growth and R&D intensity mainly reflect differences in 'technological opportunities', interpreted as parameters of knowledge production. These include the capital intensity of R&D, knowledge spillovers, and diminishing returns to R&D. Among these parameters, we find that the degree of diminishing returns to R&D is the dominant factor when the model is calibrated to account for crossindustry differences in the US.