The impacts of research and development expenditures : the relationship between total factor productivity and U.S. gross domestic product performance

The research underlying this volume was designed to test the theory of Total Factor Productivity (TFP) in contemporary context. Developed by Nobel Prize-winning economist, Robert Solow, in the 1950s, TFP has been applied by many economists to investigate the relationships among capital, labor, and economic performance. In this analysis, John Wetter presents the hypothesis that technological investment drives growth and performance of the U.S. economy. The study addresses four key questions:1. Is there a relationship between Total Factor Productivity and Gross National Product?2. Is there a relationship between Total Factor Productivity and Research & Development expenditures?3. Is there a relationship between Research & Development expenditures and Gross Domestic Product?4. Can the relationship in research question #1 be explained by other factors? Is there any potential non-spuriousness (mediation) implication to the relationship?Synthesizing the literature from related fields, including macroeconomics, technology transfer, and innovation, and applying rigorous methodology, Wetter demonstrates thatTotal Factor Productivity is positively related to Gross Domestic Product and is mediated by Research & Development. In addition, he reveals that the lag time between R&D spending and GDP growth averages eleven years, which suggests that long-term planning is essential to maximizing the benefits of R&D. Wetter considers the implications for policymaking and industry leadership, including such timely issues as the effects of the 2009 U.S. stimulus program.

• 1 Introduction p. 1
• Purpose of the Study p. 1
• Concept Questions p. 2
• Research Questions p. 4
• Research Hypotheses p. 5
• Hypothesis 1 p. 5
• Hypothesis 2 p. 6
• Hypothesis 3 p. 6
• Hypothesis 3a p. 6
• Hypothesis 4 p. 7
• Mediation Test p. 7
• Overview of Chaps. 2-5 p. 8
• 2 Literature Review p. 9
• Introduction p. 9
• Historical Perspective p. 9
• Science and Technology p. 11
• Life Cycles of Technology p. 12
• Invention and Innovation p. 14
• Principles of Innovation p. 15
• Innovation Sources p. 15
• Types of Innovation p. 15
• Framework for Understanding Innovation p. 16
• Measuring Innovation p. 18
• Impacts of Innovation p. 19
• Models of Innovation p. 20
• The "S" Curve p. 21
• Dynamic Models p. 22
• The Innovation Process p. 23
• Product-Process Boundary p. 24
• Innovation and Economic Policy p. 24
• Economic Models p. 25
• Business Perspective of Innovation p. 25
• Firm Perspective p. 26
• Managing Innovation p. 27
• Organizational Influences p. 29
• Knowledge Management p. 29
• Technology p. 30
• Technology Road Map p. 30
• Technology Forecasting p. 31
• Competitiveness p. 32
• Competitive Issues p. 33
• Paradigms of Competitiveness p. 34
• Competitive Strategy p. 35
• Competitiveness Policy p. 37
• Total Factor Productivity p. 39
• History p. 39
• Definition of Total Factor Productivity p. 39
• Alternatives to TFP p. 40
• Gross Domestic Product p. 41
• Definition p. 41
• Components p. 42
• Measures p. 45
• Research and Development p. 47
• Definition p. 47
• Components of R&D p. 48
• R&D and Productivity p. 49
• Knowledge Transfer p. 50
• Spillovers p. 51
• Alliances p. 52
• Measures of R&D p. 53
• Current State Overview p. 55
• Science and Technology Indicators p. 55
• How the Literature Informs and Directs This Research p. 58
• 3 Research Theory and Methodology p. 63
• Theoretical Approach p. 63
• Growth Accounting Methods p. 64
• Multifactor Productivity Growth p. 65
• Methodology p. 65
• Methodological Design p. 65
• Limitations of the Methodology p. 67
• Validity p. 67
• Data Set p. 69
• Confounding Variables p. 70
• Significance p. 73
• 4 Results p. 75
• Organization p. 75
• Data and Analysis p. 75
• Research Question 1 p. 75
• Hypothesis 1 p. 76
• Procedure 1 p. 76
• Assumptions 1 p. 76
• Assumption Tenability 1 p. 76
• Results 1 p. 77
• Implications/Conclusion 1 p. 77
• Research Question 2 p. 77
• Hypothesis 2 p. 77
• Procedure 2 p. 78
• Assumptions 2 p. 78
• Assumption Tenability 2 p. 78
• Results 2 p. 78
• Implications/Conclusion 2 p. 79
• Research Question 3 p. 79
• Hypothesis 3 p. 79
• Procedure 3 p. 79
• Assumptions 3 p. 79
• Assumption Tenability 3 p. 80
• Results 3 p. 80
• Implications/Conclusion 3 p. 80
• Research Question 3a p. 80
• Hypothesis 3a p. 80
• Procedure 3a p. 81
• Assumptions 3a p. 81
• Assumption Tenability 3a p. 81
• Results 3a p. 81
• Implications/Conclusion 3a p. 82
• Research Question 4 p. 82
• Hypothesis 4 p. 82
• Procedure 4 p. 82
• Assumptions 4 p. 83
• Assumption Tenability 4 p. 83
• Results 4 p. 83
• Implications/Conclusion 4 p. 83
• Baron & Kenny Condition 3 p. 84
• Hypothesis BK3 p. 84
• Procedure BK3 p. 84
• Assumptions BK3 p. 84
• Assumption Tenability BK3 p. 85
• Results BK3 p. 85
• Implications/Conclusion BK3 p. 85
• Baron & Kenny Condition 3a p. 85
• Hypothesis BK3a p. 86
• Procedure BK3a p. 86
• Assumptions BK3a p. 86
• Assumption Tenability BK3a p. 86
• Results BK3a p. 87
• Implications/Conclusion BK3a p. 87
• Baron & Kenny Condition 4 p. 87
• Hypothesis BK4 p. 87
• Procedure BK4 p. 88
• Assumptions BK4 p. 88
• Assumption Tenability BK4 p. 88
• Results BK4 p. 88
• Implications/Conclusion BK4 p. 89
• Mediation Test p. 89
• Summary p. 90
• Mediation Test p. 91
• Confounding Variable Effect p. 91
• 5 Conclusions and Recommendations p. 93
• Conclusions p. 93
• Research Question 1 p. 93
• Research Question 2 p. 93
• Research Question 3 p. 94
• Research Question 3a p. 94
• Research Question 4 p. 94
• Mediation Conclusion p. 94
• Summary and Conclusions p. 95
• Policy Implications p. 96
• Implication of Lag Effects Between R&D Expenditures and GDP p. 96
• Implications for the American Recovery & Reinvestment Act of 2009 p. 97
• Future Research p. 100
• References p. 101
• Index p. 107