Innovation Activity in South Africa : Measuring the Returns to R&D
Improvements in productivity is necessary to effectively increase economic growth in the long term.The literature emphasises a positive correlation between firm-level innovation and productivity gains, although evidence for developing countries has...
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/145271530821525760/Measuring-the-returns-to-Research-and-Development http://hdl.handle.net/10986/30265 |
| Summary: | Improvements in productivity is
necessary to effectively increase economic growth in the
long term.The literature emphasises a positive correlation
between firm-level innovation and productivity gains,
although evidence for developing countries has been less
conclusive. It is unsurprising then, that policymakers and
researchers widely acknowledge that innovation is one of the
major drivers of productivity growth, and is therefore of
critical importance to the competitiveness and growth of
firms and the macro-economy. We look at the dynamics of
R&D expenditure in South Africa over the period 2009 to
2014 at the firm level using the South African Revenue
Service and National Treasury Firm-Level Panel, which is an
unbalanced panel dataset of administrative tax data from
2008 to 2016. Expenditure on R&D is used extensively as
a proxy for innovation in the literature as it improves the
capability for developing new products and processes and
improving existing ones. We use a production function
approach to estimate the return to R&D in South African
manufacturing firms, a theoretical framework which is the
predominant approach in the literature. This paper, however,
is one of only a few estimating the return to R&D using
firm-level data in a developing country. |
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