Research and Development, Training, and Productivity: A Firm-Level Analysis

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This research examines the micro-foundations of the determinants of the level and growth of productivity in developing countries by focussing on the roles of firm level research and development (R&D) and job training expenditures. The objectives of the project are to (1) describe the incidence and patterns of firm level training and R&D expenditures; (2) study the economic factors that influence firm decisions to invest in R&D and training; and (3) the impact of R&D and job training on the level and change in productivity at the firm level. At the heart of productivity growth is technological change. In rapidly developing countries, the encouragement of high technology development is closely linked to a growth strategy which is export- oriented. Furthermore, at the microlevel, success at the exporting game is often linked to large enterprises. Here we link the three forces of technology, export-orientation and productivity in determining firm investment decisions and their outcome. This research is based on a unique and rich micro-database of the Taiwan Census of Manufactures for the period from 1976 to 1991 that covers all plants in the country's manufacturing sector. Data on firm-level R&D, training and export sales, virtually non-existent for most countries, are reported in this database. This data is combined with recently developed microdata empirical techniques to gain insights into the determinants and effects of key factors in the industrial development process in rapidly developing economies.