Date of Award

6-2014

Document Type

Open Access

Degree Name

Bachelor of Arts

Department

Economics

First Advisor

Mehmet Fuat Sener

Language

English

Keywords

OECD, growth, policy, resources, productivity

Abstract

The long-term slowdown in productivity growth for OECD countries, despite increased resources allocated to R&D, has once again raised the issue of limits of technological change. I explore the relationship between labor productivity growth and R&D intensity, using macro-level panel data from OECD countries. My empirical analysis essentially tests the semi-endogenous growth theory against the fully-endogenous Schumpeterian growth theory. The semi-endogenous framework assumes diminishing returns to R&D and requires positive population growth to generate long-run growth. The fully-endogenous framework assumes growing product variety and requires a constant share of R&D inputs in overall inputs in order to generate positive long-run growth. My empirical findings are more supportive of the semi-endogenous growth models. The results thus imply that policy changes that increase the share of resources allocated to R&D may have little impact on productivity growth.

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