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Three essays on R&D and technological progress

University of British Columbia

This thesis investigates several aspects of research and development (R&D) and technological progress. In Chapter 2 of the thesis, major stylized facts about R&D and other economic activities established in the existing empirical literature are reviewed and summarized. The chapter also undertakes some original empirical work. Specifically, the role of firm size in the determination of R&D intensity is examined, and the market evaluation of intangible assets of knowledge is investigated. Both relationships are estimated using alternative formulations and a set of pooled cross-section and time-series data for the U.S. In Chapter 3, the relationship between the R&D investment decisions and the financial decisions of a firm is studied from the perspective of managerial behaviour. A model of managerial agency costs is set up and the relationships between agency costs, debt financing, R&D investment, and the technological state of the firm are analyzed. Comparative statics analysis shows that firms with different technologies may choose different levels of financial leverage and R&D investment. In particular, firms possessing superior technology tend to invest more on R&D projects and use less debt than firms with "normal" technology. The chapter also presents some empirical evidence that supports this relationship. In Chapter 4, a general equilibrium model is set forth to study the economic consequences of technological progress in the manufacturing sector. Empirical evidence has shown that the service sector has been growing rapidly relative to manufacturing, signifying a significant shift in economic structure in several countries, particularly the U.S. This essay shows that this structural shift can be partly explained by fast growing productivity in the manufacturing sector. Also, the impact of the structural shift, particularly on capital investment, is examined within a general equilibrium framework. Different assumptions, with regard to the capital intensiveness of the service sector and with regard to the type of technological change, yield different predictions. Empirical evidence reveals that past technological changes have been principally labour saving and that the service sector in the U.S. economy is likely to be relatively capital intensive.

Text

2010-10-18

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http://hdl.handle.net/2429/29330

Business Administration

University of British Columbia

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