Productivity and research and development in two Canadian forest product industries
1996
Mohnen, P. | Jacques, R. | Gallant, J.S.
This paper examines the role of research and development (R&D) in two important sectors of the Canadian economy, its pulp and paper and wood industries. A cost of adjustment model with two quasifixed inputs (capital and R&D) and three variable inputs (labor, materials, and wood) is used to estimate the technology, the rate of return on R&D, and its contribution to total factor productivity growth in these two industries. The sample is from 1963 to 1988. R&D is found to earn a net real after-tax annual rate of return of 1.6% in the pulp and paper industry and of 7.8% in the wood industry. The contribution of R&D to total factor productivity growth is minimal. Scale remains the main determinant of total factor productivity growth.
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