Publication Type
Working Paper
Version
publishedVersion
Publication Date
7-2025
Abstract
R&D has grown robustly, yet aggregate productivity growth has stagnated. Is this because “ideas are getting harder to find”? Using microdata from the US Census Bureau this paper estimates R&D effectiveness in the manufacturing sector from 1976 to 2018. We find that the marginal effect of R&D on output and the gross marginal returns to R&D have risen sharply. But rivals’ R&D has also gotten more effective, raising expected obsolescence. But firm productivity growth rises with growth in the R&D stock. Higher obsolescence slows the accumulation of R&D capital, reducing the contribution to productivity growth and shortening innovation lives.
Keywords
innovation, productivity, obsolescence, R & D
Discipline
Economics | Growth and Development
First Page
1
Last Page
49
Identifier
10.2139/ssrn.5242171
Publisher
SSRN
Citation
ANDO, Yoshiki; BESSEN, James; and WANG, Xiupeng.
The rising returns to R&D: Ideas are not getting harder to find. (2025). 1-49.
Available at: https://ink.library.smu.edu.sg/soe_research/2846
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.2139/ssrn.5242171