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An International perspective on the productivity paradox – by Alain ...

An International perspective on the productivity paradox – by Alain ...

Taking into account such

Taking into account such R&D driven component ofcountry fixed effect suggests larger role by R&DContribution to deviation of GDP per capita against 20 OECD country average(2000-2007)50%40%30%20%10%0%Country fixed effect notpredicted by R&DCountry fixed effectpredicted by R&DHuman capitalPhysical capital-10%-20%Actual GDP per capitaPredicted GDP capita-30%-40%-50%-60%NOR USA IRL CHE NLD CAN AUT DNK BEL DEU GBR SWE AUS FRA FIN JPN ITA ESP NZL PRT18

Incorporating R&D reduces NZL’s MFP gap vis-à-vis OECDaverage by between 3 and 10% points0.40.30.20.1Country fixed effect plus residual from MRW regressionunder various settingsAUS_baseAUS_R&Daugumented modelAUS_R&D controlledFENZL_base0-0.1-0.2-0.3-0.41990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007NZL_R&Daugumented modelNZL_R&D controlledFEUSA_baseUSA_R&Daugumented modelUSA_R&D controlledFE19

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