In this paper, we conduct a comparative study for the effect of R&D investment on
total factor productivity(TFP) in order to compare the efficiency of R&D spending among
different OECD countries. For the analysis, we first pool the data from 22 OECD member
countries during 1981-2004, and estimate TFP elasticity of R&D investment of that group.
Then we evaluate TFP elasticity of R&D investment of five major advanced countries
such as USA, Japan, Canada, Italy and Korea from 1970 to 2004. Finally, we investigate
whether the efficiency of R&D investment of Korea has improved over the period by
dividing the period into two parts, before and after 1990.
From the empirical analysis, we find that the estimated R&D efficiency of Korea has
been similar to that of a group of 22 OECD countries. The estimated R&D efficiency of
Korea has been higher than those of Canada and Italy, but lower than those of USA and
Japan. In sum, the R&D efficiency of Korea has reached the average level of OECD
member countries.
In addition, we find that the R&D efficiency of Korea after 1990 has been much higher
than the efficiency before 1990. Thus, we can say that the R&D efficiency of Korea has substantially improved over the course of a period. We surmise that increased R&D
spending done by major conglomerates and technological innovation have contributed the
improvement of R&D efficiency since the year of 1990.