Objectives This work focuses primarily on the analysis of Korean industries’ R&D effect to TFP(Total Factor Productivity), an important indicator of innovation and economic growth. We estimate TFP elasticity of R&D stock by different sectors of Korea manufacturing industries. Methodology R&D Stock (perpetual inventory method by Jeorgenson) RD(stock) t = RD(flow) t + (1-γ) RD(stock) t-1 RD(stock) t0 = RD(flow) t0 {(1+g)/(g+ γ)} * γ:obsolescence rate of R&D stock, g: average growth rate of R&D stock TFP (Value Added Account Growth using Cobb-Douglas function) Y i,t = A K i,t α L i,t β lnA i,t Y = lnTFP i,t = lnY i,t – α lnK i,t – β lnL i,t * Y:Value Added, A:TFP, K:Capital stock, L:Labor input, α:Capital stock ratio to value added, β:labor ratio to value added, i:industy, t:year Elasticity (Co-integration test & Vector Error Correction Model) H0(null) : lnTFP i,t – β lnRND i,t-1 = 0 ∆lnTFP i,t = λ ∆lnTFP i,t-1 + α ∆lnRND i,t-2 + η ∆lnTFP i,t-1 + β ∆lnRNDV i,t-2 + ε i,t * RND:R&D Stock, β:long-term elasticity to TFP, i: industry, t:year, ε:error Data base Unbalanced panel of Korean manufacturing industry covering the 12 year period Data sources: the Survey of R&D activities in Science and Technology of Korea, the Survey of Mining and Manufacturing of Korea, and Economic Statistics System of the Bank of Korea Main variables : Value Added, investment in R&D of each industrial sector, Capital·Labor input and ratio to value added Also, two kinds of R&D stock obsolescence rates were used in this study. First approach is using the previous research result of Suh(2005), which estimates different obsolescence rate of the 7 industries( ) using 695 Korean firms’ data. Second approach is using suggested by many literatures. Results 4 tech sector according to OECD classification : high-tech is most high, but low-tech is not most low 23 industry classification according to KSIC Policy implications ‘TFP elasticity of R&D difference between each sector/industry can be utilized for innovation-policy decision making in national R&D strategy. Especially, these estimates as basic data showing the difference between technology sector / industries could be used in Benefit-Effectiveness Analysis(BEA) for feasibility study of new large scale R&D program. Next steps / The way forward Estimation of obsolescence rate of each industry Estimation of R&D contribution ratio in economic growth Study to explain low-tech sector’s high elasticity Total Factor Productivity Elasticity of R&D Investment Empirical Research on Korean Manufacturing Industries Contact SeungKyu Yi, Eunjung Ma Korea Institute of Science and Technology Evaluation and Planning(KISTEP) Seoul, Korea Tel / NOTES 1.Poster Title Replace the mock-up text of the poster title (”Joint Research Centre”) with the text of your own title. Keep the original font colour (100c 80m 0y 0k). Keep the flush-right justification. Set it in Helvetica Rounded Bold Condensed, if you own the typeface. Otherwise, in Arial, Helvetica or Verdana – plain or bold. Keep the original font body size (102 pt or, preferably,120 pt) and the title on a single line whenever possible. 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Dev.Observation ln (R&D Stock) ( ) ln TFP ( ) SectorElasticity 1 (different Obsolescence rate) Elasticity 2 (Obsolescence rate=0.125) Observation High-tech Mid-high tech Mid-low tech Low tech Manufacturing IndustryTech. sector Elasticity 1 (different Obsolescence rate) Elasticity 1 (Obsolescence rate=0.125) Observation Beverage and Food productsLow Tobacco productsLow Textile, except Apparel and FurLow Apparel and Fur productLow Leather, Luggage and FootwearLow Wood, Wood and Cork product, ex. Fur.Low Pulp, Paper, Paper productLow 24 Publishing, Printing, Recorded media reproduction Low Coke, Refined Petroleum, Nuclear fuelMid-low 16 Chemical material and productMid-high 106 Rubber and Plastic productMid-low Non-metallic mineralsMid-low Basic metal productMid-low Fabricated metal productMid-low Other machinery and equipmentMid-high Office, Accounting machineryHigh 16 Other electrical equip. and TransformersMid-high Electric video and audio equip., telecom.High Medical, Precision and Optical inst., Watches and clocks High Motor Vehicles, Trailers, SemitrailersMid-high Other Transport equip.Mid-high Furniture and other ManufacturingLow Recovery material reproducingLow 16 Total Approach Research is conducting on 23 groups according to 2- digit category of KSIC(Korea Standard Industry Classification) and four sectors according to OECD technology sector and product classification