Resource misallocation, R&D spillover and productivity: A study of Chinese and UK manufacturing firms

Li, Kun 2022. Resource misallocation, R&D spillover and productivity: A study of Chinese and UK manufacturing firms. PhD Thesis, Cardiff University. Item availability restricted.

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Abstract

This thesis investigates the resource misallocation in the presence of the externality of R&D spillover in the Chinese and the UK manufacturing sector. It takes capital, labour, as well as the R&D input as production factors and measure the output loss caused by the resource misallocation. This thesis extends the resource misallocation model proposed by Hsieh and Klenow (2009) by considering the externality of R&D input. We find that the output loss computed from the approach suggested by the literature is overestimated when they do not consider any externality. The externality of R&D spillover can alleviate resource misallocation. We then propose an improved allocation that is a weighted sum of the solution maximizing the industry output and the solution maximizing the industry R&D spillover. This allocation generates a larger output, implying that the allocative efficiency is increased. We also decompose the industry productivity and output in an approximation to gauge the individual contribution of each input misallocation to the output loss. The results show that the largest contribution in Chinese manufacturing sector is from labour misallocation, while capital misallocation explains most of the output loss in the UK manufacturing sector. In the end, we estimate the effect of firm’s own R&D effort and intra-industry and inter-industry R&D spillover for Chinese listed firms. The firm’s own R&D effort has positive effect on the productivity in the manufacturing sector. The intra-industry R&D spillover is negative in the manufacturing sector suggesting innovative rivalry between firms. The positive inter-industry R&D spillover in the non-manufacturing sector implies that non-manufacturing firms are more likely to communicate and cooperate rather than compete in R&D activities.

Item Type:	Thesis (PhD)
Date Type:	Completion
Status:	Unpublished
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > H Social Sciences (General)
Uncontrolled Keywords:	Resource misallocation; R&D; Knowledge spillover; Innovation; Productivity; Intr- and Inter- R&D spillovers
Date of First Compliant Deposit:	7 July 2023
Last Modified:	10 Feb 2024 02:30
URI:	https://orca.cardiff.ac.uk/id/eprint/160876

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