Impact of rd on the productivity growth of manufacturing firms in vietnam

' UNIVERSITY OF ECONOMICS HO CHI MINIJ CITY VIETNAM INSTITUTE OF SOCIAL STUDIES THE HAGUE THE NETHERLANDS VIETNAM — NETHERLANDS PROJECT ON DEVELOPMENT ECONOMICS IMPACT OF R&D ON THE PRODUCTIVITY GROWTH OF MANUFACTURING FIRMS IN VIETNAM By Duong Thi Phuong Ngoc Academic supervisor: Dr Vo Van Huy TRUONG D8| HQC #|HH TETP.MCH CHUOMGTR|NH º Ho Chi Minh City, November, 2008 A CD*÷ T A O CERTIFICATION I certify that the substance of this thesis has not already been submitted for any degree and is not being currently submitted for any other degrees I also certify that, to the best of my knowledge, any help received in preparing this thesis, and all sources used, have been acknowledged in the thesis Signature Duong Thi Phuong Ngoc ACKNOWLEDGMENT In completing this thesis, I am indebted to numerous individuals but I cannot name them all here First of all, I would like to thank all the staff and teachers of the Project for their valuable lessons, good learning facilities and warm attitudes during my school time My deepest gratitude goes to my supervisors, Dr Vo Van Huy, and Dr Nguyen Trong Hoai for their valuable comments and instructions concerning my thesis I am also very grateful to Mr Luong Vinh Quoc Duy, a teacher of the Project, for his support and lectures in econometrics Finally, I would like to thank my friends, my family who have been always behind me, given me moral support, encouragement, and sympathy that have helped me gain more strength to complete this work ABSTRACT This study examines the relationship between R&D expenditure and productivity growth of manufacturing firms in Vietnam Data on 264 manufacturing firms having positive R&D, which was drawn from the data set of Vietnam Enterprise Survey conducted by the General Statistics Office in 2004, is used for analysis A regression model is estimated based on the Cobb-Douglas production function and the R&D capital model with three main independent variables: physical capital, labor and R&D capital, and dummy variables reflecting type of ownership and size of labor R&D capital is measured in a simple way by using available R&D expenditure in the survey and ignoring the accumulation of R&D expenditure in the past, its deflation and obsolescence However, a positive and significant impact of R&D expenditure on productivity is found with the elasticity of productivity with respect to R&D expenditure per labor is about 0.1 Moreover, the effects of physical capital and labor on productivity are also positively and statistically significant The elasticities of productivity with respect to physical capital per labor and total labor are around 0.35 and 0.15, respectively TABLE OF CONTENT CHAPTERI: INTRODUCTION 1.1 RATIONALE OF THE RESEARCH .1 1.2 OBJECTIVE OF THE RESEARCH .3 1.3 RESEARCH METHODOLOGY 1.4 THESIS STRUCTURE .3 CHATPER 2: LITERATURE REVIEW 2.1 INTRODUCTION 2.2 CONCEPTS 2.2.1 Research and experimental development (R&D) .5 2.2.2 Productivity .7 2.2.3 Manufacturing sector 2.3 ECONOMIC THEORIES 2.3.1 Production theories 2.3.1.1 Cobb-Douglas Production Function 2.3.1.2 The Law of Diminishing Returns 11 2.3.2 R&D Capital Model .12 2.3.3 Suggested research model from economic theories 14 2.4 EMPIRICAL STUDIES .15 2.4 Overview .15 2.4.2 R&D and Productivity in French manufacturing firms 16 2.4.3 R&D and Productivity Growth in Japanese manufacturing firms 18 2.4.4 The effect of R&D Capital on Danish Firm Productivity 19 2.5 SUMMARY 20 CHAPTER 3: OVERVIEW OF R&D AND FIRM PERFORMANCE IN VIETNAM .22 3.1 INTRODUCTION 22 3.2 R&D ACTIVITIES IN VIETNAM .22 3.3 STRUCTURE OF THE R&D SYSTEM IN VIETNAM .25 3.4 LINKAGE BETWEEN THE PRODUCTIVE SECTOR AND R&D INSTITUTIONS .27 3.5 SUMMARY 29 CHAPTER 4: RESEARCH METHODOLOGY 30 4.1 INTRODUCTION 30 4.2 MODEL SPECIFICATION 30 4.3 DATA TRANSFORMATION 34 4.3.1 Labor productivity based on output (Y/L) 34 4.3.2 Physical capital per labor (K/L) .35 4.3.3 R&D expenditures per labor (R/L) 35 4.3.4 Firm sizes (LARGESCL, MEDIUMSCL) .35 4.3.5 Types of ownership (STATE, FOREIGN) 36 4.4 SUMMARY 36 CHAPTER 5: RESULT ANALYSIS .37 5.1 INTRODUCTION 37 • 5.2 FIRMS CHARACTERISTICS 37 5.3 REGRESSION ANALYSIS 43 5.3 SUMMARY 47 CHAPTER 6: CONCLUSIONS AND RECOMMENDATIONS .48 6.1 CONCLUSION .48 6.2 POLICY RECOMMENDATIONS 50 6.2.1 Experience of Korea 50 6.2.2 Policy Recommendations 51 6.3 LIMITATIONS OF THE RESEARCH 52 54 APPENDIX .57 Appendix 1: A System Model for Technological Innovation 58 Appendix 2: Regression results .59 Appendix 3: White Heteroskedasticity Test 59 • LIST OF TABLES Table 2.1: Overview of main productivity measures Table 1: Science & Technology Organizations in Vietnam by 31 Dec 2003 26 Table 3.2: Ranking of most wanted services (for firms) and most capable activities (for academic institutions) of enterprises 28 Table 5.1: Industrial Classification of the Sample 39 Table 5.2: Statistics Summary 41 Table 5.3: Correlation matrix from the variables in the function 43 Table 5.4: Coefficients and statistics for the productivity model 45 LIST OF FIGURES ' Figure 2.1: The effect of technology improvement 12 Figure 1: Percentage of GDP spent on R&D in 1996 23 Figure 3.2: Expenditure on R&D by Government and Business sector in 2002 .23 Figure 3.3: Sector-wise R&D Expenditure in Vietnam in 2002 24 Figure 3.4: R&D Personnel per Thousand of Total employees in z002 25 Figure 5.1: R&D firms by ownership .38 Figure 5.1: Structure of firms by size .38 Figure 5.3: Total cost for research & development of technology by resources .42 Figure 5.4: Total cost for research & development of technology l›y purposes 42 ACRONYMS CBO Congressional Budget Office EU European Union GDP Gross Domestic Product MFP Multifactor Productivity MOST Ministry of Science and Technology NACE Classification of Economic Activities in the European Community NISTPASS National Institute for Science and Technology Policy & Strategy Studies OECD Organization for Economic Cooperation and Development OSTP Office of Science and Technology R&D Policy Research & Development sME Small and Medium Enterprise VES Vietnam Enterprise Survey VND Vietnamese Dong CHAPTER INTRODUCTION 1.1 RATIONALE OF THE RESEARCH In the modem economy today, technological progress has a quite central role It contributes importantly to growth of economy and is a key factor to determine the competitiveness of firms in both national and international marketplace Research and Development (R&D) is widely regarded as the core of technological advance, and innovative capacity of firms are reliably indicated by levels and rates of R&D expenditures growth Countries belonging to the Organization for Economic Cooperation and Development (OECD) spend significant amounts on R&D activities , On average, OECD countries have spent more than percent of GDP on annual public and private R&D investments during the last two decades (OSTP', 1997) In a traditional way, firms have paid attention to R&D because the technical advances resulting from innovation may allow them to improve productivity, succeed in competitive markets, and meet environmental and regulatory requirements Besides, R&D has also had contribution to the development of new pr‹›ducts and, in many cases, the creation of new markets Within firms, economic returns are always taken into consideration on deciding the importance and nature of R&D performance Firms usually take part in R&D activities only when the results are appropriate and offer higher rates of return than that of other available investment alternatives such as acquisition of new machinery, advertising, or purchase of speculative assets There are many sources for productivity improvements, but one strategy for enhancing productivity growth which is widely acknowledged is increasing the stock of knowledge This stock of knowledge can be increased by formal investment in ' OSTP is Office of Science and Technology Policy CHAPTER CONCLUSIONS AND RECOMMENDATIONS 6.1 CONCLUSION In this study, the relationship between R&D expenditure and productivity of manufacturing firms has been analyzed based on a sample of 264 manufacturing firms reporting positive R&D The sample was drawn from the data set including 91,755 observations in all sectors of the Vietnam Enterprise Survey in 2004 In the sample, state-owned firms account for 59.470 o while foreign firms account for only 11.74% Large scale firms (>249 employees) make up more than 60% of the sample, the medium (50 — 249 employees) and small (1- 49 employees) make up 25.38% and 13.26%, respectively With reference to the industrial classification, firms manufacturing Chemicals and Chemical Products account for the largest share of the sample (17.08%) The second largest share belongs to firms operating in the Food Products and Beverage manufacturing (17.05%) The statistic summary indicates that state-owned enterprises seem to perform in a less efficient way than foreign ones on average Furthermore, foreign firms seem to be stronger in capital resource and invest more in innovation, R&D activities than stateowned firms and the others Regarding the structure of total cost for research and development of science & technology of manufacturing firms in the sample, 820 o of the cost is financed by firms themselves Nevertheless, 81% of such cost is used for developing technology and just 17% is used for research In relation to the analytical framework of the research, the regression equation was estimated mainly on the basis of the Cobb-Douglas production function and the R&D capital model It was formulated in a logarithmic form and had statistical validity The regression model can be written as follows: K Z og( ) = 2.24 + 0.35 log( — ) + l0log( ) + l5log L + 0.26LARGESCL + 0.28MEDIUMSCL + 0.53STATE + 1.34FOREIGN + u (6.1) The most important finding of the research is that R&D investment was a significant determinant of growth of firm productivity Holding other variables constant, 1% increase in R&D expenditure per labor leads to about 0 o of labor productivity growth Even though R&D capital was measured in a much simpler way than most related studies usually by using available R&D expenditure in the survey, the result is so surprised It is due to the statistical significance and positive sign of R&D elasticity coefficient The reasons may be that most R&D activities of Vietnamese enterprises are problem-solving, not science-based and most of R&D expenditure are for developing technology, not for research In addition to R&D capital, other independent variables are also statistically significant The elasticities of productivity with respect to physical capital per labor and total labor were around 0.35 and 0.15, respectively Physical capital per labor and labor have more effects on productivity growth than R&D expenditure per labor Moreover, ownership and firm size also have impacts on productivity growth rate If other variables are held constant, it is found that the productivity growth rate in foreign firms is higher than in state-owned and other firms There is no difference between state-owned firms and others due to the insignificance of STATE variable Similar to foreign firms, productivity growth rate of medium-sized firms (50-249 labors) is a little bit higher than that of large-sized firms (>249 labors) and much higher than small-sized firms In conclusion, besides usual production inputs such as physical capital and labor, R&D activities also plays an important role in productivity growth of manufacturing firms in Vietnamese case Hence, the first research question as mentioned in the first chapter is answered Regarding the second research question, manufacturing firms should pay more attention on investment in R&D activities in order to increase their productivity The section below will discuss some policy recommendations to support firms 6.2 POLICY RECOMMENDATIONS 6.2.1 Experience of Korea In order to stimulate R&D activities in the industry sector, the Korean Government used a variety of methods and policies which were flexible to different periods and national development strategies In 1960s and 1970s, polices mainly focused on tax motivation and preferential treatment to R&D activities However, these policies’ - results were below expected level because firms in the industry sector lacked of clear demand for investment in R&D and they thought that it was easy to access prevailing technology from many sources In 1980s, there were other motivation methods such as: decreasing tax rate applied for importing R&D equipment; spending for R&D and development of R&D human resources were considered as activities deducted from tax; or exempting fixed assets relating to R&D from taxes, and so on Moreover, the Korean Government launched some indirect programs stimulating R&D activities such as International Standard Korean Products Program; or the Government built a list of 21 products relating to 59 manufacturers in the industry sector to provide supports Besides tax motivation methods, the Government also had financial supporting policies to encourage enterprises in investment for R&D activities Small enterprises, which were unable to establish their own R&D centers, were encouraged to cooperate with other firms Thanks to such solutions, the number of R&D institutes and associations increased sharply, especially in 1980s — 1990s In September 1999, Korean Industrial Property Office launched a campaign to support SMEs This program aimed at encouraging all SMEs to invent new technologies and use them as their key business assets In order to achieve the target, the program was conducted in such steps as strengthening the community’s awareness of intellectual property; connecting R&D activities with intellectual property; improving patentissuing procedure; and supporting the usage, transaction of patent technologies Furthermore, in order to support financial resources for the commercialization of new technologies, the Government stimulated the development of private venture capital and initiated by establishing government venture funds The Government also enhanced capital market for newly-established firms, science and technology firms; and developed a secondary stock market for them 6.2.2 Policy Recommendations Majority of Vietnamese firms now are small or medium in scale, weak in financial resources; therefore, investment for R&D activities is limited Besides, the domestic market for technology services has not developed, firms not have information about researches, inventories conducted in the country Therefore, many firms just take into consideration the acquisition and development of new equipment, and ignore research or technology transfer SME enterprises often rely on external sources for their R&D because local R&D institutions have not well connected with enterprises For many reasons, R&D activities have not been invested at a proper level However, in the context of international integration today, enterprises have no choice to survive and develop by investing for R&D activities and technology innovation as well These activities may help firms improve production capabilities, which lead to productivity growth, production costs saving, lower price of products and higher competition ability Even though these activities may take times, require a large amount of capital, and suffer high risks, firms must be determined to conduct these activities because it is a long-term investment In addition to firms’ own attempts, supports from the authority are necessary to stimulate their R&D investment Thus, in this research, some policy recommendations are drawn based on the experience of Korea and the actual context of Vietnam to encourage firms to invest in R&D activities as follows: - Equitizing R&D institutions so that they can be more active, creative and • responsible in their activities to meet demand of the productive sector As mentioned before, the research infrastructure of Vietnam is lower than international standards, the link between the productive sector and research institutions is weak Local enterprises depend on external sources for R&D and foreign ones rely on their parent companies in home countries In general, the support of R&D institutions and universities to firms is under desirable level Equitization may enable them to operate in a more market-oriented and efficient way Through this, R&D institutions may have better contribution in supporting enterprises - Focus on tax motivation and preferential treatment to R&D activities - such as decreasing tax rate applied for importing R&D equipment; spending for R&D and development of R&D human resources are considered as activities deducted from tax; exempting fixed assets relating to R&D or Technology Development Fund from taxes, etc - Establishing R&D venture funds of the government to support financial resources for firms and stimulate the development of private venture capital These funds must be managed and supervised strictly to make sure that the capital is used in right places, at right time and for right purposes - Stimulating firms to establish their own R&D departments or cooperate with other firms This policy should be specified by programs or campaigns, which are conducted in many years and at the national level 6.3 LIMITATIONS OF THE RESEARCH The research does of course have some limitations First of all, most studies regarding the contribution of R&D to productivity growth suffer the double counting of R&D labor and physical capital, which are counted once in measuring labor and physical 52 • capital and once again in measuring R&D capital (Cuneo and Mairesse, 1983) However, the research subtracted only R&D labor from the total labor and failed to correct the double counting of physical capital In reality, the task is impossible because the limitation of the data Secondly, due to the availability of data in only one year 2004, the research failed to measure R&D in a way it should have been done R&D capital was measured by available R&D expenditure in the data The research ignored the accumulation of past R&D spending, its lag, deflation and depreciation Moreover, the relationship between R&D expenditure and productivity growth was examined for only year, therefore, the result of R&D elasticity is still skeptical This fact is the suggestion for another • research in the future, which use panel data or time-series data, instead of crosssectional data Measurement of R&D expenditure in many years may bring a more reliable result than the recent study does • REFERENCE Bezanson et at (2000) A Science Technology and Industry Strategy for Vietnam [online] Available: http://www.unido.org/fileadmin/import/20398 kbfin.pdf Congressional Budget Office (2005) R&D and Productivity Growth [online] Available: http://www.cbo.gov/ftpdocs/64xx/doc6482/06-17-RD.pdf Cuneo, P and Mairesse, J (1983), Productivity and R&D at the firm level in French manufacturing [online] Available: http://www.nber.org/papers/w1068.pdf Eris, E.D and Saatcioglu, Y (2006) A System Look For Technological Innovation: Firm Based Perspective [online] Available: http://www.iseing.org/emcis/EMCIS2006/Proceedings/Contributions/C52/CRC/eris o 20&%20saatcioglu%20CRC.pdf Graversen, E K and Mark, M (2005) The Effect of R&D Capital on Firm Productivity [online] Available: http://www.cfa.au.dk/Publikationer/Working apers/WP2005 3.pdf Griliches, Z (2000) R&D, Education and Productivity, London: Harvard University Press Gujarati, D.N (2003) Basic EconométFlCs, Fourth Edition, International: McGraw- Hill Kwon, H.U and Inui, T (2003) R&D and Productivity Growth in Japanese Manufacturing Firms [online] Available: http://www.esri.go.jp/jp/archive/e dis/e dis050/e dis044a.pdf Mairesse, J and Sassenou, M (1991) ‘R&D and Productivity: A Survey of Econometric Studies at the Firm Level’, NBER Working Paper No 3666 Matteucci, N and Sterlacchini, A (2004) ICT, R&D and Productivity Growth: Evidence from Italian Manufacturing Firms [online] Available: http://www.isae.it/Matteucci Sterlacchini ICT.pdf Nguyen, M.Q (n.d.), The Role of Technology Upgrading to Enhance Growth and Competition: The Case of Vietnam Available: http://info.worldbank.ore/etools/docs/library/238724/ o20AIF-Vietnam-Quan.pdf Nguyen, V.H., and Tran, N.C (n.d.) The Role of Academic Institutions in Economic Development: The Case of Vietnam [online] Availabe: http://www.fpi.lu.se/ media/en/research/universidad06-vietnam.pdf OECD (1994) Main Definitions and Conventions for The Measurement of Research and Experimental Development (R&D) [online] Available: http://www1.oecd.org/dsti/sti/stat-ana/prod/e 94-84.pdf OECD (2001) Measurement of Aggregate and Industry-Level Productivity Growth [online] Available: http://www.oecd.org/dataoecd/59/29/2352458.pdf OSTP (1997) Chapter 2: The Role of R&D and The Changing R&D Paradigm [online] Available: http://belfercenter.ksI:.harvard.edu/files/pcast97 ch2.pdf Pindyck, R.S and Rubinfeld, D.L (1992) Microeconomics, Second Edition, Singapore: Macmillan Rogers, M (1998) The Definition and Measurement of Innovation [online] Available: http://www.melbourneinstitute.com/wp/wp1998n10.pdf Tran, N.C (n.d.) Vietnam’s Innovation System: Toward a Product Innovation Ecosystem [online] Available: http://crds.jst.go.jp/GIES/archive/GIES2006/participants/abstract/33 ca-ngoc- tran.pdf US Census Bureau ‘NAICS Sector: 31-33 Manufacturing’ [online] Available: http://www.census.gov/epcd/ec97/def/3 I-33.HTM 55 Wang, J.C and Tsai, K.H (2003) Productivity Growth And R&D Expenditure In Taiwan’s Manufacturing Firms [online] Available: http://www.nber.org/papers/w9724 http://www.ie.I:c.ca/canadian industry statistics/cis.nsf/IDE/cis31-33defe.html European Commission (n.d.) The new SME definition: User guide and model declaration [online] Available: http://ec.europa.en/enterprise/enterprise olicy/sine definition/sine user guide.pdf 56 APPENDIX Appendix 1: A System Model for Technological Innovation I N P U T TECHNOLOGICAL INNOVATION in orn6ton r lows Organizatf›n Structure Tech nology Policiy Vslues of Toy k'anagement O U TP U T RESEARCN PI-IASE HlJM6ri Resources Culture A Cllmate Technoiogy orgar izationa Polices nn›vttion Stir›u lstion - TaCk Tccr n ology - An alyscs of p atcms DEMAND - bGfltlTC6-l0F Of lfi F 0\'btlPFI thf0lJ§lT ID l0FFTBt0Tl SIDE pi ov kJe0 Dy sector expeils - ocntlfcatlor ot In r o vstlons by' co nip any ma r a gers - oextirca'ior o r Inr cvaticn o rre i›i ln format on Innovato n - fit&U b ud §9t - rxislance ef f0r» a lze0 R6C In tne cei» periy 4iaecr»in otcd in tcsh r ical ond trodc journc to PRQDUC T DEV£LOPMER T PhASE - uccejJt8n ce on pu bllcy-fun4ec In In aton su vp c n si ogi sins PROCESS IRREVERSIBLE Customer’s Customer n Suppliers RESOURCES Plant Ecu iornent Finance lrtetectual Pro0ertv Su pplicr's SJpplicr Government - Funded Research FIRM INNOVATIVENE 55 n Prhate Laboratu a rics Private Non Profits Cornplernenbry In eos'aatiors Conpet1isrs & keBated Industries Other Nations Industries n "”””"”’ F Source: ERIS and SAATCIOGLU (2006) 58 A§pendix 2: Regression results D pendent Variable: LNY_L ethod: Least Squares te: 10/10/08 Time: 10:31 S mple: 264 I cluded observations: 264 ei htin series: WT Variable C LNK_L LNR_L LNL LARGESCL MEDIUMSCL STATE FOREIGN Wei hted Statistics 'R-squared Adjusted R-squared S.E of regression Sum squared resid Log likelihood Durbin-Watson stat Coefficient Std Error t-Statistic Prob 2.237172 0.348719 0.102087 0.146887 0.264594 0.282921 0.530748 1.335641 0.712025 0.004822 0.008608 0.002992 0.097490 0.129530 0.708885 0.709033 3.141987 72.32569 11.85892 49.09914 2.714059 2.184208 0.748708 1.883750 0.0019 0.0000 0.0000 0.0000 0.0071 0.0299 0.4547 0.0607 0.999999 0.999999 0.076562 1.500597 307.8515 2.265667 Mean dependent var S.D dependent var Akaike info criterion Schwarz criterion F-statistic Prob(F-statistic) 6.972957 90.08528 -2.271603 -2.163241 179317.4 0.000000 Unweighted Statistics R-squared Adjusted R-squared S.E of regression Durbin-Watson stat 0.315112 0.296384 1.122315 1.412164 Mean dependent var S.D dependent var Sum squared resid 5.287641 1.337972 322.4556 Appendix 3: White Heteroskedasticity Test White Heteroskedasticity Test: F-statistic Obs*R-squared 0.447285 13.86564 0.994234 0.992036 Probability Probability Test Equation: Dependent Variable: STD_RESID°2 Method: Least Squares Date: 10/10/08 Time: 10:33 Sample: 264 Included observations: 264 Variable C LNK L LNK_Lº2 LNK_L*LNR_L LNK L*LNL Coefficient Std Error 0.253502 -0.014881 -0.001331 0.000746 0.007081 0.129734 0.025232 0.002203 0.002087 0.005961 t-Statistic Prob 1.954011 -0.589758 -0.604314 0.357607 1.187928 0.0519 0.5559 0.5462 0.7210 0.2361 59 LNK_L*LARGESCL LNK L*MEDIUMSCL LNK L*STATE LNK L S REIGN LNR L LNR L°2 LNR L*LNL LNR L*LARGESCL LNR L*MEDIUMSCL LNR_L*STATE LNR L*FOREIGN LNL LNL"2 LNL*LARGESCL LNL*MEDIUMSCL LNL*STATE LNL*FOREIGN LARGESCL LARGESCL*STATE LARGESCL*FOREIGN MEDIUMSCL MEDIUMSCL*STATE MEDIUMSCL*FOREIGN STATE FOREIGN R-squared Adjusted R-squared S.E of regression Sum squared resid Log likelihood Durbin-Watson stat -0.022224 -0.009213 0.002042 0.005354 -0.004590 -0.000568 0.000820 -0.002184 -0.000614 -0.003715 0.004304 -0.156087 0.022853 -0.174192 -0.078150 -0.025378 -0.026753 0.907317 0.087808 0.080613 0.324991 0.038309 0.036714 0.078466 0.057721 0.025198 0.018205 0.011762 0.018607 0.016671 0.001045 0.004072 0.016902 0.012184 0.008081 0.010212 0.060191 0.008136 0.065164 0.041929 0.020472 0.026802 0.333042 0.079557 0.104045 0.178199 0.058244 0.069491 0.098557 0.145757 -0.881968 -0.506093 0.173619 0.287749 -0.275300 -0.543145 0.201323 -0.129185 -0.050371 -0.459750 0.421434 -2.593186 2.808808 -2.673111 -1.863879 -1.239629 -0.998154 2.724329 1.103713 0.774790 1.823753 0.657738 0.528321 0.796149 0.396006 0.052521 -0.064901 0.069212 1.120927 346.3569 1.936876 Mean dependent var S.D dependent var Akaike info criterion Schwarz criterion F-statistic Prob(F-statistic) 0.3787 0.6133 0.8623 0.7738 0.7833 0.5875 0.8406 0.8973 0.9599 0.6461 0.6738 0.0101 0.0054 0.0080 0.0636 0.2164 0.3192 0.0069 0.2709 0.4392 0.0695 0.5114 0.5978 0.4268 0.6925 0.005684 0.067070 -2.396643 -1.990286 0.447285 0.994234 60 ... grouped into 22 manufacturing industries based on their main business activities On investigating the contribution of the R&D to the productivity growth of Japanese manufacturing firms, Kwon and Inui... used in the production, some of them bec‹ame ineffective and therefore the marginal product of labor falls That is called the law of diminishing returns The law of diminishing returns is often... know the nature of innovation in Vietnam R&D is one part of innovation In the study of Nguyen and Tran (n.d), they said that Vietnam is a transitional and developing country, therefore, its innovation