Effect of rd on the productivity of construction enterprises in vietnam

INSTIJ uTx or sOCIAL STUDIES THE H IGIIE -rHE sETHERL.aNHS VIETNAM - NETHERLANDS PROGR›1MME FOR M IN IIEVELOPMENT ECONOMICS EFFECT OF R&D ON THE PROD TCTI3'ITY OF CONSTRUCTION ENTERPRisr.s IN VIETNAM SUPERVISOR Dr NGUYEN HUU DUNG Ho Chi Minh City, December 2011 CERTIFICATION I certify that the substance of this thesis has not already been submitted fof 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 acknowle‹1ged in the thesis Signature Do Khac Thanh ACKNOWI EDGMENT I am indebted to numerous individuals but I cannot name them here all First of all, I would like to thank all the teachcrs and staff of the Project for their valuable suggestion, good learning facilities and warm attitudes during my school time My deepest gratitude goes to iriy supervisors, Dr Nguyen Hu Dung, and Dr Nguyen Trong Hoai for their valuable comments and instructions conceining iriy thesis 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 The study aims to examine the link and relationship between productivity of construction enterprises in Vietnam and R&D expenditure 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 A sample of 264 construction firms was drawn from the data set of Vietnam Enterprise Survey conducted by the General Statistics Office in 2005 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, dummy and R&D capital, and labor variables reflecting type of ownership and size of labor Research findings show that 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 0.10 Moreover, the effects of physical capital and labor on productivity - are also positively and statistically significant The elasticity of productivity with respect to physical capital per labor and total labor are around 0.35 and 0.15, respectively ACRONYMS EU European Union CBO Congressional Budget Office 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 OSTP Development Office of Science and Technology Policy R&D Research & Development SME Small and Medium VES Enterprise Vietnam VND Enterprise Survey Vietnamese n.d Dong VIF No Date Variance Inflation Factors CH.APTER • INTRGDL’CTIGN 1.1 RATIONALE OF THE RESEARCH Research and Development (Rd:D) is widely regarded as the core of technological advance, and innovative capacity of firms are reliably indicated bv 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 Progress of technology has a quite central role in the modern economy today It contributes importantly to growth of economy and is a key factor to determine the competitiveness of firms in both national and international marketplace On average, OECD countries have spent more than percent of GDP on annual public and private R&D investments dui ing the last two decades (OSTP', 1997) Those stocks of knowledge can be increased by formal investment in R&D activities In the , public and private sectors, the allocation of resources tov ard the investment to generate new knowledge must be decided carefully There are many sources for productivity improvements, but one strategy for enhancing pioductivity growth which is widely acknowledged is increasing the stock of knowledge Following the assessment of the Ministry of Industry is that the labor currently lack of necessary skills to support technological upgrading and there are veiy little R&D activities appropriate for such upgrading Indeed, only a small fraction of the countr) s R&D scientists and engineers are working in industrial enterprises The iest are woiking in national centers for R&D, ministries and government agencies, universities or other institutions that perform research Another reason is the most important reason for a little investment in R&D activities of Vietnamese enterprises may be their limitations in financial resources Moreover, that there is little market-oriented relationship between firms, R&D institutions and universities (Bezanson et at., 2000) If R&D has any relationship with productivity of construction firms, the case of Vietnam will increase a doubt Specially, Role of knowledge oi technological capital for productivity growth is emphasized by some empiiical rescai ch at enteiq›iise level Those studies only focused on investment of R&D and appeared that in many countries It proved that R&D has a contribution to productivity growth significantly particularly in the cross sectional dimension However, the conclusion is not suitable for Vietnam Those R&D activities have not been taken into consideration for much investment in Vietnam, especially in business sector While most OECD countries and China devoted around 2% of their GDP to R&D activities, Vietnam spent only 0.5% of its GDP for this purpose Nevertheless, the iechnology level across the SME sectoi in Vietnam is generally assessed as being two, three or even wore times lower than both world and regional levels (Bezanson et at., 2000) R&D expenditure of Vietnam.ese enterprises accounted for only about 20% of the total R&D expenditure of the country in 2002 Whereas, according to OSTP (1997), companies in OECD countries finance more than 50% of all R&D expenditure and they conduct two-thirds of all R&D activities SMEs make up the vast majority of registered companies in Vietnam, namely 96.5% 1.2 OBJECTIVE OF THE RESEARCH (R&D) investment has been regarded as an important factor in the improvement of productivity levels of firms FOT GX81TI le, the average annual rates of R&D expenditure relative to gross domestic product in the US and Japan are around 2.64 per cent and 3.04 per cent, respectively (National Science Council, 20f11 : 195) This has been proved true by many empirical studies for many countries but neglected for Vietnamese case From 1960s, investment of R&D has played an important role in improvement of productivity levels Creation and accumulation of that knowledge is rationale factors via the R&D efforts of a firm or industry , this will be available to the production process or product innovation (Mansfield, 1965; 1969) Those investments will lead to promotion of nationwide economic development Therefore, many the advanced countries based on this rationale to _ invest expenditure on R&D activities This study sets out '.o estimate the relationship between R&D activities and productivity growth of construction firms in Vietnam to answer the following questions: - Is there a positive relationship between R&El and productivity in Vietnamese construction firms? - What should those finns to increase their productivities? and - What policies should be recommended to support them in improving productivity by increasing R&D expenditure? 1.3 RESEARCH METHODOLOGY The thesis used such methods as descriptive statistics, quantitative analysis and OLS regression to deal with the research questions The thesis studied the impacts of R&D expenditure to productivity growth of Vietnamese construction firms by using data from the Vietnam Enterprise Surve) 2005 1.4 Thesis organization There are five chapters in this thesis Introduction is the first chapter is which presents the rationalc of the research, the objective of thc research, research hypothesis as well as methodology, and the thesis structure Literature Review is the next one is This chapter examines theories and empirical studies relating to the impact of R&D expenditure on productivity growth of construction firms R&D activities of finns are discussed in the chapter 3: Overview of R&D and firm performance in Vietnam Chapter 4: Research Ivlethodology focuses on model specification and variables choices justification Chapter is the practical results are analyzed via descriptive statistics and regression analysis: Result Analysis Finally, conclusions and policy recommendations are provided in Conclusions and Recommendations chapter CHATPER LITERATURE REVIEW This chapter will make sure that the research is conducted based on a scientific background Through this chapter, impact of R&D expenditure on productivity growth is generally figured out on the basis of economic theories and empirical studies The chapter will be presented in four main parts In the part one, key concepts related to the topic such as R&D, productivity as well as construction will be discussed Economic theories supporting for the study are found out and stated in the next part At the end of this part, a research model which represents factors affecting productivity is suggested Finally, there will have empirical studies regarding effect of R&D on productivity growth of construction finns in some countries are discussed in the last part 2.1 CONCEPTS 2.1.1 Research and experimental development (R&D) R&D has been divided into three categories: basic research, applied research and experimental development OECD (1994) defined that “Research and experimental development (R&D) comprise creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications” Experimental development is defined as systematic work that using current knowledge That current knowledge gained from practical and research experience These research and experience is directed producing new products and devices, materials; installing new processes, systems or services; or substantially improving at the future in which they has been produced or installed in the past o Basic research is an experimental or theoretical jobs which ensured not to gain benefits in long-term However they must be advance the state of knowledge (CBO 2005) In those researches, characteristics, structures and relationships are ana1yze‹l with a view to test and formulate theories and laws Moreover, outcome of basic research are not for buy or sale, however usually for publishing in usage of interested people scientific journals Sometimes, it may be kept seciet for securit.y ieasons o Applied research is also original work that is undeilaken to acquire new knowledge with a specific application in view Its’ aims are determining possible uses for results of basic research or deteimining new ways to achieve specific objectives Results of applied research are mainly valid for a limited number of products, operations, methods or systems The knowledge or information resulting from applied research is often applied for patent or may be kept secret Applied research is the investigation that is performed for the development of government policy Basic research is the theoretical investigation of factors which have influence on regional variations in economic growth Experimental development is the development of operational models based on laws with the purpose of modifying regional variations The measurement of such two kinds of R&D expenditures is so complicated with many costs should be included or excluded “Expenditure on R&D may be made within the statistical unit or outside it” (OECD, 1994, page 20) However, in this thesis, R&D expenditure used to examine its effects on productivity growth of Vietnamese construction firms is available in the Vietnam Enterprise Survey There are different meanings in different contexts for the word “innovation” depending on certain objectives of measurement or analysis Scientific and technological innovation is known as the transformation of an idea into a new or improved product, a new or improved operational process or a new approach toward a social service New products or processes and significant technological changes in products or processes are considered as technological innovations An innovation is performed if it is brought out to the market or used in a production process Thus, innovations include dozens of activities relating to science, technology, organization, finance and commerce R&D is one of such activities and it may be done at different stages of the innovation process' R&D can act as the origin of ' See Appendix for explanation of innovation process constant, mean productivity of foreign firms is 1.3% higher than that of state-owned firms and others This is easy to understand because state-owned enterprises usually operate in a less efficient way than the foreign, which has been discussed iii the descriptive statistics of firms above There is no difference in the productivity between state-owned firms and other firms such as private companies, limited companies, etc In relation to firm size by the number of labor, the regression results suggest that the mean productivity of both medium- sized (50-249 employees) and large-sized firms (>249 employees) are higher than that of small-sized firms, holding other variables constant Moreover, productivity of medium-sized firms is a little bit higher than that of large-sized firms Labor productivity is influenced by physical capital per labor, number of labor, R&D expenditure per labor, size and ownership Therefore, an analysis of these institutional main factois is necessary in determining the influences to laboi productivity Table 5.4 shows the empirical results of the productivity model Except STATE, other variables are statistically significant at 5% and 10% Table 5.4: Coefficients and statistics for the productivity model Variables Coefficient t-statistic Probability Constant 2.24 3.142 LnR L 10 11.86 LnK L 0.35 72.33 Ln of Total labor (L) 15 49 l FOREIGN 1.34 1.884 006 STATE 0.53 0.749 0.46 LARGESCL (>249 employees) 0.27 2.714 MEDIUMSCL (50 - 249 employees) 0.28 2.184 Source: Author’s estimate based on the data of VES-2005(n — 264) 0.00 45 The physical capital per labof (K L), R&D expenditure per labor (R L) and total labor (L) are factors which hav’e ‹lirect impacts on productivity based on the arguments of the Cobb-Douglas production function and the R&D capital model These factors were taken as the natural log to repiesent proxy vat iables in the model Each coefficient of these three variables is the elasticity of labor productivity The regression results suggest that all those variables have positive effects on productivity, which is similar to the expectation Among these three variables, physical capital per labor has the strongest impact on productivity 4“lie elasticity of productivity with respect to physical capital per labor and total labor were around 0.35 and 0.15, respectively These numbers can be said in another way that holding other inputs constant, a 1% increase in the physical capital per labor and total labor lead to a 0.35% and 15% increase iii productivity, respcctiveiJ 5.2.2.3 Model’s Statistical validity According to model, the coefficient of natural log of total labor or n; (see model 1) is a scale parameter, c‹ >0 The hypothesis of constant return to scale with respect to three inputs (R, K, and L) is tested This coefficient is statistically significant and around 15, which implies that the assumption of constant returns to scale is rejected at the significant level of 1% and increasing returns to scale is accepted Multicollinearity and heterosccdasticity are two important tests in this model It is unnecessary to test inulticollinearity problem for the model because most of the correlation coefficients bebveen regressors did not exceed 0.5, except some correlation coefficients relating to dummy variables (Table 5.3) These tests are to make sure the statistic validity’ of the model Moreover, independent variables included in the model were statistically significant at %( Table 5.4) and R square of the model were lower than 0.8 (Appendix 2) (If int:lticollinearitJ occurs, the model will have few t-ratio significant ratios and R squared of the model is very high (Gujarati, 2003)) Regarding heteroscedasticity, the model was handled to be free of it Detailed results of White Test are shown in the Appendix 46 Idowex er, because thc result •e R-squared is x er; high(R-squared = 0.999999) so I wake a VIF testing to detect severc multicollincarity VIF is very high The fact that VIF is significantly greater than 5(Johnston (1984: 250)), it would suggest that Equation exhibits severe iriulticollineaiity MulticGllinearity diagnostics is shown in the Appendix CHAPTER CONCLUSIONS AND RECOMMENDATIONS 6.1 CONCLUSION the relationship between R&D expenditure ancl prod ucti›³itv of contraction firms has been analyzed based on a sample of 264 constr'action firms reporting positive Rd:D The sample was drawn from the data set in.eluding 91,755 obscr ³ations in all sectors of the Vietnam Enterprise Survey in 2005 In the sample, state-owtied firms account for 59.47% while foreign firms account for only 11.74%t Large scale firms (>249 employees) make up more than 60 of the sample, the small (1- 49 employees) and medium (50 — 249 employees) make up 13.26% and 25.38%, respectively Regarding the structure of total cost for research and development of science & technology of construction firms in the sample 62% of the cost is financed by ft:nis themselves The statistic summary indicates that state-owned enterprises seem to perform in a less efficient way than foreign ones on average Fuilheriiiore, foreign firms seem to be stronger in capital resource and invest more in innovation, R&D activities thar: state-owned firms and the others Nevertheless, just 17% is used for research, 81% of such cost is used for developing tcchnology The regression equation was estiiriated mainly on the basis of the Cobb-Douglas production function and the R&D capital moclel in relation to the analytical framework of the research It was formulated in a logarithmic form and had statistical validity the production model can be written as: Ft cm equation (4.3) Even though R&D capital was measured in a much simpler way than most ielated studies usually by using available R&D expenditure in the s'arvey, the result is so surprised The most important thing of the research is that R&D investment was a significant determinant of firm productivity Holding other variables constant, 1% increase in R&D expenditure per labor leads to about 0.1% increase in labor productivity It is due to the statistical significance and positive sign of R&D elasticity coefficient Those reasons maJ• be that most R&D activities of Vietnamese enterprises are not science-based, problem-solving and most of R&D expenditure is for developing technology, not for research The elasticity of productivity with respect to total laboi and physical capital per labor were around 0.15 and 0.35, respectively Beside R&D capital, other independent vaiiables are also significant statistically Labor and Physical capital per labor have more effects on productivity growth than R&D expenditure per labor However, ownership and firm size also have impacts on productivity The productivity in foreign firms is higher than in state-owned and other firms There aren’t any differences between state-owned firms and another firms are because of the insignificance of STATE variable Similar to foreign firms, productivity of medium-sized firms (50-249 labors) is much higher than small-sizcd firms and a little bit higher than that of large-sized finns (>249 labors) In conclusion, regarding the second research question, construction firms should pay more attention on investment in R&D activities in order to increase their productivity Besides usual production inputs such as physical capital and labor, R&D activities also plays an important role in productivity growth of construction firms in Vietnamese case Hence, the first research question as mentioned in the first chapter is answered The section below will discuss some policy recommendations to support firms 6.2 POLICY RECOMMENDATIONS Many Vietnamese construction 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 hat e not been invested at a 49 proper level Most of Vietnamese firms now are small or medium in scale, weak in resources, financial resources; therefore, there aie any limitations of investment for R&D activities Moreover, the Vietnamese domestic market for technology services has not developed; firms not have information about researches, inventories conducted in the country In this case, firms have no choice to survive and develop by investing for R&D activities as well as technology innovation in the context of international speed integration today 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 actual context of Vietnam to encourage firms to invest in R&D activities as follows - All firm has to take advantage of own employees to create R&D in each those own firms Those firms should invest in that they are needed to develop their products This will enhance competitiveness 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 Such actions will reduce input cost for firms that work in R&D Because R&D institutions are not operate efficiently, So Equalizing 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 The results of R&D are only theory Firms can’t apply them to real production Local enterprises depend on external sources for R&D and foreign ones rely on their parent companies in home countries In geneial, 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 - Vietnam should also 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 supervisecl strictly to make sure that the capital is used in right places, at right time and for right puipo›.es Stimulating lusts to establish their own R8:D departments or cooperate with other firms This policy should be specified by prograiiis ‹ir caiTlQaigns, which are conducted in many years and at the national level 6.3 LIMITATIONS OF THE RESEARCH First of all, most of 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 capital and once again in measuring R&D capital (Cuneo and Mairesse, 1983) Moreover, the research subtracted only R&D labor from the total labor and failed to correct the double counting of physical capital In reality, such v²oi ks is unable because the limitation of the data Secondly, research failed to measure R&D in a way it should have been done due to the availability of data in only one year 2005; the R&D capital was calculated by available R&D expenditure in the data Measurement of R&D expenditurc in many yeais may bring a more reliable result than the recent study does Mor•over, the relation.ship betv,³een R&D expenditure and productivity growth was examined for only year The research ignored the accumulation of past R&D spending, its lag, deflation ar.'d depreciation I liereforc, the result of R&D elasticity is still suspicion Thirdly, the estimated model exhibits a severe multicollinearity problem, thus make the findings ate not much qualified Those facts are the suggestion for ether reseaTcli in the future, which use panel data or time- series data, instead of cross-sectional data I done Bezanson et at (2000) A Science Technologv and Industry Strategy for Vietnam [online] Available: http:'/www.unido.or g/fileadiriin/import/20398 kbfin.pdf Congressional Budget Office (2005) R&D and Productivity Carowth [online] Available: http://www.cbo.sov/ftpdc ›cs/64xx/doc6482/116-17-R-D pd1\ Cuneo, P and Mairesse, J (1983), Productivity and ID&D at the firm level in French [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] 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The ncw SME definition: User guidc and model declaration [onlineJ Available: http://ec.europa.eu/enterprise/enterprise olicy/sine definition/sine user guide.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 papers/WP2005 3.pdf Griliches, Z (2000) R&D, Education and Productivity, London: Harvard University Press Gujarati, D.N (2003) Basic Econometrics, Fourth Edition, International: McGrawHill http://wwv•.ie.gc.ca/canadian industry statistics/cis.nsf/IDF./cis31-33defe.html Kwon, H.U and Inui, T (2003) R&D and Productivity Growth in Japanese Firms [online] Available: http://was.esri.go.jp/jp/archive/e dis/e dis050/e dis044a.pd1\ Mairesse, J and Sassenou, M (1991) ‘R8iD and Productivity: A Survey of Econometric Studies at the Finn Level’, NBER Working Papcr No 3666 Matteucci, N and Sterlacchini, A (2004) IC4“, R&D and Productivity Growth: Evidence from Italian Firms [online] Available: http://www isae.it/Matteucci Sterlacchini IC4 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/23 8724s 8%20AIF-Vietnairi -Ouan.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' iriedia/cn/research/universidad06-vietnam.pdf OECD (1994) Main Definitions and Conventions for The Measurement of Research and Experimental Development (R&D) [online] Available: http://ivww1.oecd ora/dsti/sti/stat-ana/prod/e 94-84.Ja‹l_f OECD (2001) Measurement of Aggregate and Industry-Lc•vel 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://bel fercenter.ks harvard.edu/ii Yes/pcast97 ch2.pd1\ Pindyck, R.S and Rubinfeld, D.L f1992) Microeconoinics, Second Edition, Singapore: Macmillan Rogers, M (1998) The Definition and Measurement of Innovation [online] Available: http://www.inelboumeinstitute.coin/wp/wp1998n10 pdf Tran, N.C (n.d.) Vietnam’s In:novation System: Toward a Product Innovation Ecosystem [online] Available: http://crds.jst.go.jp/GIES/archive/GIES2tI06/participants/abstract/33 ca-ngoc- 53 tran.pdf US Census Bureau ‘NAICS Sector: 31-33 [online] Available: http://www.census.aov/epcd/ec97/def/31-33.HTM Wang, J.C and Tsai, K.H (2003) Productivity Grow4h And R&D Expenditure In Taiwan’s Firms [online] Available: http://www.nber.eg/papers/w9724 54 APPENDIX Appendix 1: Regression results Dependent Variable: LNY_L Method: Least Squares Date: 10/07/11 Time: 10:31 Sample: 264 Included observations: 264 Weighting series: Variable Coefficient Std Error t-Statistic Prob C 2.23 7172 0.712025 3.141987 0.0019 LNK L 0.348719 0.004822 72.32569 0.0000 LNR L 102087 0.008608 11.85892 0.0000 LNL 0.146887 0.002992 49.09914 0.0000 LARGESCL 0.264594 0.097490 2.714059 0.0071 MEDIUMSCL 0.282921 0.129530 2.184208 0.0299 STATE 0.530748 0.708885 0.748708 0.4547 FOREIGN 1.33564 l 0.709033 1.883750 0.0607 Weighted Statistics Mean dependent vat 6.972957 S.D dependent var 90.08528 R-squared 0.999999 Adjusted R-squared 0.999999 S.E of i egression 0.076562 Akaike info critei ion -2.271603 Sum squared resid 1.500597 Schwarz criterion -2.163241 Log likelihood 307.85 15 F-statistic Durbin-Watson stat 2.265667 Prob(F-statistic) 179317.4 0.000000 Unweighted Statistics R-squared 0.315112 Mean dependent vat 5.287641 Adjusted R-squared 0.2963 84 S.D dependent vai 1.337972 Sum squared resid 322.4556 S.E of regression Durbin-Watson stat l 1223 15 l 412164 Appendix 2: White Heteroskedasticity Test White HGtéf OSkedasticity Test: F-statistic 0.447285 Probability 0.994234 Obs*R-squared 13.86›564 Probability 11.992036 Test Equation: Dependent Variable: STD RESII °2 Method: Least Squares Date: 10/07/1 Time: 10:33 Sample: 264 Included observations: 264 Variable Coefficient Std En oi I-Statistic Prob C 0.253502 0.129734 1.954011 0.0519 LNK L -0.014881 0.025232 -0.589758 11.5559 LNK Lº2 -0.001331 0.0022fJ3 -».604314 0.5462 UK L*LNR_L 0.000746 11.002087 11.357607 0.7210 LNK L*LNL 0.007081 0.005961 1.187928 0.2361 1.NK L*LARGESCL 002×22 -0.009213 0025|98 -0 8B!96S 0.018205 -0.506093 3787 0.6133 LH L*MEDIU MSCL LNK L* STATE 0.002042 0.011762 0.173619 0.8623 LNK L*FOREIGN 11.005354 0.018607 0.287749 0.7738 LNR L -0.004590 0.016671 -0.275300 0.7833 LNR_Lº2 -0.000568 0.001045 -0.543145 0.5875 LNR L*LNL 0.000820 0.004072 0.201323 0.8406 LNR_L*LARGESCL -0.002184 0.016902 -0.129185 b973 LNR L*MEDIUMSCL -0.000614 0.012184 -0.050371 0.9599 LNR L*STATE -0.003715 0.008081 -0.459750 0.6461 LNR L*FOREIGN 0.004304 0.010212 11.421434 0.6738 LNL -0.156087 0.060191 L.NLº2 0.022853 0.008136 LNL*LARGESCL -0.174192 0.065164 -2.673 FH 0.0080 LNL*MEDIUMSCL -0.078150 0.041929 -1.563879 0.0636 LNL*STATE -0.025378 0.020472 -1.239629 0.2164 LNL*FOREIGN -0.0 6753 0.026802 -11.998154 3192 -2.593186 2.St18S08 0.0101 0.0054 LARGESCL 0.907317 0.333042 2.724329 0.0069 0.087808 0.079557 1.103713 0.2709 LARGESCL*FOREIGN 0.080613 0.104045 0.774790 0.4392 MEDIUMSCL 0.324991 0.178199 1.523753 0.0695 MEDIUMSCL*STATE 0.038309 0.058244 0.6.57738 0.5114 MEDIUMSCL* FOREIGN 0.036714 0.069491 0.528321 0.5978 STATE 0.078466 0.098557 0.796149 0.4268 FOREIGN 0.057721 0.145757 0.396006 0.6925 0.052521 Mean dependent var 0.005684 S.D dependent vat 0.067070 LARGESCL*STATE R-squai‘ed Adjusted R-squared -0.0649tJl S.E of regression 0.069212 Akaike info criterion -2.396643 Sum squared i’esid 1.120927 Schwarz criterion -1.990286 Log like I ihood 346.3569 F-statistic 0.447285 Durbin-Watson stat 1.936876 Prob(F-statist ic) 0.994234 Appendix 3: multicollinearity diagnostics VIF Y L = 4904 scala: VIFlny l=1/(1-regression.@R2) 57 ... are used in the production, some of them become ineffective and therefore the marginal product of labor falls That is called the law of diminishing retuims In the analysis of production, we have... general Furthermore, the quality of research infrastructure of Vietnam is below international standards Research institutions not satisfy demand of the production sector in innovation The reason for... 1995-1998 On investigating the contiibution of the RED to the P roductivity grown of Iapanese construction firms, Kwon ancl Inui (2IJ 03) used ³.u o approaches: Production Function Approach and The