Total Factor Productivity and the R & D Expenditures

The total factor productivity (TFP) growth comes from improvements in the quality of labor and capital and from other sources of technological change, many of them in the form of externalities, spillovers, representing contributions of science and innovations in other enterprises, industries and countries. Economies of scale and scope, as well as improving x-efficiency, are among the other potential sources of total factor productivity growth. The goal of this paper is to advance the debate on the contribution of R & D to productivity. We used the method of constructing a proxy variable for interindustry technology spillovers and test its statistical association with the TFP growth