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R&D in Indian manufacturing enterprises: what shapes it?

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The article examines the factors influencing research and development (R&D) in manufacturing entities. Using data on a large sample of companies for the period 1995-2007, the finding indicates that large companies have a higher probability of pursuing R&D, although with lower intensity. In terms of magnitudes, a 10% increase in firm size raises R&D intensity by roughly 0.6%. Both the intensity and the probability of undertaking R&D initially declines for older firms. Outward orientation, and especially foreign currency earnings, has a significant bearing on R&D efforts. R&D efforts are also found to vary significantly across firm ownership.

Keywords: India; R&D intensity; Tobit model; leverage ratio

Document Type: Research Article


Affiliations: Department of Economic Analysis and Policy, Reserve Bank of India, Mumbai, Maharashtra, India

Publication date: January 1, 2009

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