The effects of R&D, foreign technology purchase, and domestic and international spillovers on productivity in Indian firms

Using panel data on Indian firms from 1974-75 to 1981-82, we provide estimates of the impact on output of Indian firms' R&D expenditures, their technology purchases, and international and domestic R&D spillovers. The private returns to technology purchases are estimated to be high and statistically significant, while the private returns to firms' own R&D expenditures are somewhat lower and are often insignificant. There is evidence of both international and domestic R&D spillovers. The estimates permit estimation of total factor productivity growth in the period preceding India's industrial liberalization policies.