Technological innovation and sectoral productivity in the Mexican economy: regional evidence: José Carlos Trejo- García, Humberto Ríos-Bolívar and Ana Lilia Valderrama- Santibáñez
Therefore it was necessary to estimate the stock of capital in R&D. The perpetual inventory method is frequently applied. That is, the capital stock for each period is calculated from the capital stock (minus depreciation) in period t-1, plus the capital investment in the period t. However, this difficulty can be avoided if we estimate a transformation of the production function that requires knowing only the R&D expenditure in each period. This is what we do in this research.1 This requires a certain degree of novelty compared to previous research conducted in Mexico, because, instead of estimating production functions where the capital in R&D is another factor, productivity growth is directly related with the intensity of R&D spending. To our knowledge, there is no research in this line for Mexican economy. The present chapter is structured as follows. The next section reviews the literature on the subject. The third presents the theoretical model. The fourth describes the data, variables and empirical methodology applied in the econometric analysis. An econometric model is estimated in Section 5. The final section summarizes the paper and highlights the most important conclusions.