R&D Depreciation, Stocks, User Costs and Productivity Growth for US Knowledge Intensive Industries

Theofanis P. Mamuneas, University of Cyprus

This paper estimates R&D depreciation rates for U.S. knowledge intensive industries.
R&D depreciates at an annual rate of; 18 percent for chemical products, 26
percent for nonelectrical machinery, 29 percent for electrical products, and 21 percent
for transportation equipment. These rates imply that R&D depreciates 2 to 7 times
faster than physical capital stocks in these industries. Based on these depreciation rates,
new estimates of R&D user costs imply that the marginal (gross of depreciation) returns
to R&D capital are; 0.25 for chemical products, 0.31 for nonelectrical machinery, 0.34
for electrical products, and 0.27 for transportation equipment. R&D investment also
signi…cantly contributed to productivity gains. R&D contributed virtually 100 percent
to productivity growth in chemical products, 55 percent in nonelectrical machinery, 38
percent in electrical products, and 84 percent in transportation equipment.

Date: 23 November-00 0000