Academic Research and Canadian Manufacturing Productivity since the Formation of NAFTA

Abstract

Does academic research have a positive impact on productivity? To examine this question, the paper focuses on national Canadian manufacturing data, using a variable-cost CES-translog cost system. Changes in the elasticities calculated from the estimation results allow the study of the impact of the free-trade agreements on Canadian production and the effects of academic R&D expenditures. The principal finding is that academic research expenditures have had a positive effect on Canadian manufacturing productivity and that this effect of R&D expenditures has become stronger since the formation of the North American Free Trade Area (NAFTA).