Agricultural research and development in India and the cost of capital investment.
详细信息
文摘
The cost of research and development is a topic rarely explored for developing nations. The ability for a developing nation's firms to acquire capital to invest in R&D is reflected by the government's policies toward innovation,conditions affecting the acquisition of funds within the firm,conditions affecting the acquisition of funds outside the firm,and the availability of venture-capital financing and capital gains taxation. This thesis provides a compilation of some of the vast amount of economic literature on R&D,a unique framework surrounding the effect of cost on R&D,and an empirical test of the importance of the availability of capital as a determinant of R&D. The cost variables used include firm data on the annual borrowings,leverage,subsidies and grants,and interest rates. In addition,annual sales data,the age of the firm,and the Herfindahl-Hirschman Index (HHI) were used to include revenue-related aspects a firm faces that might affect R&D expenditure. Using an unbalanced Indian firm-level panel,the goal of this thesis is to analyze of the relationship between the cost of capital investment and R&D while also including revenue-related variables for the pesticide and fertilizer industries. The dataset used for this analysis comes from The Centre for Monitoring Indian Economy (CMIE) which includes 1989-90 until 2009-2010. In addition,it was supplemented with variables from IMF and survey data collected by Pray and Nagarajan (2013). The empirical analysis utilizes a Random Effects General Least Squares regression for two models with two variations with different dependent variables: R&D expenditure and R&D intensity. The results show that a firm's level of debt and external financing are positively related to R&D to start,supporting the notion that a firm's ability to acquire capital will affect its total R&D expenditure. However,debt is negatively related to R&D after a certain threshold is passed,supporting the concept of risk aversion among firms. In addition,the results supports previous literature which found that variables such as sales affect R&D positively. Finally,the results show that additional research is necessary to understand more fully the nature of cost in R&D investment.