The purpose of this research is to analyze the economic impact of R&D
investment in Korean Pharmaceutical firms. To be specific, this paper analyzes
the impact of R&D investment in Korean Pharmaceutical firms on labor
productivity and, identifies the factors which have an influence on the level of
R&D investment.
The result of this analysis can be summarized as follows. First, R&D
investment has a positive impact on labor productivity. This finding is
supported not only by growth accounting analysis but also by 2SLS analysis,
which considers the endogenity of explanatory variables. Second, domestic 50
Pharmaceutical firms have a tendency to focus on short-term R&D activity
such as the development of generic medicine, not on long-term activity such
as the development of new medicine. Third, it is also found that the level of
R&D investment is affected not only by financial factors such as the level of
debt, but also by industrial structure and firm’s size.