Appendix Three: Results using Different Depreciation Rates
This appendix discusses the results of the PIM model when we use different depreciation rates. Appendix Table 14 sets out the results using a 5% depreciation rate, while Appendix Table 15 shows the results from using 15% depreciation.
Using a depreciation rate of 5% for both domestic and foreign R&D, the domestic knowledge stock is significant in all 4 specifications, with a rate of return ranging from 9.5% to 15.3%. The foreign stock, however, is significant in only 2 of the 4 specifications. The dummy variable is never significant, nor is the human capital index.
When we instead use a depreciation rate of 15%, both the domestic and foreign stock of knowledge are significant in all 4 specifications. The rate of return to domestic R&D ranges from 14.3% to 24.1%. The human capital index and dummy variables are again not significant.
| Independent variables: | Model 1 | Model 2 | Model 3 | Model 4 |
|---|---|---|---|---|
| Weather | -0.050 | -0.076 | -0.064 | -0.058 |
| Extension | -0.429*** | -0.387*** | -0.407*** | -0.358*** |
| Domestic knowledge stock | 0.341*** | 0.234** | 0.231*** | 0.212*** |
| Foreign knowledge stock | 0.228 | 0.318* | 0.234 | 0.342* |
| Human capital | -0.142 | -0.021 | ||
| Dummy84 | 0.028 | 0.002 | ||
| Adjusted r2 | 0.928 | 0.936 | 0.932 | 0.938 |
| Independent variables: | Model 1 | Model 2 | Model 3 | Model 4 |
|---|---|---|---|---|
| Weather | -0.089 | -0.099 | -0.098 | -0.084 |
| Extension | -0.295* | -0.378*** | -0.236 | -0.413*** |
| Domestic knowledge stock | 0.336*** | 0.199* | 0.172*** | 0.235*** |
| Foreign knowledge stock | 0.309*** | 0.334*** | 0.349*** | 0.283*** |
| Human capital | 0.198 | 0.019 | ||
| Dummy84 | 0.177 | 0.146 | ||
| Adjusted r2 | 0.929 | 0.934 | 0.932 | 0.936 |
