The growth effects of knowledge-based technological change on Taiwan’s industry: A comparison of R&D and education level

Abstract

This paper employs data envelopment analysis (DEA) and the Malmquist index (MI) to investigate the growth effects of knowledge-based technological change and technological efficiency change on the output of the industrial sector in Taiwan. The results reveal two main findings: First, due to the lack of knowledge-based scale efficiency, there is no improvement in knowledge-based technological efficiency during the period from 1997 to 2019. Although both the direction of the change in R&D expenditure per researcher and that in education spending time per worker can explain the knowledge-based technological efficiency change, the long-term average of the growth rate of technical efficiency change is negative; thus, the positive coefficient of the technical efficiency change to output growth still makes a negative contribution to the output growth. In other words, if the scale efficiency can be improved, the contribution of knowledge-based technological efficiency change to output growth can be reversed. Second, an increase in R&D expenditure per researcher is more important than an increase in education spending time per worker, especially in knowledge-based technological change. In addition, the results indicate that Taiwan’s economic growth driver mainly comes from technological change. The contribution of knowledge-based technological change to manufacturing output growth is close to 65%, especially in the last 20 years. Furthermore, both knowledge-based technological efficiency change and technological change have a positive and significant coefficient of output growth in the Taiwanese industry. Therefore, in addition to continuing to increase R&D to enhance the growth of technological change and facilitate the growth of output, if the contribution of technological efficiency change to output growth can be improved, Taiwan’s output growth will be more stable in the future. Overall, knowledge plays a key role in industrial growth and economic growth, and R&D promotes more direct growth than education in Taiwanese industry.