An Investigation into the Role of R&D on Productivity in the Manufacturing Sector in Ghana

Abstract

Using a firm-level dataset of 209 firms from the World Bank Enterprise Survey 2013, this study presents evidence of the impact of R&D, product, and process innovation on labour productivity in the manufacturing sector in Ghana. It examines the role R&D plays in ensuring the likelihood of manufacturing firms to embark on product and process innovation. The study employed a Three-Stage Least Square (3SLS) approach for the analysis in achieving the stated objectives. The study finds that labour productivity in the manufacturing sector in Ghana is determined by R&D, product innovation, foreign ownership, and the size of the firm. The results show a significant positive influence of R&D and product innovation on labour productivity in the manufacturing sector in Ghana. The study recommends the integration of the Science, Technology, and Innovation Policy of Ghana into the national development strategy to create an enabling environment for manufacturing firms to invest more into R&D activities and thereby become more productive. The study also suggests the need for the Government to support research and development and innovation through a coordinated effort by implementing a multi-sector policy action that considers the needs of the firms.