Testing the validity of the law of diminishing returns in research performance: Evidence for the Korean government-funded research institutes

초록

The law of diminishing returns is a key ingredient of various models in economic literature. Though it is one of the most widely known economic hypotheses, few studies have to date been tested its validity in the area of government-funded R&D. This paper thus aims to test the law of diminishing returns of capital and labor factors in the research performance, using a panel data set taken from the performance evaluation results of Korean governmentfunded research institutes. Though the performance of the research institutes is our dependent variable measured by the government, the empirical evidence is consistent with the hypothesis that the law is valid for government-funded research institutes. Results may provide practical implications for the optimal allocation of resources to improve the performance of the research institutes.

키워드