DescriptionThis thesis examines the role of R&D and innovation plays in productivity based on the agricultural machinery firm data from the annual report of National Bureau of Statistics. A structural model (the CDM model) which describes the linkage between R&D investment, innovation output, and productivity is applied. The empirical results suggest that there is a significant positive correlation between R&D investment and innovation outputs, as well as R&D investment and productivity. However, the association between innovation outputs and productivity is for this set of observations not yet established as significantly positive.