Revisiting measure of R&D spillovers: empirical evidence on OECD countries and industries |
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Authors: | Ram C. Acharya |
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Affiliation: | 1. Industry Canada, 10 East – 235 Queen Street, Ottawa, Ontario, Canada K1A 0H5ram.acharya@ic.gc.ca |
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Abstract: | Using data for 17 Organisation for Economic Co-operation and Development (OECD) countries over 29 years for 28 industries, this paper estimates industry-wise research and development (R&D) spillovers from the largest R&D investors and the most R&D-intensive industries that contribute 80% of global R&D. In doing so, it tests several assumptions made in the literature, and data rejecting them, proposes a methodology on R&D return estimation devoid of these assumptions. Results show that R&D has substantial spillovers, justifying R&D support policy. Each dollar of R&D generates about 29 cents in spillovers domestically and 4 cents in foreign countries. However, both intra- and inter-industry spillovers vary by industries, implying that the policy of supporting each R&D dollar uniformly across industries is suboptimal. Contrary to industry heterogeneity, the R&D spillovers from an industry do not vary substantially across countries, suggesting that optimal R&D policy across OECD countries might be uniform. An industry-by-industry technology matrix shows that sometimes an idea generates a greater impact on other industries than where it is generated. |
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Keywords: | R& D private return spillovers industry technology flow matrix optimal R& D policy |
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