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Innovation and Growth: Considerations for Public Policy

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  • Ben Westmore

Abstract

This paper uses panel regression techniques to assess the policy determinants of private sector innovative activity – proxied by R&D expenditure and the number of new patents – across 19 OECD countries. The relationship between innovation indicators and multifactor productivity (MFP) growth is also examined with a particular focus on the role of public policies in influencing the returns to new knowledge. The results establish an empirical link between R&D and patenting, as well as between these measures of innovation intensity and MFP growth. Innovation?specific policies such as R&D tax incentives, direct government support and patent rights are found to be successful in encouraging the innovative activities associated with higher productivity growth. However, direct empirical evidence of the positive effects of these policies on productivity is less forthcoming. A pervasive theme from the analysis is the importance of coupling policies aimed at encouraging innovation or technological adoption with well designed framework policies that allow knowledge spillovers to proliferate. In particular, the settings of framework policies relating to product market regulation, openness to trade and debtor protection in bankruptcy provisions are found to be important for the diffusion of new technologies.

Suggested Citation

  • Ben Westmore, 2013. "Innovation and Growth: Considerations for Public Policy," Review of Economics and Institutions, Università di Perugia, vol. 4(3).
    • Handle: RePEc:pia:review:v:4:y:2013:i:3:n:3
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    File URL: https://rei.unipg.it/rei/article/view/128
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    Citations

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    Cited by:

    1. A. Minniti & F. Venturini, 2014. "R&D Policy and Schumpeterian Growth: Theory and Evidence," Working Papers wp945, Dipartimento Scienze Economiche, Universita' di Bologna.
    2. Oleh Chornyi, 2019. "Creation of a National Innovation System: A Tough Task for Ukraine," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 30-35, December.
    3. Basant, Rakesh, 2017. "Exploring Linkages between Innovation and public policy- challenges and Opportunities," IIMA Working Papers WP 2017-11-01, Indian Institute of Management Ahmedabad, Research and Publication Department.
    4. Rakesh Basant, 2018. "Exploring Linkages between Industrial Innovation and Public Policy: Challenges and Opportunities," Vikalpa: The Journal for Decision Makers, , vol. 43(2), pages 61-76, June.
    5. Henrik Braconier & Giuseppe Nicoletti & Ben Westmore, 2015. "Policy challenges for the next 50 years," OECD Journal: Economic Studies, OECD Publishing, vol. 2015(1), pages 9-66.
    6. Müge Adalet McGowan & Dan Andrews & Valentine Millot, 2017. "Insolvency Regimes, Technology Diffusion and Productivity Growth: Evidence from Firms in OECD Countries," OECD Economics Department Working Papers 1425, OECD Publishing.
    7. Gaessler, Fabian & Hall, Bronwyn H. & Harhoff, Dietmar, 2021. "Should there be lower taxes on patent income?," Research Policy, Elsevier, vol. 50(1).
    8. Isabel Busom & Beatriz Corchuelo & Ester Martínez-Ros, 2015. "Dynamics of firm participation in R&D tax credit and subsidy programs," Working Papers wpdea1503, Department of Applied Economics at Universitat Autonoma of Barcelona.
    9. Paul Conway, 2016. "Achieving New Zealand's productivity potential," Working Papers 2016/01, New Zealand Productivity Commission.

    More about this item

    Keywords

    intangible assets; innovation; productivity growth; public policy;
    All these keywords.

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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