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The impact of R&D and innovation on global supply chain transition: GTAP analysis on Japan’s public R&D investment

Author

Listed:
  • Michael C. Huang

    (The Sasakawa Peace Foundation (SPF))

  • Ming-Huan Liou

    (Industrial Technology Research Institute (ITRI))

  • Yoko Iwaki

    (National Graduate Institute for Policy Studies (GRIPS))

Abstract

Policymaking for science, technology, and innovation (R&D) is stepping into a new era in the twenty-first century within a highly integrated production network, making it more challenging to capture the impact of R&D investment from an evidence-based approach. To unfold the paradox of the R&D spillover effect spared in the global supply chain, we use computable general equilibrium model with the GTAP database v10 to analyze the impact of Japan’s public R&D investment to the world focus on key sectors of global supply chain, namely chemical and pharmaceutical, electronic equipment, machinery, and transportation equipment to examine its output, external trades, and welfare. The productivity parameters triggered by public R&D investment are calibrated from the SciREX Policymaking Intelligent Assistance System—Economic Simulator (SPIAS-e). The simulation results show significant increase in Japan’s output and export for chemical and pharmaceutical, electronic equipment, and transportation equipment. The GDP growth was stimulated by 0.6% and substantial welfare improvement by USD 78,000 million, while other countries such as Malaysia and Taiwan by 0.4–0.6%. In contrast, the economic indicators of China reveal a negative impact, implying a structural change in the composition of the production network. It is notable to see a higher economic integration of Oceania within the region through its vibrant production and trades. The study provides comprehensive global analysis on production networks and insights for evaluating the R&D investment spillover effects.

Suggested Citation

  • Michael C. Huang & Ming-Huan Liou & Yoko Iwaki, 2021. "The impact of R&D and innovation on global supply chain transition: GTAP analysis on Japan’s public R&D investment," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 23(3), pages 447-467, December.
    • Handle: RePEc:spr:jsecdv:v:23:y:2021:i:3:d:10.1007_s40847-020-00113-1
    DOI: 10.1007/s40847-020-00113-1
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    References listed on IDEAS

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    More about this item

    Keywords

    GTAP 10; Public R&D investment; SPIAS-e; Global supply chain;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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