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Foreign R&D spillovers to the USA and strategic reactions

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  • Thomas H. W. Ziesemer

Abstract

This paper serves three purposes, using a vector-error-correction model (VECM) to analyse the effects of permanent changes in R&D variables. First, we re-consider the traditional result of zero or negative foreign R&D spillovers to US productivity from private and public foreign R&D stocks. Both have a positive and statistically significant effect on labour-augmenting technical change (LATC) and public R&D in the USA. Moreover, US private R&D reacts positively to foreign private R&D and negatively to foreign public R&D shocks. Second, we also find new results for the effects of changes of US R&D. Foreign public and private R&D react positively to US public R&D. All the mentioned variables react positively to changes in US private R&D. Third, based on the time profile of the simulated VECM estimate, we calculate the sum of discounted net gains for (i) additional private and public US R&D, and (ii) for policies reacting to foreign private and public R&D shocks with additional domestic private and public R&D. Additional private and public US R&D expenditures have very high internal rates of return and are profitable also in reaction to shocks from foreign R&D. All LATC reactions are transitional, suggesting semi-endogenous growth for the USA.

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  • Thomas H. W. Ziesemer, 2022. "Foreign R&D spillovers to the USA and strategic reactions," Applied Economics, Taylor & Francis Journals, vol. 54(37), pages 4274-4291, August.
    • Handle: RePEc:taf:applec:v:54:y:2022:i:37:p:4274-4291
    DOI: 10.1080/00036846.2022.2030042
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    Cited by:

    1. Giovanna Ciaffi & Matteo Deleidi & Stefano Di Bucchianico, 2022. "Stagnation despite ongoing innovation: Is R&D expenditure composition a missing link? An empirical analysis for the US (1948-2019)," Department of Economics University of Siena 877, Department of Economics, University of Siena.

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    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

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