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The International Dynamics of R&D and Innovationin the Short Run and in the Long Run

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Author Info

  • Giovanni Peri
  • Laura Bottaz

    (Department of Economics, University of California Davis)

Abstract

In this paper we estimate the dynamic relationship between employment in R&D and generation of knowledge as measured by patent applications across OECD countries. In several recently developed models, known as ‘idea-based’ models of growth, the afore mentioned ""ideagenerating"" process is the engine of productivity growth. Moreover, in real business cycle models technological shocks are an important source of fluctuations. Our empirical strategy is able to test whether knowledge spillovers are strong enough to generate sustained endogenous growth and to estimate the quantitative impact of international knowledge on technological innovation of a country in the short and in the long run. We find that a country’s stock of knowledge, its R&D resources and the stock of international knowledge move together in the long run. International knowledge has a very significant impact on innovation. As a consequence, a positive shock to R&D in the US (the largest world innovator) has a significant positive effect on the innovation of all other countries. Such a shock produces its largest effect on domestic and international innovation after five to ten years from its occurrence.

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Bibliographic Info

Paper provided by University of California, Davis, Department of Economics in its series Working Papers with number 59.

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Length: 44
Date of creation: 22 Jul 2005
Date of revision:
Handle: RePEc:cda:wpaper:05-9

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Related research

Keywords: Innovation; Weak Scale Effects; Panel Cointegration; Error Correction Mechanism; International Knowledge Spillovers;

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References

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  1. Eaton, Jonathan & Kortum, Samuel, 1996. "Trade in ideas Patenting and productivity in the OECD," Journal of International Economics, Elsevier, vol. 40(3-4), pages 251-278, May.
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Cited by:
  1. Donatella Baiardi & Carluccio Bianchi & Eleonora Lorenzini, 2014. "Food competition in world markets: Some evidence from a panel data analysis of top exporting countries," DEM Working Papers Series 083, University of Pavia, Department of Economics and Management.

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