Industries at the World Technology Frontier: Measuring R&D Efficiency in a Non-Parametric DEA Framework
AbstractThis paper identifies the leading country-industry combinations that define the world technology frontier in manufacturing. Using a unique industry dataset compiled from EU KLEMS and PATSTAT, it explores which countries and industries reveal the most efficient innovation processes. We combine a traditional nonparametric frontier approach with super-efficiency and tests for return to scale properties using bootstrap procedures to derive consistent and robust efficiency estimates. Our analysis of 17 OECD countries and 13 industries between 2000 and 2004 shows that Germany, the United States, and Denmark have the highest R&D efficiency on average in total manufacturing. However, sector-specific efficiency scores reveal substantial variation across countries. The principal industries determining the technology frontier are electrical and optical equipment, machinery, and chemical and mineral products. Our results suggest that in case of limited resources, priority should be given to the industries that promise the largest output for the available amount of investment. Instead of generally increasing the R&D-to-GDP ratio--as suggested in the Lisbon Agenda--policymakers might target future R&D efforts to those industries that are economically important and reveal excellent performance.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8579.
Date of creation: Sep 2011
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Find related papers by JEL classification:
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-10-15 (All new papers)
- NEP-CSE-2011-10-15 (Economics of Strategic Management)
- NEP-EFF-2011-10-15 (Efficiency & Productivity)
- NEP-INO-2011-10-15 (Innovation)
- NEP-IPR-2011-10-15 (Intellectual Property Rights)
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