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A Schumpeter-Inspired Approach to the Construction of R&D Capital Stocks

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  • Jürgen Bitzer
  • Andreas Stephan

Abstract

A new method for constructing R&D capital stocks is proposed. Following Schumpeter, the development of R&D capital stocks is modelled as a process of creative destruction. Newly generated knowledge is assumed not only to add to the existing R&D capital stocks but also, by displacing old knowledge, to destroy part of that capital. This is in stark contrast to the perpetual inventory method, which postulates a constant rate of depreciation. We compare both methods by estimating the impact of R&D and spillovers on output in OECD countries, and find that the new approach leads to more sensible and robust results.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.38579.de/dp300.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 300.

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Length: 19 p.
Date of creation: 2002
Date of revision:
Handle: RePEc:diw:diwwpp:dp300

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Keywords: R&D capital stocks; knowledge spillovers; creative destruction;

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References

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  1. Bronwyn H. Hall & Jacques Mairesse, 1992. "Exploring the Relationship Between R&D and Productivity in French Manufacturing Firms," NBER Working Papers 3956, National Bureau of Economic Research, Inc.
  2. Jungsoo Park, 2004. "International and Intersectoral R&D Spillovers in the OECD and East Asian Economies," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 42(4), pages 739-757, October.
  3. Bart Verspagen, 1997. "Estimating international technology spillovers using technology flow matrices," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 133(2), pages 226-248, 06.
  4. Keller, Wolfgang, 1997. "How trade patterns and technology flows affect productivity growth," Policy Research Working Paper Series 1831, The World Bank.
  5. Wolfgang Keller, 1997. "Are International R&D Spillovers Trade-Related? Analyzing Spillovers Among Randomly Matched Trade Partners," NBER Working Papers 6065, National Bureau of Economic Research, Inc.
  6. Nestor Terleckyj, 1980. "Direct and Indirect Effects of Industrial Research and Development on the Productivity Growth of Industries," NBER Chapters, National Bureau of Economic Research, Inc, in: New Developments in Productivity Measurement, pages 357-386 National Bureau of Economic Research, Inc.
  7. Chihwa Kao & Min-Hsien Chiang & Bangtian Chen, 1999. "International R&D Spillovers: An Application of Estimation and Inference in Panel Cointegration," Center for Policy Research Working Papers, Center for Policy Research, Maxwell School, Syracuse University 4, Center for Policy Research, Maxwell School, Syracuse University.
  8. Elhanan Helpman & David T. Coe, 1993. "International RandD Spillovers," IMF Working Papers 93/84, International Monetary Fund.
  9. Griliches, Zvi, 1992. " The Search for R&D Spillovers," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 94(0), pages S29-47, Supplemen.
  10. Vincenzo Atella & Beniamino Quintieri, 2001. "Do R&D expenditures really matter for TFP?," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 33(11), pages 1385-1389.
  11. Boozer, Michael A., 1997. "Econometric Analysis of Panel Data Badi H. Baltagi Wiley, 1995," Econometric Theory, Cambridge University Press, Cambridge University Press, vol. 13(05), pages 747-754, October.
  12. Keller, Wolfgang, 2001. "The geography and channels of diffusion at the world's technology frontier," HWWA Discussion Papers 123, Hamburg Institute of International Economics (HWWA).
  13. Bart Verspagen, 1997. "Measuring Intersectoral Technology Spillovers: Estimates from the European and US Patent Office Databases," Economic Systems Research, Taylor & Francis Journals, Taylor & Francis Journals, vol. 9(1), pages 47-65.
  14. Nadiri, M Ishaq & Prucha, Ingmar R, 1996. "Estimation of the Depreciation Rate of Physical and R&D Capital in the U.S. Total Manufacturing Sector," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 34(1), pages 43-56, January.
  15. Zvi Griliches, 1958. "Research Costs and Social Returns: Hybrid Corn and Related Innovations," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 66, pages 419.
  16. Roberto ESPOSTI & Pierpaolo PIERANI, 2001. "Building the Knowledge Stock: Lags, Depreciation and Uncertainty in Agricultural R&D," Working Papers, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali 145, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  17. Jürgen Bitzer, 2005. "Measuring Knowledge Stocks: A Process of Creative Destruction," Kyklos, Wiley Blackwell, Wiley Blackwell, vol. 58(3), pages 379-393, 07.
  18. Edmond, Chris, 2001. "Some Panel Cointegration Models of International R&D Spillovers," Journal of Macroeconomics, Elsevier, Elsevier, vol. 23(2), pages 241-260, April.
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Citations

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Cited by:
  1. Fabio Montobbio & Valerio Sterzi, 2008. "Inventing Together: Exploring the Nature of International Knowledge Spillovers in Latin America," KITeS Working Papers, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy 225, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Nov 2008.
  2. Wong, Siang Leng & Chang, Youngho & Chia, Wai-Mun, 2013. "Energy consumption, energy R&D and real GDP in OECD countries with and without oil reserves," Energy Economics, Elsevier, Elsevier, vol. 40(C), pages 51-60.
  3. Bastian Rake, 2013. "Determinants of Pharmaceutical Innovation: The Role of Technological Opportunities Revisited," DRUID Working Papers, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies 13-03, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  4. Hall, Bronwyn H. & Mairesse, Jacques & Mohnen, Pierre, 2010. "Measuring the Returns to R&D," MERIT Working Papers 006, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  5. Pedro Mazeda Gil & Oscar Afonso, 2011. "Technological-knowledge dynamics in lab-equipment models of quality ladders," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 18(4), pages 333-336.
  6. Alexandre Almeida & Aurora A.C. Teixeira, 2007. "Does Patenting negatively impact on R&D investment?An international panel data assessment," FEP Working Papers, Universidade do Porto, Faculdade de Economia do Porto 255, Universidade do Porto, Faculdade de Economia do Porto.
  7. Leng Wong, Siang & Chia, Wai-Mun & Chang, Youngho, 2013. "Energy consumption and energy R&D in OECD: Perspectives from oil prices and economic growth," Energy Policy, Elsevier, Elsevier, vol. 62(C), pages 1581-1590.

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