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Strategic interactions in public R&D across EU-15 countries : A spatial econometric analysis

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  • Hakim Hammadou

    (EQUIPPE, University of Lille, France)

  • Sonia Paty

    ()
    (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France)

  • Maria Savona

    ()
    (SPRU, Science and Technology Policy Research, Freeman Centre, University of Sussex, Falmer Brighton BN1 9QE, UK and Faculty of Economics and Social Sciences, University of Lille 1, France)

Abstract

The aim of this paper is to test the presence of strategic interactions in government spending on Research and Development (R&D), among EU-15 countries. We add to the literature on public choice strategic interactions in general, and to work on R&D spending in particular. We take account of traditional and some rather overlooked factors related to countries’ public R&D spending, including (i) the international context – i.e. Lisbon strategy ; (ii) country characteristics - the National System of Innovation ; (iii) national similarities in relation to (a) trade and economic size and (b) sectoral specialization. Sectoral specialization is likely to affect government spending, depending on the mechanisms of complementarity or substitution between public and private R&D. Using a dynamic spatial panel model in which spatial matrices are specified in terms of traditional Euclidean distance, and sectoral specialization proximity, we confirm the existence of strategic interactions in relation to R&D spending among European countries with similar economic, international trade and sectoral structure perspectives. Unlike the results for strategic interactions in public choice, geographic proximity seems not to affect interactions related to public spending on R&D.

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Paper provided by Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure in its series Working Papers with number 1223.

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Date of creation: 2012
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Handle: RePEc:gat:wpaper:1223

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Keywords: Public R&D expenditures; National Systems of Innovation; complementarity public and private R&D; spatial interactions; EU countries; spatial dynamic panel data;

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