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

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  • Laura Bottazzi
  • Giovanni Peri

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 "idea-generating" 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 National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11524.

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Date of creation: Aug 2005
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Publication status: published as Peri, Giovanni and Laura Bottazzi. “The Dynamics of R&D and Innovation in the Short Run and in the Long Run." Economic Journal (March 2007).
Handle: RePEc:nbr:nberwo:11524

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Cited by:
  1. Maria Cipollina & Giorgia Giovannetti & Filomena Pietrovito & Alberto Franco Pozzolo, 2011. "FDI and growth: What cross-country industry data say," Mo.Fi.R. Working Papers, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences 51, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  2. Francesco Venturini, 2011. "Looking into the black box of Schumpeterian Growth Theories: an empirical assessment of R&D races," Quaderni del Dipartimento di Economia, Finanza e Statistica, Università di Perugia, Dipartimento Economia, Finanza e Statistica 94/2011, Università di Perugia, Dipartimento Economia, Finanza e Statistica.
  3. Diana Weinhold & Usha Nair- Reichert, 2004. "Innovation, Inequality and Intellectual Property Rights," Development and Comp Systems 0410002, EconWPA, revised 04 Nov 2004.

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