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Is Public R&D a Complement or Substitute for Private R&D? A Review of the Econometric Evidence

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Paul A. David, Bronwyn H. Hall and Andrew A. Toole.

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Abstract

Is public R&D spending complementary and thus "additional" to private R&D spending, or does it substitute for and tend to "crowd out" private R&D? Conflicting answers are given to this question. We survey the body of available econometric evidence accumulated over the past 35 years. A framework for analysis of the problem is developed to help organize and summarize the findings of econometric studies based on time series and cross-section data from various levels of aggregation (laboratory, firm, industry,country). The findings overall are ambivalent and the existing literature as a whole is subject to the criticism that the nature of the "experiment(s)" that the investigators envisage is not adequately specified. We conclude by offering suggestions for improving future empirical research on this issue.

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Paper provided by University of California at Berkeley in its series Economics Working Papers with number E99-269.

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Date of creation: 01 Aug 1999
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Handle: RePEc:ucb:calbwp:e99-269

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  1. Cockburn, Iain M & Henderson, Rebecca M, 1998. "Absorptive Capacity, Coauthoring Behavior, and the Organization of Research in Drug Discovery," Journal of Industrial Economics, Blackwell Publishing, vol. 46(2), pages 157-82, June. [Downloadable!] (restricted)
  2. Paul A. David & Bronwyn H. Hall, . "Heart of Darkness: Public-Private Interactions Inside the R&D Black Box," Working Papers 99024, Stanford University, Department of Economics. [Downloadable!]
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  3. Eric J. Bartelsman, 1990. "Federally sponsored R&D and productivity growth," Finance and Economics Discussion Series 121, Board of Governors of the Federal Reserve System (U.S.).
  4. Maryann P. Feldman & Frank R. Lichtenberg, 1997. "The Impact and Organization of Publicly-Funded Research and Development in the European Community," NBER Working Papers 6040, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Paul A. David, 1999. "The Political Economy of Public Science," Working Papers 99022, Stanford University, Department of Economics. [Downloadable!]
  6. David, Paul A, 1998. "Common Agency Contracting and the Emergence of "Open Science" Institutions," American Economic Review, American Economic Association, vol. 88(2), pages 15-21, May. [Downloadable!] (restricted)
  7. Diamond, Arthur M, Jr, 1999. "Does Federal Funding "Crowd In" Private Funding of Science?," Contemporary Economic Policy, Oxford University Press, vol. 17(4), pages 423-31, October.
  8. Adams, James D, 1990. "Fundamental Stocks of Knowledge and Productivity Growth," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 673-702, August. [Downloadable!] (restricted)
  9. James D. Adams, 2000. "Endogenous R&D Spillovers and Industrial Research Productivity," NBER Working Papers 7484, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Acs, Zoltan J & Audretsch, David B & Feldman, Maryann P, 1992. "Real Effects of Academic Research: Comment," American Economic Review, American Economic Association, vol. 82(1), pages 363-67, March. [Downloadable!] (restricted)
  11. Buxton, A J, 1975. "The Process of Technical Change in UK Manufacturing," Applied Economics, Taylor and Francis Journals, vol. 7(1), pages 53-71, March.
  12. Ashish Arora & Alfonso Gambardella, 1996. "Reputation and competence in publicly funded scientific research," Industrial Organization 9605002, EconWPA. [Downloadable!]
  13. Carmichael, Jeffrey, 1981. "The Effects of Mission-Oriented Public R&D Spending on Private Industry," Journal of Finance, American Finance Association, vol. 36(3), pages 617-27, June. [Downloadable!] (restricted)
  14. Iain Cockburn & Rebecca Henderson, 1999. "Public-Private Interaction and the Productivity of Pharmaceutical Research," NBER Working Papers 6018, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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