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Innovation Shortfalls

  • William Maloney
  • Andrés Rodríguez-Clare

There is a common perception that low productivity or low growth is due to what can be called an "innovation shortfall," usually identified as a low rate of investment in R&D. The problem with this analysis is that it fails to see that a low R&D investment rate may be appropriate given the economy's pattern of specialization, or may be just one manifestation of impediments to accumulation more generally. This paper first shows a simple way to estimate the R&D gap that can be explained by a country's specialization pattern, illustrating it for the case of Chile. Second, we show how a calibrated model can be used to determine the R&D gap that should be expected given a country's investment in physical and human capital. If the actual R&D gap is above this expected gap, then one can say that the country suffers from a true innovation shortfall. Copyright © 2007 The Authors; Journal compilation © 2007 Blackwell Publishing Ltd.

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Article provided by Wiley Blackwell in its journal Review of Development Economics.

Volume (Year): 11 (2007)
Issue (Month): 4 (November)
Pages: 665-684

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Handle: RePEc:bla:rdevec:v:11:y:2007:i:4:p:665-684
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  1. Andrés Rodríguez-Clare, 2005. "Clusters and Comparative Advantage: Implications for Industrial Policy," IDB Publications (Working Papers) 6830, Inter-American Development Bank.
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