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R&D expenditures and U.S. economic growth: A disaggregated approach

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  • Goel, Rajeev K.
  • Payne, James E.
  • Ram, Rati

Abstract

Based on U.S. data for the 48-year-period 1953-2000, this study makes a contribution on the R&D-growth relation along five dimensions. First, we note several descriptive patterns that may be regarded as stylized facts relative to R&D outlays in the U.S. during the half-century period. These include (a) a dramatic increase in the share of non-federal R&D outlays, (b) a corresponding decline in the share of federally funded R&D expenditure, and (c) an even more dramatic decline in the share of defense R&D spending. Second, in a departure from most of the literature on the topic, we study the R&D-growth nexus at a disaggregated level by considering the roles of federal, non-federal, and defense R&D outlays. Third, we use the relatively new bounds-testing and ARDL (autoregressive distributed lag) procedures of Pesaran et al. [Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16, 289-326] to estimate the (long run) relation between R&D outlays and growth in a fairly standard model. Fourth, contrary to the almost universal belief, our estimates indicate a larger role of federal R&D relative to non-federal R&D in growth, and also a stronger role of defense R&D than of non-defense (federal) R&D. Last, to the extent our estimates are reasonable, the above-noted temporal movements in the shares of federal, non-federal, and defense R&D outlays seem to reflect socially perverse trends in the context of economic growth and well-being, and indicate the need for appropriate policy interventions for a substantial enhancement of federal defense R&D and non-defense R&D outlays.

Suggested Citation

  • Goel, Rajeev K. & Payne, James E. & Ram, Rati, 2008. "R&D expenditures and U.S. economic growth: A disaggregated approach," Journal of Policy Modeling, Elsevier, vol. 30(2), pages 237-250.
  • Handle: RePEc:eee:jpolmo:v:30:y:2008:i:2:p:237-250
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    References listed on IDEAS

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    Cited by:

    1. Kokko, Ari & Tingvall, Patrik Gustavsson & Videnord, Josefin, 2015. "The growth effects of R&D spending in the EU: A meta-analysis," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 9, pages 1-26.
    2. Chia-Hui Huang, 2015. "Tax credits and total factor productivity: firm-level evidence from Taiwan," The Journal of Technology Transfer, Springer, vol. 40(6), pages 932-947, December.
    3. Gurgul, Henryk & Lach, Łukasz, 2012. "Technological progress and economic growth: evidence from Poland," MPRA Paper 52279, University Library of Munich, Germany.
    4. Jangraiz KHAN, 2015. "The Role of Research and Development in Economic Growth: A Review," Journal of Economics Bibliography, KSP Journals, vol. 2(3), pages 128-133, September.
    5. Horvath, Roman, 2011. "Research & development and growth: A Bayesian model averaging analysis," Economic Modelling, Elsevier, vol. 28(6), pages 2669-2673.
    6. Stéphane Auray & Aurélien Eyquem & Fréderic Jouneau-Sion, 2011. "Wars as Large Depreciation Shocks," Working Papers 2012-30, Center for Research in Economics and Statistics.
    7. Andrés, Antonio R. & Goel, Rajeev K., 2012. "Does software piracy affect economic growth? Evidence across countries," Journal of Policy Modeling, Elsevier, vol. 34(2), pages 284-295.
    8. Mario Coccia, 2017. "General purpose technologies in dynamic systems: visual representation and analyses of complex drivers," IRCrES Working Paper 201705, Research Institute on Sustainable Economic Growth - Moncalieri (TO) ITALY - former Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY.
    9. Goel, Rajeev K. & Saunoris, James W., 2014. "Military versus non-military government spending and the shadow economy," Economic Systems, Elsevier, vol. 38(3), pages 350-359.
    10. Angus C. Chu, 2010. "Effects of Patent Policy on Income and Consumption Inequality in a R&D Growth Model," Southern Economic Journal, Southern Economic Association, vol. 77(2), pages 336-350, October.
    11. Begüm Erdil Şahin, 2015. "The Relationship Between R&D Expenditures and Economic Growth: Panel Data Analysis 1990-2013," EY International Congress on Economics II (EYC2015), November 5-6, 2015, Ankara, Turkey 207, Ekonomik Yaklasim Association.
    12. Brenner, Thomas, 2015. "Science, Innovation and National Growth," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112873, Verein für Socialpolitik / German Economic Association.
    13. Angus C. Chu & Ching-Chong Lai, 2009. "On the Growth and Welfare Effects of Defense R&D," IEAS Working Paper : academic research 09-A008, Institute of Economics, Academia Sinica, Taipei, Taiwan, revised Dec 2009.
    14. Mario Coccia, 2012. "What are the effects of public debt on innovation and employment growth?," CERIS Working Paper 201206, Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY -NOW- Research Institute on Sustainable Economic Growth - Moncalieri (TO) ITALY.
    15. Knobel, Alexander & Chokaev, Bekhan & Mironov, Alexey, 2015. "Comparative Analysis of the Effectiveness of Public Spending in the Field of National Defense and Law Enforcement," Published Papers mn47, Russian Presidential Academy of National Economy and Public Administration.
    16. Claudia Capozza & Angela Stefania Bergantino & Angela De Carlo, 2013. "The Role of Transport Infrastructures in determining Technical Efficiency in R&D activity of Italian regions. A double-bootstrapped DEA procedure," ERSA conference papers ersa13p1052, European Regional Science Association.
    17. Thomas Brenner, 2014. "Science, Innovation and National Growth," Working Papers on Innovation and Space 2014-03, Philipps University Marburg, Department of Geography.
    18. Khan, Jangraiz & Rehman Khattak, Naeem Ur, 2014. "The Significance of Research and Development for Economic Growth: The Case of Pakistan," MPRA Paper 56005, University Library of Munich, Germany.
    19. Goel, Rajeev K. & Saunoris, James W. & Schneider, Friedrich, 2017. "Growth in the Shadows: Effect of the Shadow Economy on U.S. Economic Growth over More Than a Century," IZA Discussion Papers 10705, Institute for the Study of Labor (IZA).
    20. Haruna Shoji & Goel Rajeev K., 2016. "International Tariffs in a Mixed Oligopoly with Research Spillovers," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 22(3), pages 277-293, August.

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