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Do R&D strategies in high-tech sectors differ from those in low-tech sectors? An alternative approach to testing the pooling assumption

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  • Bettina Becker

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  • Stephen Hall

Abstract

Most studies investigating the determinants of R&D investment consider pooled estimates. However, if the parameters are heterogeneous, pooled coefficients may not provide reliable estimates of individual industry effects. Hence pooled parameters may conceal valuable information that may help target government tools more efficiently across heterogeneous industries. There is little evidence to date on the decomposition of the determinants of R&D investment by industry. Moreover, the existing work does not distinguish between those R&D determinants for which pooling may be valid and those for which it is not. In this paper, we test the pooling assumption for a panel of manufacturing industries and find that pooling is valid only for output fluctuations, adjustment costs and interest rates. Implementing the test results into our model, we find government funding is significant only for low-tech R&D. Foreign R&D and skilled labour matter only in high-tech sectors. These results suggest important implications for R&D policy. Copyright Springer Science+Business Media, LLC. 2013

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  • Bettina Becker & Stephen Hall, 2013. "Do R&D strategies in high-tech sectors differ from those in low-tech sectors? An alternative approach to testing the pooling assumption," Economic Change and Restructuring, Springer, vol. 46(2), pages 183-202, May.
  • Handle: RePEc:kap:ecopln:v:46:y:2013:i:2:p:183-202
    DOI: 10.1007/s10644-012-9122-7
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    Cited by:

    1. Ugur, Mehmet & Trushin, Eshref & Solomon, Edna, 2015. "UK and EU subsidies and private R&D investment: Is there input additionality?," MPRA Paper 68009, University Library of Munich, Germany, revised 16 Nov 2015.
    2. Bettina Becker, 2015. "Public R&D Policies And Private R&D Investment: A Survey Of The Empirical Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 29(5), pages 917-942, December.
    3. Pietro Moncada-Paternò-Castello, 2016. "Sector dynamics and demographics of top R&D firms in the global economy," JRC Working Papers on Corporate R&D and Innovation 2016-06, Joint Research Centre (Seville site).
    4. Bettina Becker, 2013. "The Determinants of R&D Investment: A Survey of the Empirical Research," Discussion Paper Series 2013_09, Department of Economics, Loughborough University, revised Sep 2013.
    5. repec:kap:ecopln:v:50:y:2017:i:2:d:10.1007_s10644-016-9184-z is not listed on IDEAS

    More about this item

    Keywords

    Research and development; Pooling; Panel data estimation; F2; H3; L6; O3;

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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