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Economic impact of public R&D: an international perspective
[The governance and performance of universities: evidence from Europe and the US]

Author

Listed:
  • Luc Soete
  • Bart Verspagen
  • Thomas H W Ziesemer

Abstract

Despite the fact that research and development (R&D) activities are carried out in most countries in public research institutes such as universities and public research organizations, there have been few studies that attempted to estimate the economic impact of such public investment in R&D. In this paper, we analyze the relations between total factor productivity (TFP) and public and private R&D as well as gross domestic product for a set of 17 Organisation for Economic Cooperation and Development (OECD) countries using a vector-error-correction model. We find that for the period 1975–2014, investment in public R&D has had a clearly positive effect on TFP growth in the majority of countries analyzed. In simulations allowing for a permanent positive shock to public R&D, we observe a strong dynamic complementarity between the public and private (domestic) stocks of R&D for several countries. In countries where this complementarity is strong, the TFP effect of extra public R&D investments is also strong. A discriminant analysis shows that in countries with high complementarity between private and public R&D, the share of foreign funding of R&D performed in the business sector combined with a high business R&D intensity tends to be low. At the same time, the share of basic R&D in business R&D combined with a higher public R&D intensity tends to be higher in countries with strong complementarity.

Suggested Citation

  • Luc Soete & Bart Verspagen & Thomas H W Ziesemer, 2022. "Economic impact of public R&D: an international perspective [The governance and performance of universities: evidence from Europe and the US]," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 31(1), pages 1-18.
    • Handle: RePEc:oup:indcch:v:31:y:2022:i:1:p:1-18.
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    File URL: http://hdl.handle.net/10.1093/icc/dtab066
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    Cited by:

    1. Thomas H. W. Ziesemer, 2023. "Semi-endogenous growth in a non-Walrasian DSEM for Brazil: estimation and simulation of changes in foreign income, human capital, R&D, and terms of trade," Economic Change and Restructuring, Springer, vol. 56(2), pages 1147-1183, April.
    2. Thomas H.W. Ziesemer, 2024. "Internal rates of return for public R&D from VECM estimates for 17 OECD Countries," Economic Change and Restructuring, Springer, vol. 57(5), pages 1-16, October.
    3. Tatyana Kuznetsova & Stanislav Zaichenko, 2022. "R&D Funding Tools: Context And Application Within Global And Russian Practices," HSE Working papers WP BRP 124/STI/2022, National Research University Higher School of Economics.
    4. Abiad (ADB), Abdul & Furceri (IMF and University of Palermo), Davide & Topalova (IMF), Petia, 2016. "The macroeconomic effects of public investment: Evidence from advanced economies," Journal of Macroeconomics, Elsevier, vol. 50(C), pages 224-240.
    5. Thomas Ziesemer, 2023. "Labour-augmenting technical change data for alternative elasticities of substitution: growth, slowdown, and distribution dynamics," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 32(4), pages 449-475, May.
    6. Thomas H. W. Ziesemer, 2021. "Semi-endogenous growth models with domestic and foreign private and public R&D linked to VECMs," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 30(6), pages 621-642, August.
    7. Bart van Ark & Dirk Pilat & Klaas de Vries, 2023. "Are Pro-Productivity Policies Fit for Purpose? Productivity Drivers and Policies in G-20 Economies," Working Papers 038, The Productivity Institute.
    8. Dumont, Michel, 2022. "Public support to business research and development in Belgium: fourth evaluation," MPRA Paper 115418, University Library of Munich, Germany.
    9. Sebastiano Cattaruzzo & Agustí Segarra-Blasco & Mercedes Teruel, 2024. "Firm-level contributions to the R&D intensity distribution: evidence and policy implications," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 33(1), pages 45-65, January.
    10. Ziesemer, Thomas, 2020. "Semi-endogenous growth models with domestic and foreign private and public R&D linked to VECMs with evidence for five countries," MERIT Working Papers 2020-013, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    11. Engelbert Stockhammer & Andre Novas Otero, 2023. "A tale of housing cycles and fiscal policy, not competitiveness. Growth drivers in Southern Europe," New Political Economy, Taylor & Francis Journals, vol. 28(3), pages 483-505, May.
    12. Fernando Almeida & José Morais & José Duarte Santos, 2022. "A Bibliometric Analysis of the Scientific Outcomes of European Projects on the Digital Transformation of SMEs," Publications, MDPI, vol. 10(4), pages 1-18, September.
    13. Roberto Martino, 2021. "Public Investment, Convergence and Productivity Growth in European regions," Working Papers - Economics wp2021_19.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    14. Alvarez, Roberto & Bravo-Ortega, Claudio & Poniachik, Dan, 2023. "Understanding R&D transitions: From bottom to top?," Economic Systems, Elsevier, vol. 47(4).
    15. António Afonso & Eduardo Rodrigues, 2024. "Is public investment in construction and in R&D, growth enhancing? A PVAR approach," Applied Economics, Taylor & Francis Journals, vol. 56(24), pages 2875-2899, May.
    16. Sanchez-Carrera Edgar J. & Ille Sebastian & Travaglini Giuseppe, 2021. "Macrodynamic Modeling of Innovation Equilibria and Traps," The B.E. Journal of Macroeconomics, De Gruyter, vol. 21(2), pages 659-694, June.
    17. Thomas H.W. Ziesemer, 2021. "Mission-oriented R&D and growth," Journal of Applied Economics, Taylor & Francis Journals, vol. 24(1), pages 460-477, January.
    18. Thomas H. W. Ziesemer, 2024. "Mission-oriented R&D and growth of Japan 1988–2016: a comparison with private and public R&D," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 33(2), pages 218-247, February.
    19. Ciaffi, Giovanna & Deleidi, Matteo & Di Bucchianico, Stefano, 2024. "Stagnation despite ongoing innovation: Is R&D expenditure composition a missing link? An empirical analysis for the US (1948–2019)," Technological Forecasting and Social Change, Elsevier, vol. 206(C).
    20. Thomas H. W. Ziesemer, 2022. "Foreign R&D spillovers to the USA and strategic reactions," Applied Economics, Taylor & Francis Journals, vol. 54(37), pages 4274-4291, August.
    21. THW Ziesemer, 2020. "Japan’s Productivity and GDP Growth: The Role of Private, Public and Foreign R&D 1967–2017," Economies, MDPI, vol. 8(4), pages 1-25, September.

    More about this item

    JEL classification:

    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • H40 - Public Economics - - Publicly Provided Goods - - - General

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