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Complementarity between private and public investment in R&D: A Dynamic Panel Data analysis

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  • Sadraoui Tarek

    (URDEE)

  • Naceur Ben Zina

Abstract

This paper investigates the relationship between private and public investment in R&D, while taking into account the effect of several instruments policies such as subsidies and taxes. We design a new look of knowledge spillovers and R&D cooperation to explain the contribution of public and private R&D on growth. We propose a heterogeneous dynamic panel data model to consider the endogenous effect of R&D investment. We also distinguish between the estimated long and short run results. Our results based on a sample of 23 countries over the period 1992-2004 indicate that both public and private investments in R&D are complementary. By establishing an endogenous growth model, the estimates indicate that public and private R&D depends on the host country's human capital investment. Results indicate that foreign direct investment is a more significant spillover channel than imports.

Suggested Citation

  • Sadraoui Tarek & Naceur Ben Zina, 2009. "Complementarity between private and public investment in R&D: A Dynamic Panel Data analysis," Papers 0905.4272, arXiv.org.
    • Handle: RePEc:arx:papers:0905.4272
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