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The International Dynamics of R&D and Innovationin the Short Run and in the Long Run

Author

Listed:
  • Giovanni Peri
  • Laura Bottaz

    (Department of Economics, University of California Davis)

Abstract

In this paper we estimate the dynamic relationship between employment in R&D and generation of knowledge as measured by patent applications across OECD countries. In several recently developed models, known as ?idea-based? models of growth, the afore mentioned ""ideagenerating"" process is the engine of productivity growth. Moreover, in real business cycle models technological shocks are an important source of fluctuations. Our empirical strategy is able to test whether knowledge spillovers are strong enough to generate sustained endogenous growth and to estimate the quantitative impact of international knowledge on technological innovation of a country in the short and in the long run. We find that a country?s stock of knowledge, its R&D resources and the stock of international knowledge move together in the long run. International knowledge has a very significant impact on innovation. As a consequence, a positive shock to R&D in the US (the largest world innovator) has a significant positive effect on the innovation of all other countries. Such a shock produces its largest effect on domestic and international innovation after five to ten years from its occurrence.

Suggested Citation

  • Giovanni Peri & Laura Bottaz, 2005. "The International Dynamics of R&D and Innovationin the Short Run and in the Long Run," Working Papers 59, University of California, Davis, Department of Economics.
  • Handle: RePEc:cda:wpaper:05-9
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    File URL: http://wp.econ.ucdavis.edu/05-9.pdf
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    References listed on IDEAS

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    Cited by:

    1. Donatella Baiardi & Carluccio Bianchi & Eleonora Lorenzini, 2014. "Food competition in world markets: Some evidence from a panel data analysis of top exporting countries," DEM Working Papers Series 083, University of Pavia, Department of Economics and Management.

    More about this item

    Keywords

    Innovation; Weak Scale Effects; Panel Cointegration; Error Correction Mechanism; International Knowledge Spillovers;

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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