R&D in Worldscan
In March 2000, the European Unionâ€™s Lisbon Agenda identified the low level of R&D as an important reason for Europeâ€™s lacking economic growth. Seven years later, innovation still has the full attention of policy makers around Europe. Given the prominent role of innovation in economic policy, the analysis of innovation is also important for policy-oriented economic research. A CGE model is a choice vehicle for the analysis of the long-term economic consequences of innovation policy. So far, attempts of such an analysis have however been rather scarce. In addition, in models that do incorporate innovation, R&D is frequently modelled as an exogenous rather than an endogenous event. Exceptions are the models Quest III, Mesemet and International Futures. WoldScan, the CGE model for the world economy of CPB Netherlands Bureau for Economic Policy Analysis, includes endogenous R&D, thus providing a flexible instrument for evaluating the effect of innovation policy. This memorandum analyses and checks whether the effect of R&D on total factor productivity (TFP) as modelled in WorldScan is consistent with the empirical estimates used for the calibration of the model. We find that the model deviates from these empirical estimates in two ways: i) the effect of R&D in WorldScan differs considerably over countries and sectors. Some validation for this sectoral pattern is found in the empirical literature; and ii) in WorldScan, R&D not only generates spillovers, but is also treated as a production factor. There is thus a potential for double-counting the effects of private R&D. We find that this risk is only partly realized. In addition, we have considered the effectiveness of an R&D tax credit in WorldScan and find that such a tax credit raises both R&D expenditures and welfare. The degree of effectiveness of the tax credit in raising R&D expenditures is broadly consistent with the empirical literature: 1 euro extra R&D credit raises total R&D expenditures by an equal amount.
|Date of creation:||Oct 2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (070) 338 33 80
Fax: (070) 338 33 50
Web page: http://www.cpb.nl/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Peeters, Marga & Ghijsen, Paul, 1995.
"Capital, Labour, Materials and Additional R&D Investment in Japan. The Issue of (Double-) Counting,"
Discussion Papers (IRES - Institut de Recherches Economiques et Sociales)
1995009, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- Marga PEETERS & Paul GHIJSEN, 2000. "Capital, Labour, Materials and Additional R&D Investment in Japan - The Issue of Double-Counting," Annales d'Economie et de Statistique, ENSAE, issue 58, pages 165-184.
- Wolfgang Keller, 2002.
"Geographic Localization of International Technology Diffusion,"
American Economic Review,
American Economic Association, vol. 92(1), pages 120-142, March.
- Keller, Wolfgang, 2001. "Geographic Localization of International Technology Diffusion," CEPR Discussion Papers 2706, C.E.P.R. Discussion Papers.
- Wolfgang Keller, 2000. "Geographic Localization of International Technology Diffusion," NBER Working Papers 7509, National Bureau of Economic Research, Inc.
- Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1992.
"Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations,"
NBER Working Papers
3993, National Bureau of Economic Research, Inc.
- Jaffe, Adam B & Trajtenberg, Manuel & Henderson, Rebecca, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 577-98, August.
- Jaffe, A.B. & Trajtenberg, M., 1992. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," Papers 14-92, Tel Aviv.
- Sean M. Dougherty & Robert Inklaar & Robert H. McGuckin & Bart van Ark, 2007.
"International Comparisons of R&D Expenditure: Does an R&D PPP Make a Difference?,"
in: Hard-to-Measure Goods and Services: Essays in Honor of Zvi Griliches, pages 291-322
National Bureau of Economic Research, Inc.
- Sean M. Dougherty & Robert Inklaar & Robert H. McGuckin & Bart van Ark, 2003. "International Comparisons of R&D Expenditure: Does an R&D PPP make a difference?," Economics Program Working Papers 03-03, The Conference Board, Economics Program, revised Jun 2006.
- Sean M. Dougherty & Robert Inklaar & Robert H. McGuckin & Bart van Ark, 2007. "International Comparisons of R&D Expenditure: Does an R&D PPP Make a Difference?," NBER Working Papers 12829, National Bureau of Economic Research, Inc.
- Schankerman, Mark, 1981. "The Effects of Double-Counting and Expensing on the Measured Returns to R&D," The Review of Economics and Statistics, MIT Press, vol. 63(3), pages 454-58, August.
- Christoph Meister & Bart Verspagen, 2005.
"European Productivity Gaps Is R&D the Solution?,"
DRUID Working Papers
05-06, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
- Meister,Christoph & Verspagen,Bart, 2004. "European productivity gaps: Is R&D the solution?," Research Memorandum 005, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
- Meister, C. & Verspagen, B., 2004. "European Productivity Gaps: Is R&D the solution?," Working Papers 04.03, Eindhoven Center for Innovation Studies.
- Hall, Bronwyn & Van Reenen, John, 2000. "How effective are fiscal incentives for R&D? A review of the evidence," Research Policy, Elsevier, vol. 29(4-5), pages 449-469, April.
- Mauro Giorgio Marrano & Jonathan Haskel & Gavin Wallis, 2009.
"What Happened To The Knowledge Economy? Ict, Intangible Investment, And Britain'S Productivity Record Revisited,"
Review of Income and Wealth,
International Association for Research in Income and Wealth, vol. 55(3), pages 686-716, 09.
- Mauro Giorgio Marrano & Jonathan Haskel & Gavin Wallis, 2007. "What Happened to the Knowledge Economy? ICT, Intangible Investment and Britain's Productivity Record Revisited," Working Papers 603, Queen Mary University of London, School of Economics and Finance.
- Cincera, Michele, 2005.
"Firms' Productivity Growth and R&D Spillovers: An Analysis of Alternative Technological Proximity Measures,"
CEPR Discussion Papers
4894, C.E.P.R. Discussion Papers.
- Michele Cincera, 2005. "Firms' productivity growth and R&D spillovers: An analysis of alternative technological proximity measures," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 14(8), pages 657-682.
- Michele Cincera, 2005. "Firms' productivity growth and R&D spillovers: an analysis of alternative technological proximity measures," ULB Institutional Repository 2013/5490, ULB -- Universite Libre de Bruxelles.
- Wolff, Guntram B. & Reinthaler, Volker, 2008.
"The effectiveness of subsidies revisited: Accounting for wage and employment effects in business R&D,"
Elsevier, vol. 37(8), pages 1403-1412, September.
- Reinthaler, Volker & Wolff, Guntram B., 2004. "The effectiveness of subsidies revisited: Accounting for wage and employment effects in business R&D," ZEI Working Papers B 21-2004, ZEI - Center for European Integration Studies, University of Bonn.
- Sid Shanks & Simon Zheng, 2006. "Econometric Modelling of R&D and Australia's Productivity," Staff Working Papers 0604, Productivity Commission, Government of Australia.
- Christine Greenhalgh & Mark Longland, 2002. "Running to Stand Still? - Intellectual Property and Value Added in Innovating Firms," Economics Series Working Papers 134, University of Oxford, Department of Economics.
- M. Ishaq Nadiri, 1993. "Innovations and Technological Spillovers," NBER Working Papers 4423, National Bureau of Economic Research, Inc.
- van Bergeijk, Peter A. G. & van Hagen, Gilbert H. A. & de Mooij, Ruud A. & van Sinderen, Jarig, 1997. "Endogenizing technological progress: The MESEMET Model," Economic Modelling, Elsevier, vol. 14(3), pages 341-367, July.
- Jürgen Bitzer, 2005. "Measuring Knowledge Stocks: A Process of Creative Destruction," Kyklos, Wiley Blackwell, vol. 58(3), pages 379-393, 07.
- Diao, Xinshen & Roe, Terry & Yeldan, Erinc, 1999. "Strategic policies and growth: an applied model of R&D-driven endogenous growth," Journal of Development Economics, Elsevier, vol. 60(2), pages 343-380, December.
- Bruno Van Pottelsberghe & Dominique Guellec, 2003.
"The impact of public R&D expenditure on business R&D,"
ULB Institutional Repository
2013/6213, ULB -- Universite Libre de Bruxelles.
- Dominique Guellec & Bruno Van Pottelsberghe De La Potterie, 2003. "The impact of public R&D expenditure on business R&D," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 12(3), pages 225-243.
- Dominique Guellec & Bruno van Pottelsberghe de la Potterie, 2000. "The Impact of Public R&D Expenditure on Business R&D," OECD Science, Technology and Industry Working Papers 2000/4, OECD Publishing.
- Juan Carlos BARCENA-RUIZ & Jesus RUBIO, 2000. "Withholding of Information as an Endogenous Entry Barrier," Annales d'Economie et de Statistique, ENSAE, issue 58, pages 185-194.
- Bruno Van Pottelsberghe & Dominique Guellec, 1999. "Does government support stimulates private R&D," ULB Institutional Repository 2013/6231, ULB -- Universite Libre de Bruxelles.
- Bernstein, Jeffrey I. & Mamuneas, Theofanis P., 2006. "R&D depreciation, stocks, user costs and productivity growth for US R&D intensive industries," Structural Change and Economic Dynamics, Elsevier, vol. 17(1), pages 70-98, January.
- Nadiri, M Ishaq & Prucha, Ingmar R, 1996. "Estimation of the Depreciation Rate of Physical and R&D Capital in the U.S. Total Manufacturing Sector," Economic Inquiry, Western Economic Association International, vol. 34(1), pages 43-56, January.
- Bart Verspagen, 1997. "Estimating international technology spillovers using technology flow matrices," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 133(2), pages 226-248, 06.
- B. Los & B. Verspagen, 2007. "Technology Spillovers and their Impact on Productivity," Chapters, in: Elgar Companion to Neo-Schumpeterian Economics, chapter 35 Edward Elgar.
- Lee BRANSTETTER, 1998. "Looking for International Knowledge Spillovers: A Review of the Literature with Suggestions for New Approaches," Annales d'Economie et de Statistique, ENSAE, issue 49-50, pages 517-540.
- Nadiri, M.I., 1993. "Innovations and Technological Spillovers," Working Papers 93-31, C.V. Starr Center for Applied Economics, New York University.
When requesting a correction, please mention this item's handle: RePEc:cpb:memodm:189. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.