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R&D and Development


  • William F. Maloney
  • Daniel Lederman


This paper employs a new global panel data set on innovation related variables to examine patterns of R&D investment across the development process. We find that R&D effort measured as a share of GDP rises with development at an increasing rate, but that several countries have experienced extraordinary “take offs†relative to the median tendency. Our estimates of the rates of return to R&D suggest that these efforts are justified. Moreover, the returns to R&D appear higher for developing countries. Differences in financial depth, protection of intellectual property rights, government capacity to mobilize resources, and the quality of research institutions appear as the main reasons that developing countries invest less despite higher returns. Finally, natural resource abundant countries show higher returns to R&D although lower overall investment.

Suggested Citation

  • William F. Maloney & Daniel Lederman, 2004. "R&D and Development," Econometric Society 2004 Latin American Meetings 216, Econometric Society.
  • Handle: RePEc:ecm:latm04:216

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    References listed on IDEAS

    1. Rudiger Dornbusch & Sebastian Edwards, 1989. "Macroeconomic Populism in Latin America," NBER Working Papers 2986, National Bureau of Economic Research, Inc.
    2. Francisco Gallego & Norman Loayza, 2002. "The Golden Period for Growth in Chile. Explanations and Forecasts," Central Banking, Analysis, and Economic Policies Book Series,in: Norman Loayza & Raimundo Soto & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.), Economic Growth: Sources, Trends, and Cycles, edition 1, volume 6, chapter 13, pages 417-464 Central Bank of Chile.
    3. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 407-443.
    4. William D. Nordhaus, 1975. "The Political Business Cycle," Review of Economic Studies, Oxford University Press, vol. 42(2), pages 169-190.
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    Cited by:

    1. Philip R. Lane IIIS, Trinity College Dublin and CEPR, 2009. "Innovation and Financial Globalisation," The Institute for International Integration Studies Discussion Paper Series iiisdp299, IIIS.
    2. Lederman, Daniel & Saenz, Laura, 2005. "Innovation and development around the world, 1960-2000," Policy Research Working Paper Series 3774, The World Bank.
    3. Rita Almeida & Ana Margarida Fernandes, 2008. "Openness and Technological Innovations in Developing Countries: Evidence from Firm-Level Surveys," Journal of Development Studies, Taylor & Francis Journals, vol. 44(5), pages 701-727.
    4. Martin Falk, 2004. "What Drives Business R&D Intensity Across OECD Countries?," WIFO Working Papers 236, WIFO.
    5. Andrés Rodríguez-Clare, 2005. "Innovation and Technology Adoption in Central America," IDB Publications (Working Papers) 1552, Inter-American Development Bank.
    6. Thorn, Kristian & Holm-Nielsen, Lauritz B., 2006. "International Mobility of Researchers and Scientists: Policy Options for Turning a Drain into a Gain," WIDER Working Paper Series 083, World Institute for Development Economic Research (UNU-WIDER).
    7. Leger, Andreanne, 2006. "Intellectual Property Rights and Innovation in Developing Countries: Evidence from Panel Data," 2006 Annual meeting, July 23-26, Long Beach, CA 21407, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Chen, Derek H. C. & Dahlman, Carl J., 2004. "Knowledge and development : a cross-section approach," Policy Research Working Paper Series 3366, The World Bank.
    9. Rena, Ravinder, 2006. "Higher Education In Africa – A Case Of Eritrea," MPRA Paper 10580, University Library of Munich, Germany.
    10. Córdoba, Juan Carlos & Ripoll, Marla, 2008. "Endogenous TFP and cross-country income differences," Journal of Monetary Economics, Elsevier, vol. 55(6), pages 1158-1170, September.
    11. Ping Li & Guocai Yu, 2009. "The dynamics of China’s expenditure on R&D," Frontiers of Economics in China, Springer;Higher Education Press, vol. 4(1), pages 97-109, March.
    12. Mika Maliranta, 2005. "R&D, International Trade and Creative Destruction—Empirical Findings from Finnish Manufacturing Industries," Journal of Industry, Competition and Trade, Springer, vol. 5(1), pages 27-58, January.
    13. Hiau Looi Kee & Chen, Derek H. C., 2005. "A model on knowledge and endogenous growth," Policy Research Working Paper Series 3539, The World Bank.
    14. Gabriel Sánchez & Ricardo Rozemberg & Inés Butler & Hernán Rufo, 2008. "The Emergence of New Successful Export Activities in Argentina: Self-Discovery, Knowledge Niches, or Barriers to Riches?," Research Department Publications 3254, Inter-American Development Bank, Research Department.
    15. Полтерович В.М., 2009. "Проблема Формирования Национальной Инновационной Системы," Журнал Экономика и математические методы (ЭММ), Центральный Экономико-Математический Институт (ЦЭМИ), vol. 45(2), апрель.
    16. Crawford, Ron & Fabling, Richard & Grimes , Arthur & Bonner, Nick, 2004. "Determinants of National R&D and Patenting: Application to a Small, Distant Country," Occasional Papers 06/2, Ministry of Economic Development, New Zealand.
    17. Andrés Rodríguez-Clare, 2005. "Innovation and Technology Adoption in Central America," IDB Publications (Working Papers) 1552, Inter-American Development Bank.
    18. Eskander Alvi & Debasri Mukherjee & Ashraf Eid, 2007. "Do Patent Protection and Technology Transfer Facilitate R&D in Developed and Emerging Countries? A Semiparametric Study," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 35(2), pages 217-231, June.
    19. Andrés Rodríguez-Clare, 2005. "Adopción de innovación y tecnologías en Centroamérica," Research Department Publications 4396, Inter-American Development Bank, Research Department.

    More about this item


    Innovation; R&D;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies


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