There is a common perception that low productivity or low growth is due to what can be called an `innovation shortfall,` usually identified as a low rate of investment in research and development (RD) compared with some high-innovation countries. The usual reaction to this perceived problem is to call for increases in RD investment rates, usually specifying a target that can be as high as 3 percent of GDP. The problem with this analysis is that it fails to see that a low RD investment rate may be appropriate given the economy`s pattern of specialization, or may be just one manifestation of more general problems that impede accumulation of all kinds of capital. When does a country suffer from an innovation shortfall above and beyond the ones that should be expected given its specialization and accumulation patterns? This is the question tackled in this paper. First, it shows a simple way to estimate the RD gap that can be explained by a country`s specialization pattern, and illustrates this with the case of Chile. The analysis finds that although Chile`s specialization in natural-resource-intensive sectors explains part of its RD gap, a significant shortfall remains. Second, it shows how a calibrated model can be used to determine the RD gap that should be expected given a country`s investment in physical and human capital. If the actual RD gap is above this expected gap, the country suffers from a true innovation shortfall.
|Date of creation:||Dec 2005|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.iadb.org/res
More information through EDIRC
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.:
- Bronwyn H. Hall & John van Reenen, 1999. "How Effective are Fiscal Incentives for R&D? A New Review of the Evidence," NBER Working Papers 7098, National Bureau of Economic Research, Inc.
- Comin, D., 2002.
"R&D? A Small Contribution to Productivity Growth,"
02-01, C.V. Starr Center for Applied Economics, New York University.
- Andrés Rodríguez-Clare, 2005.
"Clusters and Comparative Advantage: Implications for Industrial Policy,"
IDB Publications (Working Papers)
6830, Inter-American Development Bank.
- Rodriguez-Clare, Andres, 2007. "Clusters and comparative advantage: Implications for industrial policy," Journal of Development Economics, Elsevier, vol. 82(1), pages 43-57, January.
- Andrés Rodríguez-Clare, 2005. "Clusters and Comparative Advantage: Implications for Industrial Policy," Research Department Publications 4391, Inter-American Development Bank, Research Department.
- Psacharopoulos, George, 1994.
"Returns to investment in education: A global update,"
Elsevier, vol. 22(9), pages 1325-1343, September.
- Psacharopoulos, George, 1993. "Returns to investment in education : a global update," Policy Research Working Paper Series 1067, The World Bank.
- Ricardo Caballero G. & Eduardo Engel G. & Alejandro Micco A., 2004.
"Microeconomic Flexibility in Latin America,"
Journal Economía Chilena (The Chilean Economy),
Central Bank of Chile, vol. 7(2), pages 5-26, August.
- Ricardo Caballero & Eduardo Engel & Alejandro Micco, 2005. "Microeconomic Flexibility in Latin America," Central Banking, Analysis, and Economic Policies Book Series, in: Jorge Restrepo & Andrea Tokman R. & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Edi (ed.), Labor Markets and Institutions, edition 1, volume 8, chapter 10, pages 329-366 Central Bank of Chile.
- Ricardo J. Caballero & Eduardo M.R.A. Engel & Alejandro Micco, 2004. "Microeconomic Flexibility in Latin America," Working Papers 884, Economic Growth Center, Yale University.
- Ricardo J. Caballlero & Eduardo Engel & Alejandro Micco, 2004. "Microeconomic Flexibility in Latin America," NBER Working Papers 10398, National Bureau of Economic Research, Inc.
- Paul Krugman, 1986. "Strategic Trade Policy and the New International Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262610450, June.
- James J. Heckman & Carmen Pagés, 2004.
"Law and Employment: Lessons from Latin America and the Caribbean,"
National Bureau of Economic Research, Inc, number heck04-1, July.
- James Heckman & Carmen Pages, 2003. "Law and Employment: Lessons from Latin America and the Caribbean," NBER Working Papers 10129, National Bureau of Economic Research, Inc.
- Peter J. Klenow & Andres Rodriguez-Clare, 2004.
"Externalities and Growth,"
NBER Working Papers
11009, National Bureau of Economic Research, Inc.
- Ronald Findlay, 1995. "Factor Proportions, Trade, and Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061759, June.
- Barro, Robert J & Lee, Jong-Wha, 2001.
"International Data on Educational Attainment: Updates and Implications,"
Oxford Economic Papers,
Oxford University Press, vol. 53(3), pages 541-63, July.
- Robert J. Barro & Jong-Wha Lee, 2000. "International Data on Educational Attainment: Updates and Implications," CID Working Papers 42, Center for International Development at Harvard University.
- Robert J. Barro & Jong-Wha Lee, 2000. "International Data on Educational Attainment Updates and Implications," NBER Working Papers 7911, National Bureau of Economic Research, Inc.
- Lam. D. & Schoeni, R.F., 1996.
"Effects on Family Background on Earnings and Returns to Schooling: Evidence from Brazil,"
96-13, RAND - Reprint Series.
- Lam, David & Schoeni, Robert F, 1993. "Effects of Family Background on Earnings and Returns to Schooling: Evidence from Brazil," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 710-40, August.
- Parente, Stephen L & Prescott, Edward C, 1994. "Barriers to Technology Adoption and Development," Journal of Political Economy, University of Chicago Press, vol. 102(2), pages 298-321, April.
- 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.
- Peter Howitt & David Mayer-Foulkes, 2002.
"R&D, Implementation and Stagnation: A Schumpeterian Theory of Convergence Clubs,"
NBER Working Papers
9104, National Bureau of Economic Research, Inc.
- Howitt, Peter & Mayer-Foulkes, David, 2005. "R&D, Implementation, and Stagnation: A Schumpeterian Theory of Convergence Clubs," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(1), pages 147-77, February.
- Soledad Arellano & Matías Braun-Llona, 1999. "Rentabilidad de la Educación Formal en Chile," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 36(107), pages 685-724.
- Irwin, Douglas A & Klenow, Peter J, 1994. "Learning-by-Doing Spillovers in the Semiconductor Industry," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1200-1227, December.
- Peter J. Klenow & Mark Bils, 2000. "Does Schooling Cause Growth?," American Economic Review, American Economic Association, vol. 90(5), pages 1160-1183, December.
When requesting a correction, please mention this item's handle: RePEc:idb:wpaper:4429. 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: (Monica Bazan)
If references are entirely missing, you can add them using this form.