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Determinants of National R&D and Patenting: Application to a Small, Distant Country

  • Crawford, Ron

    (Ministry of Economic Development, New Zealand)

  • Fabling, Richard

    (Ministry of Economic Development, New Zealand)

  • Grimes , Arthur

    (Motu Economic & Public Policy Research and University of Waikato)

  • Bonner, Nick


    (Ministry of Economic Development, New Zealand)

We analyse the determinants of national R&D expenditure and patenting activity. In contrast to most related studies, we account for factors that impact on small, distant countries. These factors include country size, firm size, distance from major economic centres, and industrial structure. We apply the results to New Zealand, which has a low rate of privately funded R&D. We find that R&D expenditure and patenting activity are negatively affected by having a preponderance of small firms, having a heavy reliance on agriculture and also by distance of a country from major world centres. Population size is found to have no impact on either R&D or patenting. Greater R&D increases patenting, with an elasticity that indicates moderately increasing returns to scale in the relationship between R&D inputs and patent outcomes. Better intellectual property protection within a country also increases patenting activity. Once we control for these factors, New Zealand is not an outlier with respect to its R&D expenditures; it is a positive outlier with regard to patenting.

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Paper provided by Ministry of Economic Development, New Zealand in its series Occasional Papers with number 06/2.

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Length: 59 pages
Date of creation: Nov 2004
Date of revision:
Handle: RePEc:ris:nzmedo:2006_002
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