International Differences in R&D: An Empirical Investigation of a "Quality Ladder" Implication
R&D varies substantially across countries. By introducing the profit motive into R&D, the "quality ladder" growth model implies an inverse relationship between the national activity levels of R&D and unit costs of R&D. This inverse relationship is supported by findings from a data set of direct measures and a second data set that contains measures based on the R&D content of international trade.
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