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Research and development (R&D) and development

Listed author(s):
  • Lederman, Daniel
  • Maloney, William F.

Lederman and Maloney trace the evolution of research and development (R&D) expenditures along the development process using a new global panel data set. They show that R&D effort measured as a share of GDP rises with development at an increasing rate. The authors examine how four groups of countries from Latin America, Asia, advanced manufacturing exporters, and advanced natural resource-abundant countries fare relative to the predicted development trajectory. Latin America generally underperforms as do some countries in Asia and Europe, but their striking finding is that some-Finland, Israel, the Republic of Korea, and Taiwan (China)-have radically deviated from the predicted trajectory and displayed impressive R&D takeoffs. The authors ask whether these countries overinvest in R&D but find that the high estimates of the social rates of return probably justify this effort. Moreover, the returns to R&D decline with per capita GDP. The authors attempt to explain why rich countries invest more in R&D than poor countries. They conclude that financial depth, protection of intellectual property rights, government capacity to mobilize resources, and the quality of research institutions are the main reasons why R&D efforts rise with the level of development.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3024.

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Date of creation: 30 Apr 2003
Handle: RePEc:wbk:wbrwps:3024
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  5. repec:fth:harver:1473 is not listed on IDEAS
  6. Ross Levine & Norman Loayza & Thorsten Beck, 2002. "Financial Intermediation and Growth: Causality and Causes," Central Banking, Analysis, and Economic Policies Book Series, in: Leonardo Hernández & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.), Banking, Financial Integration, and International Crises, edition 1, volume 3, chapter 2, pages 031-084 Central Bank of Chile.
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