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Is Public R&D a Complement or Substitute for Private R&D? A Review of the Econometric Evidence

Author

Listed:
  • Paul A. David

    (All Souls College, Oxford University & Stanford University)

  • Bronwyn H. Hall

    (Nuffield College, Oxford University, & University of California at Berkeley)

  • Andrew A. Toole

    (Stanford Institute for Economic Policy Research, Stanford University)

Abstract

Is public R&D spending complementary and thus “additional” to private R&D spending, or does it substitute for and tend to “crowd out” private R&D? Conflicting answers are given to this question. We survey the body of available econometric evidence accumulated over the past 35 years. A framework for analysis of the problem is developed to help organize and summarize the findings of econometric studies based on time series and cross-section data from various levels of aggregation (laboratory, firm, industry, country). The findings overall are ambivalent and the existing literature as a whole is subject to the criticism that the nature of the “experiment(s)” that the investigators envisage is not adequately specified. We conclude by offering suggestions for improving future empirical research on this issue

Suggested Citation

  • Paul A. David & Bronwyn H. Hall & Andrew A. Toole, 2005. "Is Public R&D a Complement or Substitute for Private R&D? A Review of the Econometric Evidence," Development and Comp Systems 0502011, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpdc:0502011
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