Estimating the Returns to Public R&D Investments: Evidence from Production Function Models

Roel van Elk, Bas ter Weel (), Karen van der Wiel and Bram Wouterse
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Roel van Elk: CPB Netherlands Bureau for Economic Policy Analysis
Bas ter Weel: SEO Amsterdam Economics
Bram Wouterse: CPB Netherlands Bureau for Economic Policy Analysis

De Economist, 2019, vol. 167, issue 1, No 3, 45-87

Abstract: Abstract This paper analyses the returns to publicly performed R&D investments in 22 OECD countries. We exploit a dataset containing time-series from 1963 to 2011 and compare the estimates of different types of production function models. Robustness analyses are performed to test the sensitivity of the outcomes for particular specifications, sample selections, assumptions about the construction of R&D stocks, and variable definitions. Analyses based on Cobb–Douglas and translog production functions mostly yield statistically insignificant or negative returns. In these models we control for private and foreign R&D investments and the primary production factors. Models including additional controls, such as public capital, the stock of inward and outward foreign direct investment, and the shares of high-tech imports and exports, yield more positive returns. Our findings suggest that publicly performed R&D investments do not automatically foster GDP and TFP growth in production function models. Furthermore, our estimates suggest that economic returns to publicly performed R&D seem to depend on the specific national context.

Keywords: Science; Knowledge; Public R&D; Economic growth; Total factor productivity (search for similar items in EconPapers)
JEL-codes: I23 O11 O40 O47 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (24)

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DOI: 10.1007/s10645-019-09331-3

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