Foreign R&D spillovers to the USA and strategic reactions
Thomas Ziesemer ()
No 2021-015, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)
We re-consider the traditional result of zero or negative foreign R&D spillovers or strategic reactions to the USA using accumulated shocks in a vector-error-correction model (VECM) for the period 1963-2017. Foreign private and public R&D stocks have a positive and statistically significant effect on US public R&D and labour-augmenting technical change (LATC). US private R&D reacts positively to foreign private R&D and negatively to foreign public R&D shocks. Foreign public and private R&D react positively to US public R&D. All variables react positively to US private R&D. From the time profile of the simulated VECM, we calculate the sum of discounted (at 4%) net gains for (i) additional private and public US R&D, and (ii) for policies reacting to foreign private and public R&D shocks with additional domestic private and public R&D. Additional private and public US R&D expenditures have very high internal rates of return. R&D investments in reaction to shocks from foreign R&D are profitable. All LATC reactions are transitional suggesting semi-endogenous growth for the USA.
Keywords: Growth; productivity; R&D; reaction functions; spillovers; CVAR (search for similar items in EconPapers)
JEL-codes: C51 O30 O38 O47 O51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff and nep-ino
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Persistent link: https://EconPapers.repec.org/RePEc:unm:unumer:2021015
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