Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/326774 
Year of Publication: 
2021
Series/Report no.: 
UNU-MERIT Working Papers No. 2021-015
Publisher: 
United Nations University (UNU), Maastricht Economic and Social Research Institute on Innovation and Technology (UNU-MERIT), Maastricht
Abstract: 
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.
Subjects: 
Growth
productivity
R&D
reaction functions
spillovers
CVAR
JEL: 
C51
O30
O38
O47
O51
Creative Commons License: 
cc-by-nc-sa Logo
Document Type: 
Working Paper

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