Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/89326
Authors: 
Hammadou, Hakim
Paty, Sonia
Savona, Maria
Year of Publication: 
2012
Series/Report no.: 
LEM Working Paper Series 2012/14
Abstract: 
The aim of this paper is to test the presence of strategic interactions in government spending on Research and Development (R&D) among EU-15 countries. We add to the literature on public choice strategic interactions in general, and to work on R&D spending in particular. We take account of traditional and some overlooked factors related to countries' public R&D spending, including (i) the international context - i.e. Lisbon strategy; (ii) country characteristics - the National System of Innovation, and more specifically national similarities in relation to (a) trade and economic size and (b) sectoral specialization. Sectoral specialization is likely to affect government spending, depending on the mechanisms of complementarity or substitution between public and private R&D. Using a spatial dynamic panel model in which spatial matrices are specified both in terms of traditional Euclidean distance, and sectoral specialization proximity, we confirm the existence of strategic interactions on R&D spending among European countries with similar economic size, international trade and sectoral structure. Unlike the results emerging from the literature on strategic interactions in public choice, geographic proximity seems not to affect interactions related to public spending on R&D.
Subjects: 
Public spending strategic interactions
Public R&D expenditures
National Systems of Innovation
Complementarity public and private R&D
Spatial interactions
EU countries
Spatial dynamic panel data
JEL: 
H5
O3
Document Type: 
Working Paper

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