Working Paper: NBER ID: w11524
Authors: Laura Bottazzi; Giovanni Peri
Abstract: In this paper we estimate the dynamic relationship between employment in R&D and generation of knowledge as measured by patent applications across OECD countries. In several recently developed models, known as `idea-based' models of growth, the afore mentioned "idea-generating" process is the engine of productivity growth. Moreover, in real business cycle models technological shocks are an important source of fluctuations. Our empirical strategy is able to test whether knowledge spillovers are strong enough to generate sustained endogenous growth and to estimate the quantitative impact of international knowledge on technological innovation of a country in the short and in the long run. We find that a country's stock of knowledge, its R&D resources and the stock of international knowledge move together in the long run. International knowledge has a very significant impact on innovation. As a consequence, a positive shock to R&D in the US (the largest world innovator) has a significant positive effect on the innovation of all other countries. Such a shock produces its largest effect on domestic and international innovation after five to ten years from its occurrence.
Keywords: R&D; Innovation; Knowledge Spillovers; Economic Growth; OECD Countries
JEL Codes: O31; F43; C23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| R&D resources (O32) | domestic knowledge (G53) |
| international knowledge (F53) | domestic knowledge (G53) |
| Positive shocks to R&D in the US (O39) | knowledge creation in other countries (O36) |