Public Investment in R&amp;D in Reaction to Economic Crises - A Longitudinal Study for OECD Countries

Pellens, Maikel; Peters, Bettina; Hud, Martin; Rammer, Christian; Licht, Georg

doi:10.2139/ssrn.3122254

Cited by 21 publications

(16 citation statements)

References 36 publications

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“…A temporary change of GDP (growth) in 1967 of 0.005, a half percentage point, shown in Figure 6, generates a negative reaction of GDP in the next three years and then a positive one for four years and the opposite for public R&D, which is in line with the counter-cyclical result for Japan in Pellen et al (2017) and the negative partial lagged short-run effect of our VECM (see appendices). In contrast, private R&D and TFP are pro-cyclical.…”

Section: Checking Cyclically Of Public Randd: the Effects Of A Temporarsupporting

confidence: 82%

Japan’s Productivity and GDP Growth: The Role of Private, Public and Foreign R&D 1967–2017

Ziesemer

2020

Economies

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We analyze the dynamic interaction of Japan’s total factor productivity, gross domestic product (GDP) domestic and foreign private and public research and development (R&D) in vector-error-correction models (VECMs) for Japan with data from 1963–2017. Extensive testing leads to favoring a model with five cointegrating equations for the six variables. Analysis of effects of permanent policy changes shows that (i) additional public R&D encourages private R&D and total factor productivity (TFP), and has higher internal rates of return than private R&D changes and therefore could speed up Japan’s growth; (ii) public R&D changes have a statistically significant positive permanent effect on foreign private R&D stocks and a transitional effect on foreign public R&D stocks; (iii) private R&D changes have a statistically significant positive permanent effect on foreign public R&D stocks and a transitional effect on foreign private R&D stocks; (iv) after a temporary GDP change, public R&D is counter-cyclical in the short and medium run and private R&D is pro-cyclical. Empirical results are related to the parameters of a VES (variable elasticity of substitution) function for TFP production.

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Section: Checking Cyclically Of Public Randd: the Effects Of A Temporarsupporting

confidence: 82%

Japan’s Productivity and GDP Growth: The Role of Private, Public and Foreign R&D 1967–2017

Ziesemer

2020

Economies

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“…A final point, not visible in the figures and table we presented above, is that these patterns are stronger in the European peripheries (Veugelers 2016;Dosi et al 2017;Pellens et al 2018). The disparities between the stronger core countries of Europe and those at the periphery widened, potentially as a result of different rates in investment, in particular in innovation and R&D, both by the public and business sector (Archibugi and Filippetti 2011;Izsak and Radošević 2017).…”

Section: The Fall Of Public and Private Investment Since The Beginninmentioning

confidence: 92%

“…There is also evidence that this is not the case. Most European governments have acted pro-cyclically with investments in R&D: the Czech Republic, Estonia, Greece, Hungary, Italy, Lithuania, Poland, Portugal, and Spain substantially cut public budgets for R&D during the recession (Makkonen 2013;Veugelers 2016;Pellens et al 2018). But, the innovation leaders in Europe followed a counter-cyclical strategy.…”

Section: The Fall Of Public and Private Investment Since The Beginninmentioning

confidence: 99%

“…We have shown above that the economic crisis has brought about a sharp drop in investment across Europe and that this drop has affected investments in infrastructure and in science, technology and innovation. Since the economic recession has begun, conditions have negatively affected R&D expenditures (Pellens et al 2018;Kapetaniou et al 2018). The gap between the innovation leading countries and the innovation lagging countries is growing (Veugelers 2016).…”

Section: The Response From the European Union So Farmentioning

confidence: 99%

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Investment in innovation for European recovery: A public policy priority

Archibugi

Filippetti

Frenz

2019

Science and Public Policy

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The 2008 crisis had severe consequences in Europe at many levels. One of them is the significantly lower levels of public and private investments. This article explores to what extent a large plan of public innovation investment could contribute to the overall economic recovery and to opening a new stage of development in the European Union (EU). We argue that key scientific and technological opportunities, currently untapped, exist, which have the potential to accelerate economic growth and to pull in private investments. Decisive instruments, such as the Juncker investment plan and the proposed 2021–7 Framework Programme Horizon Europe, are important steps in that direction. The article concludes by reviving Lundvall’s call for a Council for Innovation and Competence Building that should have the same political weight as the EU Economic and Financial Affairs Council.

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“…Typically, governments implement countercyclical policies to stabilize the macroeconomy and to ease public concerns about the uncertainty [44][45][46]. When uncertainty is high, after observing a decline in aggregate economic activities, governments tend to expand public expenditures, including public R&D budgets [47]. Moreover, governments will take actions, through such efforts as offering tax rebates, subsidies, and more credits, in order to reinforce their support for private investment [48].…”

Section: Uncertainty May Increase R Andd Investmentmentioning

confidence: 99%

The Negative Impact of Uncertainty on R&D Investment: International Evidence

2021

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Previous studies have not provided consistent conclusions regarding the impact of uncertainty on research and development (R&D) investment. While most of the previous literature has focused only on one or a small group of countries, this study examines the effect of uncertainty on R&D on the basis of a sample covering 109 countries from 1996 to 2018. The country-level uncertainty is measured using the “World Uncertainty Index”, which has recently been developed by Ahir et al. (2018). By estimating a panel data fixed-effects regression model, it is found that uncertainty has a significantly negative impact on R&D investment at the country-level aggregate scale. We also find that uncertainty depresses the number of R&D personnel and patent applications, although the effect on R&D personnel is not statistically significant. These findings imply that high uncertainty poses a considerable threat to global innovation and technological progress. Heterogeneity analyses across different country groups demonstrate that, although the impact of uncertainty on R&D is not statistically significant in some country groups, its effect is always negative and no positive effect is observed.

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Public Investment in R&D in Reaction to Economic Crises - A Longitudinal Study for OECD Countries

Cited by 21 publications

References 36 publications

Japan’s Productivity and GDP Growth: The Role of Private, Public and Foreign R&D 1967–2017

Japan’s Productivity and GDP Growth: The Role of Private, Public and Foreign R&D 1967–2017

Investment in innovation for European recovery: A public policy priority

The Negative Impact of Uncertainty on R&D Investment: International Evidence

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