Strategic Interactions in Public R&D Across EU-15 Countries: A Spatial Econometric Analysis

GATE Working Paper No. 1223

28 Pages Posted: 4 Sep 2012

See all articles by Hakim Hammadou

Hakim Hammadou

University of Lille I - Department of Economics and Management

Sonia Paty

University of Angers - Institute of Economic Theory and Analysis (GATE)

Maria Savona

University of Sussex

Date Written: August 2012

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 rather 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; (iii) 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 dynamic spatial panel model in which spatial matrices are specified in terms of traditional Euclidean distance, and sectoral specialization proximity, we confirm the existence of strategic interactions in relation to R&D spending among European countries with similar economic, international trade and sectoral structure perspectives. Unlike the results for strategic interactions in public choice, geographic proximity seems not to affect interactions related to public spending on R&D.

Keywords: Public R&D expenditures, National Systems of Innovation, complementarity public and private R&D, spatial interactions, EU countries, spatial dynamic panel data

JEL Classification: H5, 03

Suggested Citation

Hammadou, Hakim and Paty, Sonia and Savona, Maria, Strategic Interactions in Public R&D Across EU-15 Countries: A Spatial Econometric Analysis (August 2012). GATE Working Paper No. 1223. Available at SSRN: https://ssrn.com/abstract=2097757 or http://dx.doi.org/10.2139/ssrn.2097757

Hakim Hammadou (Contact Author)

University of Lille I - Department of Economics and Management ( email )

Villeneuve D'Ascq Cedex, 59655
France

Sonia Paty

University of Angers - Institute of Economic Theory and Analysis (GATE) ( email )

93, chemin des Mouilles
Monnaie et Finance at Lyon
69130 Ecully cedex
France

Maria Savona

University of Sussex ( email )

Sussex House
Falmer
Brighton, Sussex BNI 9RH
United Kingdom

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