R&D Policy and Schumpeterian Growth: Theory and Evidence

Quaderni - Working Paper DSE N° 945

45 Pages Posted: 11 May 2014

See all articles by Antonio Minniti

Antonio Minniti

University of Bologna

Francesco Venturini

University of Perugia; National Institute of Economic and Social Research (NIESR)

Date Written: May 9, 2014

Abstract

In recent years, a large body of empirical research has investigated whether the predictions of second-generation growth models are consistent with actual data. This strand of literature has focused on the long-run properties of these models by using productivity and innovation data but has not directly assessed the effectiveness of R&D policy in promoting innovation and economic growth. In the present paper, we fill this gap in the literature by providing a unified growth setting that is empirically tested with US manufacturing industry data. Our analysis shows that R&D policy has a persistent, if not permanent, impact on the rate of economic growth and that the economy rapidly adjusts to policy changes. The impact of R&D tax credits on economic growth appears to be long lasting and statistically robust. Conversely, more generous R&D subsidies are associated with an increase in the rate of economic growth in the short run only, indicating that, at best, this policy instrument has only temporary effects. Overall, the evidence regarding the effectiveness of R&D policy provides more support for fully endogenous growth theory than for semi-endogenous growth theory.

Keywords: Schumpeterian growth theory, Innovation policy, Patenting, US manufacturing

JEL Classification: O3, O38, O4

Suggested Citation

Minniti, Antonio and Venturini, Francesco, R&D Policy and Schumpeterian Growth: Theory and Evidence (May 9, 2014). Quaderni - Working Paper DSE N° 945. Available at SSRN: https://ssrn.com/abstract=2435112 or http://dx.doi.org/10.2139/ssrn.2435112

Antonio Minniti (Contact Author)

University of Bologna ( email )

Piazza Scaravilli 2
Bologna, 40100
Italy

Francesco Venturini

University of Perugia ( email )

Italy

National Institute of Economic and Social Research (NIESR) ( email )

2 Dean Trench Street
Smith Square
London, SW1P 3HE
United Kingdom

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