Strategic Interactions in Public R&D Across European Countries: A Spatial Econometric Analysis

26 Pages Posted: 24 Feb 2016

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: December 01, 2013

Abstract

The paper adds to the existing literature on the determinants of government spending in Research and Development (R&D) by considering the role of strategic interactions among countries as one of the possible competing explanations, within a spatial econometric framework. We account for several factors affecting national levels of public R&D spending, including (i) the international context – i.e. Lisbon strategy; (ii) country characteristics – level of private R&D, GDP, trade openness and the National System of Innovation; (iii) countries’ similarities in relation to (a) trade and economic size and (b) sectoral specialization. The analysis is carried out on 14 European countries. First, we find that factors traditionally affecting the level of public R&D expenditure, such as the scale of the national economy, trade openness, sectoral specialization and private R&D, significantly influence the level of public R&D in European countries between 1994 and 2006. Interestingly, the introduction of the Lisbon strategy does not seem to have affected changes in the levels of public R&D spending. Second, by using different weight matrices, we confirm the existence of strategic interactions in relation to R&D spending among European countries with similar economic, international trade and sectoral structure characteristics.

Suggested Citation

Hammadou, Hakim and Paty, Sonia and Savona, Maria, Strategic Interactions in Public R&D Across European Countries: A Spatial Econometric Analysis (December 01, 2013). SWPS 2013-17. Available at SSRN: https://ssrn.com/abstract=2736862 or http://dx.doi.org/10.2139/ssrn.2736862

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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