International R&D Spillovers and Marginal Social Returns on R&D
45 Pages Posted: 1 Feb 2017
Date Written: December 20, 2016
We analyze the impact of international R&D spillovers on recipient countries in terms of social and private returns. We divide the aggregate R&D stock by the business, government and education sectors and examine the impact on Total Factor Productivity. We endogenize the accrual of the R&D stocks by estimating an R&D investment function. We find that the marginal social returns on R&D are much larger than the marginal private returns for R&D-intensive countries. It implies that R&D intensive countries are expected to generate more spillovers at the margin, but the observed R&D stock is smaller than the socially optimal level.
Keywords: R&D, spillovers, total factor productivity, social returns, private returns
JEL Classification: E220, O320, O330, O470
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