R&D efforts, international technology spillovers and the evolution of productivity in industrial countries

Abstract

Equations are presented that relate countries' total factor productivity to own and to foreign R&D efforts. They are estimated on a panel of annual time series concerning a set of industrial countries over a period from the mid-1960s to the early 1990s. Use is made of alternative cointegrating estimation procedures. The results imply that, whereas domestic R&D efforts exercise a significant influence on total factor productivity, the influence of international technology spillovers is, on average, even more important. A causality analysis confirms that the causation runs in essence from R&D to productivity rather than the other way around.