The Driving Forces of Economic Growty: Panel Data Evidence for the OECD Countries

Di Andrea Bassanini e Stefano Scarpetta - 1 gennaio 2001

Estratto dal rapporto per l’Organizzazione europea per la cooperazione e lo sviluppo di Andrea Bassanini e Stefano Scarpetta, “The Driving Forces of Economic Growty: Panel Data Evidence for the OECD Countries”, OECD Economic Studies, n. 33, 2001/II, pp. 30-2.

The analysis of the determinants of growth can be further extended to include R&D activities, even though the sample is smaller and inference therefore more tentative. In particular the analysis is restricted to 14-17 countries depending on the specification, and to the period 1981-98 (and for some countries the period is shorter). The shorter time-series significantly restrict the number of variables that could be considered in the regressions. These include, in addition to the R&D variables, the basic controls and trade exposure, whenever possible. […] The results (Table 5) support previous evidence suggesting a significant effect of R&D activity on the growth process. Furthermore, regressions including separate variables for business-performed R&D and the R&D performed by other institutions (mainly public research institutes) suggest that it is the former that drives the positive association between total R&D intensity and output growth. […] The negative results for public R&D needs some qualification. Taken at face value they suggest publicly performed R&D crowds out resources that could be alternatively used by the private sector, including private R&D. There is some evidence of this effect in studies that have looked in details at the role of different forms of R&D and the interaction between them. In particular, it is found that defence research performed by the public sector does indeed crowd out private R&D, partly by raising the cost of research. However, there are avenues for more complex effects that regression analysis cannot identify. For example, while business-performed R&D is likely to be more directly targeted towards innovation and implementation of new inovative processes in production (leading to improvement in productivity), other forms of R&D (e.g. energy, health and university research) may not raise technology levels significantly in the short run, but they may generate basic knowledge with possible “technology spillovers”. The latter are difficult to identify, not least because of the long lags involved and the possible interactions with human capital and associated institutions.