Towards an Efficient Use of R&D –Accounting for Heterogeneity in the OECD

30 Pages Posted: 12 Feb 2013

See all articles by Astrid Cullmann

Astrid Cullmann

German Institute for Economic Research (DIW Berlin)

Petra Zloczysti

German Institute for Economic Research (DIW Berlin)

Date Written: February 2013

Abstract

Expenditures devoted to research and development (R&D) are scarce and thus need to be used as efficiently as possible given the financial constraints countries are facing. This paper assesses the relative efficiency of R&D expenditures for 26 OECD member countries and 2 non-member countries. As countries differ in their national innovation systems and states of economic development and industrialization, e.g. transition economies in Eastern Europe vs. Asian countries vs. Anglo-Saxon countries, the measurement of R&D efficiency needs to consider differences in the technology of knowledge production. The existing empirical literature on R&D efficiency mainly builds on a homogeneous technology frontier neglecting the importance to account for country-specific heterogeneity. This paper models technological differences in knowledge production among countries using a stochastic frontier model for panel data. Applying a latent class model for SFA, we find empirical evidence for two technological classes, a 'capital-intensive' and a 'labor-intensive' one. Assuming a common knowledge production technology, as has been done so far in the empirical literature, thus results in biased efficiency estimates.

Keywords: innovation, knowledge production function, latent classes, R&D efficiency, stochastic frontier analysis

JEL Classification: C40, O31, O57

Suggested Citation

Cullmann, Astrid and Zloczysti, Petra, Towards an Efficient Use of R&D –Accounting for Heterogeneity in the OECD (February 2013). CEPR Discussion Paper No. DP9345, Available at SSRN: https://ssrn.com/abstract=2215463

Astrid Cullmann (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Petra Zloczysti

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
0
Abstract Views
486
PlumX Metrics