Why Don't Poor Countries Do R&D?
Using a global panel on research and development (R&D) expenditures, this paper documents that on average poor countries do far less R&D than rich as a share of GDP. This is arguably counter intuitive since the gains from doing the R&D...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/03/19266897/dont-poor-countries-rd http://hdl.handle.net/10986/17729 |
| Summary: | Using a global panel on research and
development (R&D) expenditures, this paper documents
that on average poor countries do far less R&D than rich
as a share of GDP. This is arguably counter intuitive since
the gains from doing the R&D required for technological
catch up are thought to be very high and Griffith et al
(2004) have documented that in the OECD returns increase
dramatically with distance from the frontier. Exploiting
recent advances in instrumental variables in a varying
coefficient context we find that the rates of return follow
an inverted U: they rise with distance to the frontier and
then fall thereafter, potentially turning negative for the
poorest countries. The findings are consistent with the
importance of factors complementary to R&D, such as
education, the quality of scientific infrastructure and the
overall functioning of the national innovation system, and
the quality of the private sector, which become increasingly
weak with distance from the frontier and the absence of
which can offset the catch up effect. China's and
India's explosive growth in R&D investment
trajectories in spite of expected low returns may be
justified by their importing the complementary factors in
the form of multinational corporations who do most of the
patentable research. |
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