The Internationalization Of Agricultural Technology: Patents, R&D Spillovers, And Their Effects On Productivity In The European Union And United States

Multilateral indices of total factor productivity (TFP) allow efficiency comparisons between ten European Union countries and the United States from 1973 to 1993. Differences in TFP levels are then explained by land quality differences, public research and development (R&D) expenditures, education levels, private‐sector patents, international spillovers of public R&D, and private‐sector technology transfer. There is evidence that public R&D results in limited knowledge spillovers between the European countries and the United States. However, the use of international patent data from the Yale Technology Concordance shows not only that patents matter, but also that private sector technology transfer may be the dominant force in explaining TFP trends. The United States and the European Union countries with more advanced research systems (Netherlands, Denmark, France, and Belgium) converge in a high‐growth club, while Germany, Luxembourg, Greece, Italy, Ireland, and the United Kingdom form the slow‐growth group. Ignoring knowledge spillovers and technology transfer leads to biased estimates of R&D elasticities, which is hardly surprising since the private sector is now spending more than the public in some of these countries. Thus, the estimated rate of return to public agricultural R&D falls from over 60% in the closed economy model to 10% in the model that takes account of international spillovers. (JEL Q16)