International Macroeconomic R&D Spillovers

This paper fulfills four functions. First, it presents a self-contained survey of research on international R&D spillovers. Second, a number of new results are presented and briefly discussed. Third, the policy implications of the various empirical findings are examined, and finally, this paper outlines a number of relevant issues in econometric methodology. It is argued that two fundamental econometric problems combine to inherently limit the relevance of this R&D spillovers literature. However, despite these limitations, the macroeconomic approach to R&D spillovers provides additional information on a number of interesting issues in macroeconomics and international trade. In particular, the literature so far indicates that the returns to R&D capital are distributed in rough accordance with factor proportions theory and that more recent models of "semi-endogenous" growth are better supported than are the first wave of endogenous innovation models.