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Public R&D investment in economic crises

Author

Listed:
  • Pellens, Maikel
  • Peters, Bettina
  • Hud, Martin
  • Rammer, Christian
  • Licht, Georg

Abstract

We study the cyclicality of public R&D in 29 OECD countries over the period 1995 to 2019. Public R&D is procyclical on average, and mostly driven by adjustments in public R&D aimed at the government and higher education sectors. However, public R&D reacts asymmetrically over different phases of the business cycle, becoming acyclical during recessions. This acyclicality masks an important heterogeneity across countries: the world’s leading innovators behave countercyclically during recessions and even increase public R&D. These results suggest that countries behind the innovation frontier could still strengthen their resilience to economic crises by adopting countercyclical public R&D strategies, thereby also safeguarding long-term growth through innovation.

Suggested Citation

  • Pellens, Maikel & Peters, Bettina & Hud, Martin & Rammer, Christian & Licht, Georg, 2024. "Public R&D investment in economic crises," Research Policy, Elsevier, vol. 53(10).
    • Handle: RePEc:eee:respol:v:53:y:2024:i:10:s0048733324001331
    DOI: 10.1016/j.respol.2024.105084
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    2. Ana María Gómez-Aguayo & Joaquín M. Azagra-Caro & Carlos Benito-Amat, 2024. "The steady effect of knowledge co-creation with universities on business scientific impact throughout the economic cycle," Scientometrics, Springer;Akadémiai Kiadó, vol. 129(5), pages 2771-2799, May.

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    More about this item

    Keywords

    R&D; Public policy; Business cycle;
    All these keywords.

    JEL classification:

    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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