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Heterogeneity of Returns to Business R&D: What Makes a Difference?

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  • Petr Pleticha

Abstract

Business R&D spending has been shown to exert both direct and indirect positive effects on value added. Nevertheless, the heterogeneity of the returns to R&D has seldom been examined. Using detailed sectoral data from Czechia over the period 1995-2015, this study finds that privately funded business R&D has both direct and spillover effects, but that the publicly funded part of business R&D only leads to spillovers. The results further suggest that both upstream and downstream spillovers matter, regardless of the source of funding, and that during the period studied, R&D returns were heavily affected by the economic crisis. Lastly, private R&D offers significant returns only after reaching a critical mass, while the effects of public R&D spending do not display such non-linearity. This heterogeneity in the returns to business R&D should be reflected in innovation policy design.

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  • Petr Pleticha, 2021. "Heterogeneity of Returns to Business R&D: What Makes a Difference?," Prague Economic Papers, Prague University of Economics and Business, vol. 2021(3), pages 253-271.
    • Handle: RePEc:prg:jnlpep:v:2021:y:2021:i:3:id:767:p:253-271
    DOI: 10.18267/j.pep.767
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    References listed on IDEAS

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    More about this item

    Keywords

    R& D returns; spillovers; Czechia;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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