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

Author

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  • Petr Pleticha

    (CERGE-EI, a joint workplace of Charles University and the Economics Institute of the Czech Academy of Sciences, Prague, Czechia
    Institute of Economic Studies, Faculty of Social Sciences, Charles University, Czechia)

Abstract

Business R&D spending has been showed to exert a positive direct as well as indirect, spillover effects on value added. Nevertheless, heterogeneity of the returns to R&D has been seldom 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 the 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 profess such non-linearity. The heterogeneity of returns to business R&D needs to be reflected in the design of innovation policy.

Suggested Citation

  • Petr Pleticha, 2019. "Heterogeneity of Returns to Business R&D: What Does Make a Difference?," Working Papers IES 2019/32, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Nov 2019.
    • Handle: RePEc:fau:wpaper:wp2019_32
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    File URL: https://ies.fsv.cuni.cz/en/veda-vyzkum/working-papers/6165
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    More about this item

    Keywords

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

    JEL classification:

    • 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
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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