Public research and development
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Public R&D
Public research and development (public R&D) refers to the R&D activities related to public sectors, including governments, colleges and non-profit organizations.[1] Public R&D include academic fundamental research, applied research and R&D grants and contracts to private sectors, where later two are known as R&D subsidy. Public R&D could be understood as a funder or a performer of an R&D activity. According to National Science Foundation in U.S., in 2015, R&D expenditures performed by federal government, local governments, colleges and non-profit organizations are 54, 0.6, 64, and 20 billions of dollars, respectively. Meanwhile, industry performs R&D expenditures of 356 billions of dollars. Moreover, R&D expenditures funded by federal government, local governments, colleges and non-profit organizations are 121, 4.3, 17, and 19 billions of dollars, respectively. R&D expenditures funded by industry are 333 billions of dollars.[2] In terms of R&D funders, public R&D to private R&D ratio is about 0.5.
Economic impacts
Economic and management papers have spent significant efforts in understanding the real effect of public R&D, as stated below.
Productivity
Scholars generally propose that public R&D enhances industrial productivity (e.g., Levy and Terleckyj, 1983[3]; Nadiri and Mamuneas, 1994[4]). The improvement of productivity could result from R&D spillover of public sectors, researcher movements and cooperation between public and private sectors.
R&D investment of private sectors
Economists are particularly concern about whether public R&D stimulates or crowds out the private sector R&D. It is generally known as a policy success if the public R&D (especially the government R&D subsidy) could stimulate the R&D investment of private sectors. So far, there is no conclusive viewpoints in the literature (e.g., Toole, 2007[5] ;Cohen, Coval, and Malloy, 2011[6]; Azoulay, Zivin, Li, and Sampat, 2018[7]).
Stock returns
Public R&D is also positively related to stock returns of industrial firms (Chen, Chen, Liang, and Wang, 2020).[1] They show that abnormal returns based on public R&D ratio generate about 0.9% abnormal return per month, and suggest that the positive relation could be interpreted by increased cash flow risks.
References
- ^ a b Chen, Sheng-Syan, Yan-Shing Chen, Woan-lih Liang, and Yanzhi Wang. (2020). "Public R&D spending and cross-sectional stock returns". Research Policy. 49: forthcoming.
{{cite journal}}: CS1 maint: multiple names: authors list (link) - ^ "Research and Development: U.S. Trends and International Comparisons, National Science Foundation" (PDF).
{{cite web}}: CS1 maint: url-status (link) - ^ Levy, David M., and Nestor E. Terleckyj (1983). "Effects of government R&D on private R&D investment and productivity: A macroeconomic analysis". The Bell Journal of Economics: 551–561.
{{cite journal}}: CS1 maint: multiple names: authors list (link) - ^ Mamuneas, Theofanis P., and M. Ishaq Nadiri. (1996). "Public R&D policies and cost behavior of the US manufacturing industries". Journal of Public Economics. 63: 57–81.
{{cite journal}}: CS1 maint: multiple names: authors list (link) - ^ Toole, Andrew A. (2007). "Does public scientific research complement private investment in research and development in the pharmaceutical industry?". The Journal of Law and Economics. 50: 81–104.
- ^ Cohen, Lauren, Joshua Coval, and Christopher Malloy (2011). "Do powerful politicians cause corporate downsizing?". Journal of Political Economy. 119: 1015–1060.
{{cite journal}}: CS1 maint: multiple names: authors list (link) - ^ Azoulay, P., Graff Zivin, J. S., Li, D., & Sampat, B. N. (2018). "Public R&D investments and private-sector patenting: evidence from NIH funding rules". The Review of Economic Studies. 86: 117–152.
{{cite journal}}: CS1 maint: multiple names: authors list (link)