A macroeconomic analysis of the returns to public R&D investments
Robustness analyses are performed to test the sensitivity of the outcomes for particular model specifications, sample selections, assumptions with respect to the construction of R&D stocks, and variable definitions. Analyses based on Cobb-Douglas and translog production functions mostly yield statistically insignificant or negative returns. In these models we control for private and foreign R&D investments and the primary production factors. Models including additional controls, such as public capital, the stock of inward and outward foreign direct investment, and the shares of high-tech imports and exports, yield more positive returns. Our findings suggest that public R&D investments do not automatically foster GDP and TFP growth. The economic return to scientific research seems to depend on the specific national context.