TY  - JOUR
AU  - Bernstein,Jeffrey I.
AU  - Mohnen,Pierre
TI  - International R&D Spillovers Between U.S. and Japanese R&D Intensive    Sectors
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4682
PY  - 1999
Y2  - April 1999
UR  - http://www.nber.org/papers/w4682
L1  - http://www.nber.org/papers/w4682.pdf
N1  - Author contact info:
Jeffrey I. Bernstein
Department of Economics
University Park Campus
Florida International University
11200 S.W. 8th Street
Miami, FL 33199
Tel: 305/348-2592
E-Mail: jeffrey.bernstein@fiu.edu

Pierre Mohnen
UNU-MERIT
Maastricht University
P.O. Box 616
6200 MD Maastricht
Netherlands
E-Mail: p.mohnen@maastrichtuniversity.nl
AB  - A great deal of empirical evidence shows that a country's production structure and productivity growth depend on its own R&D capital formation.  With the growing role of international trade, foreign investment and international knowledge diffusion, domestic production and productivity also depend on the R&D activities of other countries.  The purpose of this paper is to empirically investigate the bilateral link between the U.S. and Japanese economies in terms of how R&D capital formation in one country affects the production structure, physical and R&D capital accumulation, and productivity growth in the other country. We find that production processes become less labor intensive as international R&D spillovers grow.  In the short-run, R&D intensity is complementary to the international spillover.  This relationship persists in the long-run for the U.S., but the Japanese decrease their own R&D intensity.  U.S. R&D capital accounts for 60% of Japanese total factor productivity growth, while Japanese R&D capital contributes 20% to U.S. productivity gains.  International spillovers cause social rates of return to be about four times the private returns.
ER  -