NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Is Public R&D a Complement or Substitute for Private R&D? A Review of the Econometric Evidence

Paul A. David, Bronwyn H. Hall, Andrew A. Toole

NBER Working Paper No. 7373
Issued in October 1999
NBER Program(s):   PR

Is public R&D spending complementary and thus "additional" to private R&D spending, or does it substitute for and tend to "crowd out" private R&D? Conflicting answers are given to this question. We survey the body of available economectric evidence accumulated over the past 35 years. A framework for analysis of the problem i is developed to help organize and summarize the findings of econometric studies based on time series and cross-section data from various levels of aggregation (laboratory, firm, industry, country). The findings overall are ambivalent and the existing literature as as a whole is subject to the criticim that the nature of the "experiment(s)" that the investigators envisage is not adequately specified. We conclude by offering suggestions for improving future empirical research on this issue.

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Document Object Identifier (DOI): 10.3386/w7373

Published: Research Policy, Vol. 29 (May 2000).

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