@techreport{d1a0aa045aa640f5884f56f8d4b1c3dd,
title = "Foreign R&D spillovers to the USA and strategic reactions",
abstract = "We re-consider the traditional result of zero or negative foreign R&D spillovers or strategic reactions to the USA using accumulated shocks in a vector-error-correction model (VECM) for the period 1963-2017. Foreign private and public R&D stocks have a positive and statistically significant effect on US public R&D and labour-augmenting technical change (LATC). US private R&D reacts positively to foreign private R&D and negatively to foreign public R&D shocks. Foreign public and private R&D react positively to US public R&D. All variables react positively to US private R&D. From the time profile of the simulated VECM, we calculate the sum of discounted (at 4%) net gains for (i) additional private and public US R&D, and (ii) for policies reacting to foreign private and public R&D shocks with additional domestic private and public R&D. Additional private and public US R&D expenditures have very high internal rates of return. R&D investments in reaction to shocks from foreign R&D are profitable. All LATC reactions are transitional suggesting semi-endogenous growth for the USA.",
keywords = "growth, productivity, R&D, reaction functions, spillovers, CVAR",
author = "Thomas Ziesemer",
year = "2021",
language = "English",
series = "UNU-MERIT Working Papers",
publisher = "UNU-MERIT",
number = "015",
pages = "1--27",
type = "WorkingPaper",
institution = "UNU-MERIT",
}