Foreign R&D spillovers to the USA and strategic reactions

T.H.W. Ziesemer*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

1 Citation (Web of Science)


This paper serves three purposes, using a vector-error-correction model (VECM) to analyse the effects of permanent changes in R&D variables. First, we re-consider the traditional result of zero or negative foreign R&D spillovers to US productivity from private and public foreign R&D stocks. Both have a positive and statistically significant effect on labour-augmenting technical change (LATC) and public R&D in the USA. Moreover, US private R&D reacts positively to foreign private R&D and negatively to foreign public R&D shocks. Second, we also find new results for the effects of changes of US R&D. Foreign public and private R&D react positively to US public R&D. All the mentioned variables react positively to changes in US private R&D. Third, based on the time profile of the simulated VECM estimate, we calculate the sum of discounted 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 and are profitable also in reaction to shocks from foreign R&D. All LATC reactions are transitional, suggesting semi-endogenous growth for the USA.
Original languageEnglish
Pages (from-to)4274-4291
Number of pages18
JournalApplied Economics
Issue number37
Early online date2 Mar 2022
Publication statusPublished - 9 Aug 2022

JEL classifications

  • c51 - Model Construction and Estimation
  • o30 - "Technological Change; Research and Development; Intellectual Property Rights: General"
  • o38 - Technological Change: Government Policy
  • o47 - "Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence"
  • o51 - "Economywide Country Studies: U.S.; Canada"


  • Growth
  • productivity
  • R&D
  • CVAR

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