Basic Research and International Spillovers

Abstract

This paper discriminates between basic and developmental research when estimating international research spillovers between nine OECD nations. Using panel cointegration techniques, the estimates show that basic research generates much larger international spillovers than developmental research. Developmental research in turn appears more easily appropriated by the research performer, and thus has a stronger effect domestically. These results suggest growth models should incorporate the firm's choice between basic and developmental research. More importantly, since basic research receives a large proportion of its funding from public sources, the finding of large international spillovers from basic research suggests current public research policies should be reevaluated. The results support the argument in favor of increased international coordination of basic research policies.