International R&D Spillovers Between U.S. and Japanese R&D Intensive Sectors / Jeffrey I. Bernstein, Pierre Mohnen.

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Bernstein, Jeffrey I

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w4682.Publication details: Cambridge, Mass. National Bureau of Economic Research 1994.Description: 1 online resource: illustrations (black and white)Online resources:

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Abstract: 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.

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Previous	nber w4679 Minimum Wage Effects on Employment and School Enrollment /	nber w4680 The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience /	nber w4681 Policy, Technology Adoption, and Growth /	nber w4682 International R&D Spillovers Between U.S. and Japanese R&D Intensive Sectors /	nber w4683 Foreign Direct Investment, Employment Volatility and Cyclical Dumping /	nber w4684 Wage Inequality and Industrial Change: Evidence from Five Decades /	nber w4685 Accounting Standards, Information Flow, and Firm Investment Behavior /	Next

March 1994.

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.