Abstract

This paper investigates the relationship between private and public investment in R and D, while taking into account the effect of several instruments policies such as subsidies and taxes. We design a new look of knowledge spillovers and R and D cooperation to explain the contribution of public and private R and D on growth. We propose a heterogeneous dynamic panel data model to consider the effect as well as endogenous. We also distinguish between the estimated long run and short run results. Our results based on a sample of 23 countries over the period 1992 - 2009 indicate that both private and private investment in R and D are complement. By establishing an endogenous growth model, the estimates indicate that public and private R and D depend on the host country’s human capital investment and that FDI is a more significant spillover channel than imports.

Key words: R and D investment, technology spillovers, complementarities, economic growth, dynamic panel data, private investment, public investment, R and D cooperation.