TY - BOOK ID - 134623706 TI - Why Don't Poor Countries Do R&D? AU - Goni, Edwin AU - Maloney, William F. PY - 2014 PB - Washington, D.C., The World Bank, DB - UniCat KW - Complementarities KW - Debt Markets KW - Development KW - E-Business KW - Economic Theory & Research KW - Finance and Financial Sector Development KW - Instrumental Variable Varying Coefficient Models KW - Macroeconomics and Economic Growth KW - Political Economy KW - Private Sector Development KW - R&D KW - Science and Technology Development KW - Scientific Research & Science Parks KW - Technology Adoption UR - https://www.unicat.be/uniCat?func=search&query=sysid:134623706 AB - Using a global panel on research and development (R&D) expenditures, this paper documents that on average poor countries do far less R&D than rich as a share of GDP. This is arguably counter intuitive since the gains from doing the R&D required for technological catch up are thought to be very high and griffith2004 have documented that in the OECD returns increase dramatically with distance from the frontier. Exploiting recent advances in instrumental variables in a varying coefficient context we find that the rates of return follow an inverted U: they rise with distance to the frontier and then fall thereafter, potentially turning negative for the poorest countries. The findings are consistent with the importance of factors complementary to R&D, such as education, the quality of scientific infrastructure and the overall functioning of the national innovation system, and the quality of the private sector, which become increasingly weak with distance from the frontier and the absence of which can offset the catch up effect. China's and India's explosive growth in R&D investment trajectories in spite of expected low returns may be justified by their importing the complementary factors in the form of multinational corporations who do most of the patentable research. ER -