Public R&D Spillovers and Productivity Growth
Best Job Market Paper Award 2023 - European Economic Association & UniCredit Foundation
Presentations: Alan Turing Economics Data Science workshop, Warwick PhD conference 2023, Concordi 2023 conference, Workshop on Entrepreneurial Finance and Innovation, CEPR Paris Symposium (scheduled), European Winter Meeting of the Econometric Society 2023 (scheduled)
Abstract: Does the source of Research and Development funding–public or private–matter for aggregate productivity growth? Using a unique firm-level dataset with patent and balance-sheet information covering 70 years (1950-2020), I estimate the impact of the decline in public R&D in the US on long-run TFP growth. I first document three new facts about publicly-funded innovations: they are (i) more reliant on science, (ii) more likely to open new technological fields, and (iii) more likely to generate spillovers, especially toward smaller firms. I then use two instrumental variable strategies-a historical shift-share IV and a patent examiner leniency instrument-to estimate the impact of the decline in public R&D on the productivity of firms through spillovers. I find that a 1% decline in public R&D spillovers causes a 0.17% decline in productivity growth. Public R&D spillovers are three times as impactful as private R&D spillovers for firm productivity and their impact persists at the sector level. Moreover, smaller firms experience larger productivity gains from public R&D spillovers. I calibrate a model of growth with heterogeneous firms which suggests that the decline in public R&D can explain around a third of the decline in TFP growth in the US from 1950 to 2018, and half of the rise in size inequality between firms over the same period.
Innovation Catalysts: How Multinationals Reshape the Global Geography of Innovation
with Riccardo Crescenzi & Frank Neffke
Economic Geography, June 2022
Online appendix, Summary thread, Data visualisation
Media: Financial Times, LSE Business Review, Global Investment Local Development (I), Global Investment Local Development (II)
Abstract: We study whether and when research and development (R&D) activities by foreign multinationals facilitate the formation and growth of new innovation clusters. Combining information on nearly four decades’ worth of patents with socioeconomic data for regions that cover virtually the entire globe, we use matched difference-in-differences estimation to show that R&D activities by foreign multinationals have a positive causal effect on local innovation rates. This effect is sizeable: over a five-year period, foreign research activities help a region climb fourteen centiles in the global innovation ranks. This effect materializes through a combination of knowledge spillovers to domestic firms and the attraction of new foreign firms to the region. However, not all multinationals generate equal benefits. In spite of their advanced technological capabilities, technology leaders generate fewer spillovers than technologically less advanced multinationals. A closer inspection reveals that technology leaders also engage in fewer technological alliances and exchange fewer workers with local firms abroad than less advanced firms. Moreover, technology leaders tend to set up their foreign R&D activities in regions with lower levels of economic development than less advanced firms, yet with comparable public-sector research capacity. These findings suggest that technologically leading multinationals face comparatively unfavorable trade-offs between the costs and benefits of local spillovers, underscoring the importance of taking the strategic choices that firms face into account when analyzing innovation clusters.
The Rwanda-Uganda border closure: Impacts and Adaptation through Production Networks [Slides]
with Andrew Bernard, Patrick Hitayezu and John Spray
STEG grant (£15,000, PI), IGC grant (£18,000, co-PI)
Matching Patents to Publicly Listed Firms in the US: 1950-2020
with Oliver Seager
STICERD grant 1 (£5,000, PI), STICERD grant 2 (£5,000, PI)
Graduating from Food Insecurity: Evidence from Graduation Projects in Burundi and Rwanda
with Stephen Devereux, Keetie Roelen, Ricardo Sabates, Rachel Sabates-Wheeler & Dimitri Stoelinga
Food Security, February 2019
Abstract: Graduation model programmes deliver a package of support to poor households, including cash and asset transfers, training and coaching, and access to savings facilities. They have been shown to reduce extreme poverty but evidence for their impacts on household food security is limited. Drawing on multiple-round evaluations of graduation projects in Burundi and Rwanda, this paper demonstrates statistically significant impacts on several food security indicators, including months of hunger, meals per day and dietary diversity. Importantly, positive impacts were sustained for households that were re-interviewed 2 years after they exited the programme.