TY - JOUR
T1 - The cosine-shaped pattern of innovations and technological advantages
T2 - Theory and evidence
AU - Ju, Jiandong
AU - Yang, Xuebing
PY - 2013
Y1 - 2013
N2 - Using data from 24 OECD countries, we find that the relationship between a country's R&D investment and technological advantage in a sector (measured by the country's labor productivity of the sector relative to the rest of the world) is non-monotonic. In particular, for countries whose technology levels are much lower or higher than the rest of the world in a sector, their sectoral R&D investment declines as their advantages in the sector improve; for counties with middle technology levels, the opposite is true. Extending the Eaton and Kortum framework, we develop a static model to theoretically analyze the relationship between R&D investment and technological advantages. We show that when the research efficiency in a sector is sufficiently elastic with respect to the sectoral technological advantage, a country's R&D investment increases with its technological advantage, and vice versa.
AB - Using data from 24 OECD countries, we find that the relationship between a country's R&D investment and technological advantage in a sector (measured by the country's labor productivity of the sector relative to the rest of the world) is non-monotonic. In particular, for countries whose technology levels are much lower or higher than the rest of the world in a sector, their sectoral R&D investment declines as their advantages in the sector improve; for counties with middle technology levels, the opposite is true. Extending the Eaton and Kortum framework, we develop a static model to theoretically analyze the relationship between R&D investment and technological advantages. We show that when the research efficiency in a sector is sufficiently elastic with respect to the sectoral technological advantage, a country's R&D investment increases with its technological advantage, and vice versa.
UR - http://www.scopus.com/inward/record.url?scp=84904811991&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84904811991&partnerID=8YFLogxK
U2 - 10.3868/s060-002-013-0024-8
DO - 10.3868/s060-002-013-0024-8
M3 - Article
AN - SCOPUS:84904811991
SN - 1673-3444
VL - 8
SP - 476
EP - 489
JO - Frontiers of Economics in China
JF - Frontiers of Economics in China
IS - 4
ER -