UNIVERSITÄT POTSDAM - Prof. Dr. Paul JJ Welfens

investigations offers a wide field for further research. Up to now, these effects are only
taken rather roughly and partially into account in most empirical studies.
Generally, studies which are based on time series data on levels of output and
R&D stocks for individual US, French and Japanese companies found output elasticities
lying between 0.06 and 0.1 (GRILICHES, 1995). Considering results of this kind
of studies for Germany and France at different levels of aggregation, the estimated output
elasticities turned out to be somewhat higher. For the total economy of West Germany
PATEL / SOETE (1988) estimated 0.21 as the output elasticity of R&D. However,
in a recent study BÖNTE (1998) estimated only output elasticities between 0.03
and 0.04 for the R&D stock of selected sectors of West German manufacturing. At the
firm level CUNEO / MAIRESSE (1984) estimated for the R&D stock output elasticities
between 0.22 and 0.33 for France; MAIRESSE / CUNEO (1985) estimated values
between 0.09 and 0.26, and MAIRESSE / HALL (1996) values between 0.00 and 0.17.
At the level of the total economy PATEL / SOETE (1988) estimated a value of 0.13 for
the output elasticity of R&D for France. COE / MOGHADAM (1993) estimated with
their preferred specification an output elasticity of 0.17 for the R&D stock of France.
When growth rates are used as dependent variables and R&D intensities as independent
variables, the estimated rate of return lies – summarizing the bulk of empirical
results for different countries and different levels of aggregation – mainly between
0.2 and 0.5, with most of the recent estimates falling in the lower part of this range
(GRILICHES, 1995). However, the results for West Germany are a little bit puzzling.
At a firm level, BARDY (1974) estimated direct rates of return to R&D between 0.92
and 0.97. However, at an industry level MÖHNEN / NADIRI / PRUCHA (1986) estimated
a direct rate of return to R&D of 0.13, and O’MAHONY / WAGNER (1996)
found at the same level a direct rate of return of 0.00. With a different approach
BÖNTE (1998) calculated net rates of return for selected sectors of West German
manufacturing between 0.23 and 0.3. This is quite in accordance with the general results
and with the results for France at the firm level where GRILICHES / MAIRESSE
(1983) estimated a rate of return to R&D of 0.31, and HALL / MAIRESSE (1995)
found values between 0.22 and 0.34.
However, most of the studies considered here simply treat R&D as another form
of investment and do not allow for the effects of the externalities mentioned above.
Therefore, it is unclear whether such studies underestimate or overestimate the effects
of R&D. JONES / WILLIAMS (1997) derived an endogenous growth model, which
takes these externalities into account, and calibrated it to a range of plausible parameter
values. They find that in most cases the excess returns to R&D (calculated as the social
return minus the private return) are positive, but less than 20 per cent. We may add that
due to the globalization power of the Internet the divergence between private and social
returns to R&D might increase – not least if the Internet reinforces international knowledge
spillovers. This raises problems for R&D cooperation.
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