Working Paper Series

Private and Social Rates of Returns to R&D in OECD Countries: How Different Are They across Industries?

by Ram Acharya

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Abstract

Using data for 17 Organisation for Economic Co-operation and Development (OECD) countries over 30 years for 28 industries, the paper estimates private and social returns to research and development (R&D). Results show that the excess private return (excess over normal return to factor of production) that an R&D dollar in an industry generates to itself is positive for all industries ranging from 3% to 57%. R&D of some industries generates spillovers to others, making private returns different from social returns. The paper provides partial support to Griliches' conjecture as it finds that, in some cases, an idea generates a greater impact on other industries than where it is generated.

Key words: R&D, private return, social return, industry technology flow matrix