UNU-MERIT Working Papers Series
Mission-oriented R&D and growth of Japan 1988-2016: A comparison with private and public R&D
Thomas Ziesemer #2022-034We analyze the dynamic interaction of Japan's total factor productivity
(TFP), GDP, stocks of domestic and foreign private and public as well as
mission-oriented R&D, called GBARD in OECD statistics, in a
vector-error-correction model (VECM) for Japan with stock data for the
period 1987-2016. Permanent policy changes show the following main
results: (i) GBARD as well as private and public R&D each encourage
growth rates of the other R&D stocks and of TFP and GDP, and all have
high internal rates of return; (ii) Japan's R&D policies affect and are
affected by foreign R&D; in particular, Japan's public R&D has a
positive impact on European private R&D, whereas other OECD countries'
R&D has a negative one; (iii) permanent foreign public R&D changes are
detrimental to Japan's growth of TFP and GDP. Japan's R&D policies
should be supported by education policies enhancing especially the
number of PhDs and IT personnel.
Keywords: R&D, productivity, growth, cointegration, cointegrated
vector-auto-regression model (VECM)
JEL Classification: F43, O19, O47, O53
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