Inter-Industry Technological Spillovers and the Rate of Return on R&D

This paper provides an homogeneous comparison of the impact of inter-industry technological spillovers on productivity growth in Japan, the USA, and the UK. The three main results may be summarized as follows. (i) The input-output matrix is not a good proxy for the technological flows matrix; the latter weighting matrix leads to substantially higher estimates of social rates of return on R&D. (ii) Among the three countries under consideration, Japan benefits from the highest private and social rates of return on R&D. (iii) The lower private rates of return on R&D in the US and the UK are likely to be counterbalanced by relatively stronger inter-industry R&D spillovers effects. However, it is not sufficient for an equalization of the social rates of return among the three countries.