Spillover Effects of R&D in Japan

This paper, using large panel data of Japanese companies (1983 – 2019) on the research activities of companies, public research institutes, and universities, calculates the technological distances between companies and public research institutes and those between companies and universities, in addition to those among firms. The paper then calculates the spillover pool as a proxy variable for the spillovers that companies obtain from public research institutes, universities and from themselves. In calculating the distances, the paper uses the number of researchers by each research field, and the research expenditure in each specific field. The paper aggregates research expenditures using the distances as weights and calculate spillover pools to measure spillover effects. It also uses information on basic research, applied research, and development research spending by industry, academia, and government organizations to calculate spillover pools by the types of research activities and organizations. Using the calculated spillover pool, we attempted to quantitatively capture the impact on R&D expenditure. We found that the knowledge spillover effect from the social pool, which aggregates knowledge spillovers from companies, public research institutes, and universities, has a negative correlation with the R&D expenditure of companies. However, estimates differentiating spillover pools by types of R&D and organizations shows both positive and negative correlations, indicating the possibility that knowledge spillover affects corporate R&D in various ways.