SMU SOE Online Seminar (Nov 9, 2022, 9.30am-11am): Innovation Networks and R&D Allocation

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ABSTRACT We study the cross-sector allocation of R&D resources in a multisector growth model with an innovation network, where one sector’s past innovations may benefit other sectors’ future innovations. Theoretically, we solve for the optimal path of R&D resource allocation. We show a planner valuing long-term growth should allocate more R&D toward upstream sectors in the innovation network, but the incentive is muted in open economies that rely on foreign knowledge spillovers. We derive sufficient statistics for evaluating the welfare cost of R&D misallocation. Empirically, we build the global innovation network based on patent citations and establish its empirical importance for knowledge spillovers. We evaluate R&D allocative efficiency across countries using model-based sufficient statistics. Japan has the highest allocative efficiency among the advanced economies. For the U.S., reducing R&D misallocation down to Japan’s level could generate more than 28% welfare gains. Keywords: Innovation Network, Resource Allocation, Growth JEL Codes: O33, O38, F43 Click here to view the paper. Click here to view the CV.		This seminar will be held virtually via Zoom. A confirmation email with the Zoom details will be sent to the registered email by 8 November 2022.
		PRESENTER Ernest Liu Princeton University
		RESEARCH FIELDS Networks Growth Trade Finance Macro-development
		DATE: 9 November 2022 (Wednesday)
		TIME: 9.30am - 11.00am

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