The Effects of U.S. Public R&D on Global Growth — by Gustavo De Souza, Andrew J. Fieldhouse, Karel Mertens, Ishan B. Nath, Valerie A. Ramey
This paper provides the first causal estimates of the global social returns to U.S. public R&D. We use a narrative identification strategy to quantify the effects of exogenous shocks to U.S. R&D appropriations on the dynamic TFP response of 69 foreign economies from 1980–2019. A U.S. R&D appropriations shock equal to 1 percent of the federal R&D capital stock raises foreign TFP by approximately 1 percent after 12 years. This response is driven primarily by nondefense rather than defense R&D and is concentrated in non-OECD economies. These patterns are most consistent with diffusion occurring through openly accessible scientific content, capital-embodied trade, and technological leapfrogging by economies further from the global frontier. A back-of-the-envelope calculation suggests that the global social returns to U.S. public nondefense R&D are roughly twice as large as the domestic returns, meaning the U.S. captures about half of these productivity benefits.
