The effects of innovation policies on business R&D: A cross-national empirical study

Yonghong Wu, D. Popp, S. Bretschneider

Research output: Contribution to journalArticlepeer-review

22 Scopus citations


This paper examines the effect of three major national innovation policies (patent protection, research and development (R&D) tax incentives, and government funding of business R&D) on business R&D spending. Unlike previous work, we also consider the effect of openness to international trade. We use data from nine OECD countries (Australia, Canada, France, Germany, Italy, Japan, Spain, UK, and USA) in 1985–1995. Our results show that all three innovation policies play a significant role in stimulating business R&D. Enforcement of patent right matters most to business R&D spending. In addition, R&D performed by the government has a positive effect on business R&D, whereas R&D by the higher education sector has a negative impact on business R&D. We also find modest empirical support to the positive role of openess to international trade in business R&D investment.

Original languageEnglish (US)
Pages (from-to)237-253
Number of pages17
JournalEconomics of Innovation and New Technology
Issue number4
StatePublished - Jun 2007


  • Innovation policy
  • Patent policy
  • R&D
  • Tax incentive

ASJC Scopus subject areas

  • General Economics, Econometrics and Finance
  • Management of Technology and Innovation


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