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Structural stability of the research & development sector in European economies despite the economic crisis

Abstract

When an external shock such as the economic crisis in 2008/2009 occurs, the interconnectedness of sectors can be affected. This paper investigates whether the R&D sector experienced changes in its sectoral integration through the recession. Based on an input-output analysis, it can be shown that the linkages of the R&D sector with other sectors remain stable. In some countries, the inter-sectoral integration becomes even stronger. Policy makers can be encouraged to use public R&D spending as a means of fiscal policy against an economic crisis.

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Notes

  1. This empirical observation is in line with theoretical findings from Aghion et al. (2012), Shleifer (1986) and Barlevy (2007). However, cyclicality of R&D will not be the focus of this paper.

  2. We acknowledge the critique of Richter (1995) who draws attention to the fact that technology is not fully expressed through input coefficients. We use input coefficients as a proxy here.

  3. In our case, it is a standardized vector for all countries with all zero elements except for one billion euro in the R&D sector.

  4. The multipliers for value added will be presented in the appendix.

  5. In our case, it is one billion Euro invested directly into the R&D sector as a standardized figure for all calculations.

  6. In the current ESA 2010 only input-output tables for several countries for the year 2010 are available.

  7. Input-output tables before 2008 and after 2010 are not comparable. Therefore, we cannot extend the time period.

  8. A comparison of multipliers calculated for the 3 years and five countries by the use of Eurostat and WIOD database shows that – due to different levels of sectoral dis-aggregation (number of sectors) – there are differences not only in the size, but also in the direction of changes of backward multipliers.

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Acknowledgements

We greatly acknowledge comments and suggestions of the participants of scientific conferences and workshops, in particular the International Input-Output Workshop in Osnabrueck/Germany 2016, the Meeting of the Committee of Evolutionary Economics of the Verein für Socialpolitik in Hannover/Germany 2016 and the International April Conference at Higher School of Economics Moscow 2016. Furthermore, the paper benefited strongly from comments and suggestions of three anonymous referees who we would like to thank.

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Correspondence to Jutta Günther.

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Annex

Annex

Table 9 R&D multipliers for gross value added and income

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Günther, J., Kristalova, M. & Ludwig, U. Structural stability of the research & development sector in European economies despite the economic crisis. J Evol Econ 29, 1415–1432 (2019). https://doi.org/10.1007/s00191-019-00640-z

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Keywords

  • Economic crisis
  • Research and development
  • Input-output analysis

JEL classifications

  • C67
  • H12
  • O30
  • O38