R&D efficiency and heterogeneity – a latent class application for the OECD

Abstract

Expenditures devoted to research and development (R&D) are scarce and thus need to be used as efficiently as possible given the financial constraints countries are facing. This article assesses the relative efficiency of R&D expenditures for 26 OECD member countries and two nonmember countries. As countries differ in their national innovation systems and states of economic development and industrialization, e.g. transition economies in Eastern Europe versus Asian countries versus Anglo-Saxon countries, the measurement of R&D efficiency needs to consider differences in the technology of knowledge production. By means of a latent class model for stochastic frontiers, we relax the assumption of a homogeneous technology frontier and model technological differences in knowledge production among countries. Empirical evidence suggests the existence of different classes stressing the importance of accounting for countries' disparities within R&D efficiency analysis.

Decent rural employment and farm production efficiency: empirical evidence from Tanzania and Ethiopia

“…In such a context, the idea of reducing production input use to reach to the frontier level seems to be an unrealistic assumption (Ogundari and Brümmer, ). It is plausible to assume the possibility of radial expansion of outputs with the given level of inputs when economic entities aim to maximize their outputs (Cullmann and Zloczysti, ; Kumbhakar et al., ). Accordingly, we decide to use the OODF approach for the estimation.…”

Measuring and ranking R&D performance at the country level

“…Its usefulness in assessing efficiency in Science and Technology has also been highlighted (Bonaccorsi and Daraio, 2004) and in recent years it has been more and more adopted for measuring R&D performance (Lee and Shin, 2014). Therefore, although some interesting cross-country studies based on a parametric R&D efficiency analysis have been performed (see for example Cullman and Zloczysti, 2014;Fu and Yang, 2009;Wang, 2007) , the present research will be focused on DEA.…”

“…Given the severe financial constraints that currently affect both public and private sectors, the evaluation of how efficiently R&D processes are performing becomes of key importance for the allocation of resources. For this reason, recent years have seen a growing number of studies that attempt to assess and compare R&D efficiency at different scales of analysis (Aristovnik, 2012;Cullman & Zloczysti, 2014;Han et al, 2017;Lee & Lee, 2015).…”