Complementarity or substitutability between private and public investment in R&D: An empirical study

In this paper, we investigate the relationship between private and public investment in R&D. Various models proposed in the literature to take account for several instruments policies as: (subsidies, taxes…) are estimated to verify if private and public R&D spending are complement or substitute. Our empirical study is based on a dynamic panel model for a sample of (23) countries over the period 1992-2004. This research is dealing with the relationship between private and public investment in R&D. Results based on the GMM method of Arellano and Bond (1991) and the tests of causality and unit root applied to the panel data show a positive and significant relation between private and public R&D.