The cosine-shaped pattern of innovations and technological advantages

Using data from 24 OECD countries, we find that the relationship between a country's R&D investment and technological advantage in a sector (measured by the country's labor productivity of the sector relative to the rest of the world) is non-monotonic. In particular, for countries whose technology levels are much lower or higher than the rest of the world in a sector, their sectoral R&D investment declines as their advantages in the sector improve; for counties with middle technology levels, the opposite is true. Extending the Eaton and Kortum framework, we develop a static model to theoretically analyze the relationship between R&D investment and technological advantages. We show that when the research efficiency in a sector is sufficiently elastic with respect to the sectoral technological advantage, a country's R&D investment increases with its technological advantage, and vice versa.



Work Title The cosine-shaped pattern of innovations and technological advantages
Subtitle Theory and evidence
Open Access
  1. Jiandong Ju
  2. Xuebing Yang
License In Copyright (Rights Reserved)
Work Type Article
  1. Frontiers of Economics in China
Publication Date January 1, 2013
Publisher Identifier (DOI)
Deposited November 22, 2021




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  • Added Creator Xuebing Yang
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