Email
a.dyevre@lse.ac.uk

Office Address
Department of Economics
London School of Economics and Political Science
Houghton Street, London WC2A 2AE

Placement Officer
Matthias Doepke

Supervisors
Xavier Jaravel
Ben Moll
John Van Reenen

References
Xavier Jaravel 
Department of Economics
London School of Economics and Political Sciences
Houghton Street, London WC2A 2AE
x.jaravel@lse.ac.uk

Ben Moll 
Department of Economics
London School of Economics and Political Sciences
Houghton Street, London WC2A 2AE
b.moll@lse.ac.uk

John Van Reenen
Department of Economics
London School of Economics and Political Sciences
Houghton Street, London WC2A 2AE 
j.vanreenen@lse.ac.uk

Arun Advani
Department of Economics, 
University of Warwick, 
Coventry, CV4 7AL, UK 
a.advani.1@warwick.ac.uk

Public R&D and Productivity Growth 
Does the composition of Research and Development (R&D), in particular its split between public and private funding, matter for aggregate productivity growth? Using a unique firm-level dataset with patent and balance-sheet information covering 70 years (1950-2020), I estimate the impact of the decline in public R&D in the U.S. on long-run TFP growth. I first document three new facts about publicly funded innovations: they are (i) more reliant on science, (ii) more likely to open new technological fields, and (iii) more likely to generate spillovers, especially toward smaller firms. In other words, public R&D tends to be more of a public good for firms. I then use two instrumental variable strategies—a historical shift-share IV and a patent examiner leniency instrument—to estimate the impact of the decline in public R&D on the productivity of firms through spillovers. I find that a 1% decline in public R&D spillovers causes a 0.17% decline in productivity growth. This impact is twice as big as that of spillovers from private R&D and persists at the aggregate sector level. Moreover, smaller firms benefit more from public R&D spillovers than large firms. A calibrated model of growth with heterogeneous firms suggests that the decline in public R&D can explain a significant share of the decline in TFP growth in the U.S. from 1950 to 2020, and of the rise in inequality between firms.

Paper to follow

Publications

Innovation Catalysts: How Multinationals Reshape the Global Geography of Innovation (with Riccardo Crescenzi and Frank Neffke), Economic Geography, 98(3): 199-227, 2022.
We study whether and when research and development (R&D) activities by foreign multinationals facilitate the formation and growth of new innovation clusters. Combining information on nearly four decades’ worth of patents with socioeconomic data for regions that cover virtually the entire globe, we use matched difference-in-differences estimation to show that R&D activities by foreign multinationals have a positive causal effect on local innovation rates. This effect is sizeable: over a five-year period, foreign research activities help a region climb fourteen centiles in the global innovation ranks. This effect materializes through a combination of knowledge spillovers to domestic firms and the attraction of new foreign firms to the region. However, not all multinationals generate equal benefits. In spite of their advanced technological capabilities, technology leaders generate fewer spillovers than technologically less advanced multinationals. A closer inspection reveals that technology leaders also engage in fewer technological alliances and exchange fewer workers with local firms abroad than less advanced firms. Moreover, technology leaders tend to set up their foreign R&D activities in regions with lower levels of economic development than less advanced firms, yet with comparable public-sector research capacity. These findings suggest that technologically leading multinationals face comparatively unfavorable trade-offs between the costs and benefits of local spillovers, underscoring the importance of taking the strategic choices that firms face into account when analyzing innovation clusters.

Working papers

The Hidden Costs of Market Power in a Production Network [updated draft coming soon], May 2020.

Works in progress

Fragmentation, Employment and Compensation in Production Networks (with Jan Bakker, Kalina Manova and Andreas Moxnes).
Matching Patents to Publicly Listed Firms in the US: 1950-2020 (with Oliver Seager)