Frontier academic research, industrial R&D and technological progress: The case of OECD countries

Since frontier academic research is often thought to be driven by recognition and promotion rather than commercial values, its real contribution to a country's technological progress is sometimes doubted. Against this skepticism, this paper argues that frontier academic research resembles a public good and creates important scientific foundations for industrial innovation. When diffused to industry, it significantly contributes to the country's technological improvement. Using panel OLS and dynamic panel OLS estimation methods to analyze a dataset of 18 OECD countries during 2003–2017, this paper finds substantial support to this theory. Obtained results indicate that both frontier academic research and industrial R&D are beneficial to a country's technological progress, but a large proportion of the effect of frontier academic research on a country's technological development is transferred through industrial R&D. In countries with relatively abundant industrial R&D, frontier academic knowledge becomes relatively less attractive in production. These results are robust across different estimation methods, regression specifications, and different proxies of frontier academic research and technological progress. They convey important implications for policymakers in designing national strategies towards promoting a nation's long-term technological development.