Convergence of RD intensity in OECD countries: evidence since 1870

Research and development (RD) activity has been widely cited as one of the key drivers of economic growth over several decades. This research note employs the Phillips and Sul (Econometrica 75(6):1771--1855, 2007; Econometrics 24(7):1153--1185, 2009) methodology to test for the convergence of RD intensity across OECD countries spanning 145 years. We find evidence in favour of full convergence (i.e. convergence among all 20 countries) in RD intensity. However, the club clustering procedure reveals that prior to World War II (WWII) the patterns of RD intensity differ across countries where we identify one convergent club and one non-convergent club. These results suggest that the post-WWII period witnessed significant international RD spillovers between countries, given that all countries converge to the same steady state. Alternatively, the pre-WWII period included countries where technology and innovation were lagging behind.