Convergence of R&D intensity in OECD countries: evidence since 1870

Research and development (R&D) 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 R&D intensity across OECD countries spanning 145 years. We find evidence in favour of full convergence (i.e. convergence among all 20 countries) in R&D intensity. However, the club clustering procedure reveals that prior to World War II (WWII) the patterns of R&D 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 R&D 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.