Comments to Rodriguez-Clare and Bosch, Lederman and Maloney Gerardo Esquivel El Colegio de Mèxico

Both Papers have a lots of things in common … For example: For example: Both papers were written in Washington andBoth papers were written in Washington and Both papers were written by very good friends of mineBoth papers were written by very good friends of mine

Nonetheless they also differ in important aspects … For example: For example: Rodriguez-Clare paper is about R&D expenditures and Bosch et al. focuses on PatentingRodriguez-Clare paper is about R&D expenditures and Bosch et al. focuses on Patenting RC focuses on LAC whereas Bosch et al is a worldwide cross-country studyRC focuses on LAC whereas Bosch et al is a worldwide cross-country study RC has an underlying theoretical model and uses calibration methods whereas Bosch et al is a purely empirical paper and they specify and estimate an econometric modelRC has an underlying theoretical model and uses calibration methods whereas Bosch et al is a purely empirical paper and they specify and estimate an econometric model

Comments on Rodriguez-Clare An interesting analytical framework relating R&D with other key macro variables such as capital-output ratio. An interesting analytical framework relating R&D with other key macro variables such as capital-output ratio. Nice idea: R&D diagnostics Nice idea: R&D diagnostics It has an illuminating discussion on the second part of the paper on sectoral composition and R&D. It has an illuminating discussion on the second part of the paper on sectoral composition and R&D.

Comments on Rodriguez-Clare Do we really believe in the calibration results? Do we really believe in the calibration results? I am somewhat skeptical. Why? I am somewhat skeptical. Why? For example, is it really true that countries like Chile, Colombia, El Salvador and Uruguay have favorable R&D institutions and regulations? For example, is it really true that countries like Chile, Colombia, El Salvador and Uruguay have favorable R&D institutions and regulations? I doubt it. I doubt it. Moreover, the author himself seems reluctant to believe in these results. Chile: Innovation or accumulation problem? It depends. Moreover, the author himself seems reluctant to believe in these results. Chile: Innovation or accumulation problem? It depends.

Comments on Rodriguez-Clare Could it be misleading that we are using only LA countries? Could it be misleading that we are using only LA countries? I guess so. It seems that results are capturing part of what is known as the LA dummy. I guess so. It seems that results are capturing part of what is known as the LA dummy. What would happen if we calibrate the model for the whole world? Can we use country-specific info instead of commons parameters? What would happen if we calibrate the model for the whole world? Can we use country-specific info instead of commons parameters? What if instead of using the Mincerian approach we adjust the model along the lines of Manuelli and Seshadri? What if instead of using the Mincerian approach we adjust the model along the lines of Manuelli and Seshadri?

Comments on Bosch et al. Nice empirical paper. Nice empirical paper. Main findings: Main findings: a) Unit elasticity for R&D and patens for OECD countries. This suggests role for spillovers at the aggregate level. b) Less than unit elasticity for LDC. b) Less than unit elasticity for LDC. c) Education, IPR security, Quality of research institutions and interaction with private sector explains differences between DCs and LDCs.

Comments on Bosch et al. Claim: Claim: For developed countries: For developed countries: R&D → Patents with unit elasticityR&D → Patents with unit elasticity For developing countries: For developing countries: R&D → Patents with less than unit elasticityR&D → Patents with less than unit elasticity But, does this mean higher growth? But, does this mean higher growth? Answer: Not obvious Answer: Not obvious

Comments on Bosch et al. Authors use count data estimators. However, is this the appropriate methodology? Authors use count data estimators. However, is this the appropriate methodology? Not obvious. It seems that a Tobit model could be better. There are 6.5% observations with a 0 value in the total sample and 14.4% 0’s in the case of Non- OECD countries. More specifically, it looks like a corner solution situation. Not obvious. It seems that a Tobit model could be better. There are 6.5% observations with a 0 value in the total sample and 14.4% 0’s in the case of Non- OECD countries. More specifically, it looks like a corner solution situation.

Comments on Bosch et al. Figures 1 to 3 suggest that there is a threshold level for R&D expenditures, before they actually result in patents. Figures 1 to 3 suggest that there is a threshold level for R&D expenditures, before they actually result in patents. If this result were relevant, then policy conclusions would be quite different from those in the paper. In that case, maybe the problem is one of the size of resources devoted to these activities and some countries could probably be better off without R&D expenditures. If this result were relevant, then policy conclusions would be quite different from those in the paper. In that case, maybe the problem is one of the size of resources devoted to these activities and some countries could probably be better off without R&D expenditures.

Comments for both papers.. In my opinion, both papers overemphasize the role of R&D and/or Patenting for developing countries. In my opinion, both papers overemphasize the role of R&D and/or Patenting for developing countries. Are these aspects necessary to develop? The history of Asian tigers suggests that they are not. Are these aspects necessary to develop? The history of Asian tigers suggests that they are not. Technology adoption seems far more important. And for that, an adequate level of human capital is important, including certain basic skills such as a good command of English (at least in some LAC) and basic knowledge of computation. Technology adoption seems far more important. And for that, an adequate level of human capital is important, including certain basic skills such as a good command of English (at least in some LAC) and basic knowledge of computation.

A forgotten aspect … R&D is an activity that depends on certain aspects of the economy including trade openness and FDI regulations and institutions. R&D is an activity that depends on certain aspects of the economy including trade openness and FDI regulations and institutions. Example: Mexico after NAFTA. Papers by Lòpez-Cordova (2004) and Meza (2004) Example: Mexico after NAFTA. Papers by Lòpez-Cordova (2004) and Meza (2004)

Now, putting the two papers together … RC concludes that Latin American countries suffer from shortfalls in R&D expenses. RC concludes that Latin American countries suffer from shortfalls in R&D expenses. B-L-M conclude that R&D expenses do not translate well into US patents. B-L-M conclude that R&D expenses do not translate well into US patents. Assuming that patenting is good for growth, where do we go from here? Assuming that patenting is good for growth, where do we go from here? Subsidize R&D to remedy the shortfall?Subsidize R&D to remedy the shortfall? Or improve LAC capacity of translating R&D into patents?Or improve LAC capacity of translating R&D into patents?

Comments to Rodriguez-Clare and Bosch, Lederman and Maloney Gerardo Esquivel El Colegio de Mèxico