The Economic Effectiveness of Public R&D Investment in Environmental Technologies: The Case of Korea

다국어 초록 (Multilingual Abstract)

public environmental R&D investment; total factor productivity (TFP); economies of scale; factor substitutability Korean government has invested huge amounts of public money (approximately 871 billion wons from 2001 to 2010) in environment R&D projects. However, research has not been systematically conducted to evaluate the effectiveness of public environmental R&D investment. Thus this paper tries to evaluate the effectiveness and productivity of public environmental R&D investment, using a hybrid translog cost function approach. In doing that, it employs total factor productivity (TFP), supply elasticity of cost and economies of scale, price elasticity of input demand, and Morishima elasticity of substitution. It also analyzes differences in TFP, economies of scale, and factor substitutability across environmental project research areas and across R&D research launching agents. Empirical findings indicate that (1) environmental projects failed to achieve efficiency and productivity gains, and (2) when accounting for both measures of outputs (i.e., number of peer-reviewed articles, and number of patents obtained), the size and magnitude of an environmental project need to be expanded to save average costs and improve efficiency. In addition, this paper found large variations in productivity gains, supply elasticity of cost and economies of scale, own- or cross-price elasticity of input demand, and Morishima elasticity of substitution across environmental project research areas and across R&D research launching agents.