Abstract: R&D varies substantially across countries. By introducing the profit motive into R&D, the "quality ladder" growth model implies an inverse relationship between the national activity levels of R&D and unit costs of R&D. This inverse relationship is supported by findings from a data set of direct measures and a second data set that contains measures based on the R&D content of international trade.
Keywords: International R&D Competition; R&D Content of Trade
JEL Classification: F12;O41