Modern Economy, 2012, 3, 873-883
http://dx.doi.org/10.4236/me.2012.37110 Published Online November 2012 (http://www.SciRP.org/journal/me)
The Role of R&D in Shaping Public Sector Typologies:
An European Perspective
Andrés Maroto1, Luis Rubalcaba2
1Economic Analysis: Economic Theory Department, Autonomous University of Madrid, Madrid, Spain
2Applied Economics Department, University of Alcalá, Madrid, Spain
Received June 22, 2012; revised July 28, 2012; accepted August 13, 2012
ABSTRACT
One of functions of the modern public states fo r improv ing dynamism in the econ o mic system is the use of their support
to cope with the market and systemic failures created in the innovation area: the R&D promoted by public administra-
tions can be considered a dimension, among others, of their performance in society. This paper explores the relation-
ships between the R&D promoted by public administrations and the different typologies of states from a European per-
spective. The results show some similarities between the public sectors in terms of general characteristics such as per-
formance or stability and the most R&D-oriented promoters. However, differences are found depending on indicators
and types analyzed. The existence of large differences within each type of public sector is also confirmed. Results sug-
gest the influence that pro-innovation profiles of public sectors might exert on general innovation system and perform-
ance patterns in EU countries.
Keywords: Public Sector; Typologies; R&D; Innovation; Europe
1. Introduction: R&D in New Public Sector’s
Role
Since mid-XX century public sectors have gaining im-
portance in advanced economies developing social and
economic functions in different ways, depending on his-
torical traditions, administrativ e cu ltu res, inspiration s and
development of welfare and growth. A third of the ser-
vice employment created in Europe from the 1979 till
2007 has been generated in public sector. In Europe,
many types of public states coexist with different sizes,
socials roles, and performances. But, in the last 20 years
all of them have something in common: th ey are seeking
for modernization and performance. In this way some
traditional functions are being be revised (e.g., better
regulation actions to reduce enterprise burden and red
tape, or measures to reduce interventionism in private
markets) while others need to be reinforced (e.g., policies
for growth, employment, productivity and innovation).
One of key functions of the modernized public sectors
for enforcing the economic system is the use of their
support to cope with the market and systemic failures
created in the innovation area: the R&D promoted by
public administrations can be considered a dimension,
among others, of their performance in society.
Public sector research and innovation plays a key role
in technological change and consequently in economic
growth. In r ec ent years, a number of trends have emerged,
heightening interest in the economic effects of public
sector innovation and, specially, R&D both in policy and
academic circles. One of the key factors of the downturn
of economic growth in the European Union in the after-
math of the Lisbon Council of 2000 is the structural na-
ture of the EU’s innovation systems and processes. If
innovation is the process of gene rating and applying n ew
ideas that raise living standards, create new growth in-
dustries, and improve the way institutions operate—then
public sector will determine EU’s success or failure in
the innovation endeavor as much as the private sector,
since the justification o f public sector to face market and
systemic failures in innovation are widely recognized
(see, for example, Arrow, 1962 [1]; Griffith, 2000 [2];
OECD, 2002 [3]; Mowery and Sampat, 2002 [4 ]).
Although in that period labor apparent productivity of
public administrations as such performed well in the EU
(European Commission , 2005 [5]; Maro to and Rub alcaba,
2008 [6]), the qu estion is if the curr ent size, structure and
functioning of European public sector is efficient enough
to produce positive impacts throughout the whole econ-
omy. In terms of policy, the empirical results stresses that
the EU’s innovation system needs to be drastically re-
formed if the EU is to make a decisive shift towards re-
alizing the broad features of which have been laid out in
the Lisbon 2010 agenda. A structural reform and institu-
C
opyright © 2012 SciRes. ME

A. MAROTO, L. RUBALCABA 874
tional change, and an emphasis on competitive ness that is
based on science and on knowledge is a prerequisite for
the Union to catch up with the United States and the dy-
namic Asian economies, and public sector has a key role
in this process.
A recent research of the US Council on Competi-
tiveness (2005) [7] explains the reasons why. Public sec-
tor sets the framework by which private entities inno-
vate—as a regulator, an investor, a purchaser or a partner.
Consider just a few public sector activities and their im-
pact on putting new ideas into practice, such as research
investment, education policy, intellectual property pro-
tection or infrastructure investment. Clearly, th e capacity
of the private sector to innovate relies heavily on public
sector practices. Government also determines countries’
innovation potential because the public sector accounts
for a major portion of our society’s activities1. Such an
enormous swath of activity must be productive and effi-
cient—it must be innovative—if EU countries are to
prosper and compete in the global arena of 21st century.
Improving the performance of the public sector in
terms of innovation is a goal that is high on the policy
agenda in almost all European countries. Public policies
play a key role in sh aping competitiveness and growth in
the economy. Due to the size of government activity,
performance and efficiency in the public sector is an im-
portant determinant of aggregate economic performance
at the national level. Secondly, the organization and
functioning of governments affects the private sector via
three main channels through which government action
can have an impact: taxation (that distorts relative prices
in the economy and thus influence economic incentives
such as the willingness to work, to invest or to engage in
entrepreneurial activities), public spending on areas such
as education, R&D or infrastructure; and regulations
(that limit the choices which individuals and enterprises
can make), and the state of efficiency and modernization
in the provision of public services (a high-performing
administration will produce positive direct and indirect
impacts in the economy as a whole).
Some of the public sector actions produce contradict-
tory effects in the economy, causing debate among re-
searchers and policy-makers. For example, cross-country
studies investigatin g the role of public capital in explain-
ing productivity growth differentials provide no clear
conclusions: while many of them find a positive impact,
the effect is often not significant. For both education and
R&D, the case for the public sector involvement is often
based on the existence of externalities. There is econo-
metric evidence suggesting the R&D performed by pub-
lic sector could have stronger impacts on economic per-
formance than business R&D (Griliches, 1992 [8]; Grif-
fith, 2000 [2]). The extent to which public research can
strengthen it depends also on the exploitation of the re-
sults in the business sector. Finally, some papers con-
clude that public R&D has to some extent taken the place
of private research rather than adding to it (David, Hall
and Toole, 2000 [9]); however, most available studies do
not find such substitution effects.
Furthermore, the public sector is not only a performer
of R&D, but also an important source of R&D funding in
the business sector. The gap in private research invest-
ment between the EU and the US2 has alarming cones-
quences for the long-term potential for innovation,
growth and productivity performance. For this reason,
the European Council in Barcelona 2000 decided to
strive to increase gross expenditures on R&D to 3 per-
cent of GDP in the EU by 2010 with industry contribut-
ing two-thirds of the total amount of R&D expenditures
(European Commission, 2003). Public R&D and pro-
grams for boosting innovation can be one of the most
powerful instruments to overcome deficits and achieve
competitive goals.
Public sector innovation, therefore, is directly related
to economic prosperity and tightly linked to whether
governments will meet their greatest national challenges
in areas such as education or research and development.
Following these ideas, the aim of this paper is twofold: to
identify public sector typologies in Europe, upon which
R&D can play a significant role, and to analyze if R&D
performance in EU countries differs according to the
structure, organization and typology of public admini-
stration. A final discussion is made exploring the influ-
ence that public innovation might exert on general per-
formance patterns in EU public sectors.
2. Public Sectors in Europe: Shaping
Typologies and Impacts of Reforms in
R&D
The modern public sector is a consequence of a long and
even controversial process where different organiza-
tional models, sizes and profiles have been evolved. Pub-
lic sector really has a great economic and social impor-
tance all over market economies, but even much more
within the European Union. This fact becomes an eco-
nomic achievement, and shows the EU trying to get the
right balance between high social protection levels and
income redistribution processes, what sometimes involve
a certain trade-off between economic growth and income
2Expenditures on business sector R&D as a percentage of GDP in the
EU-15 (1.22 percent in 2007) lag significantly behind the US (1.93 per-
cent in 2007) and Japan (2.68 percent in 2007) whereas there is virtu-
ally no gap in terms of public R&D expenditures (including the gov-
ernment and higher education sector ones).
1In Sweden, which has the highest share of government employment in
EU-15 in 2007, one out of three jobs is in the government sector. The
N
etherlands has the smallest share of government employment in 2007,
one tenth of all
j
obs.

A. MAROTO, L. RUBALCABA 875
distribution. More recently, some other debates are in the
center of discussion about the modern role of States; for
example, the debate about comple mentarities or substitu-
tions between public and private (crowding out effects
included); the debate about the conflict between Welfare
State and competitiv eness or the debate on modernization
and innovation of public sector.
The public sector in the economies of the advanced
countries, and among them the European ones, fulfills
nowadays one two-fold mission: it is creative and re-
sponsible of the institutional frame in which they op erate
the individuals and also an authority that take part ac-
tively in the economic processes correcting the results
that would obtain the markets. Traditionally, it has been
denominated “arrangement policy” to the first role, and
“process policy” to the second one. In order to take care
of both tasks, the public sector uses three generic instru-
ments: regulations, public property, and state companies.
One of the main roles that the pu b lic sector takes at th e
present time is to develop all the activities that the Wel-
fare State implies, which means the displacement of cer-
tain areas of the social conflict to the sphere of public
action. In a strand of the literature, the performance of
welfare states is linked to their institutions. A typology
aims to explain the performance of national institutions
for in the light of their key characteristics. One well-
known typology of institutions for social protection
found in welfare states was developed by Esping-An-
dersen (1990) [10]. Before that, between 1960 and 1975
the three great models of European Keynesian Welfare
State are based. Titmuss in 1974 [11] had laid the way
towards the consideration of three models differentiated
of social protection in advanced Capitalist states. Esp-
ing-Andersen retakes this proposal and builds a very in-
fluential three-poled typology. In his approach, the de-
fining characteristic of welfare states is the generosity
and accessibility of government programs designed to
protect the citizenry against loss of income and poverty.
Each type is different in terms of the regulation of labor
markets (primary protection) and the level and scope of
income guarantees (secondary protection). He distin-
guished, in particular, a Nordic or socialist model (with
Sweden like paradigm), a Continental or Christian De-
mocrat model (Germany) and an Anglo-Saxon or liberal
model (United Kingdom). Eastern countries emerge as a
separate type of welfare state (SCP/CERP, 2004 [12]),
while some authors—such as Castles (1995) [13] or
Rhodes (1997) [14]—describe an alternative model for
Southern or Mediterranean countries.
Recent studies complement these typologies. Differ-
ences in administrative culture have a major impact both
on fundamental choices concerning the structure of the
public sector, and on the daily functioning of the gov-
ernment apparatus. Administrative culture forms part of a
wider political and social culture. Hofstede’s dimensions
are probably the best-known categorization of adminis-
trative cultures (Hofstede, 1980 [15]), although other
attempts have been made (Mamadouh, 1999 [16]). It is
clearly no simple matter to group countries on the basis
of their administrative culture. Loughlin (1994) [17]
groups countries on the basis of broad philosophical and
cultural traditions. He distinguishes an Anglo-Saxon
(minimal state), a Germanic-organicist and a French Na-
poleonic state tradition. The Scandinavian type is a mix
of the first two. Finally, Hooghe (2002) [18] used four
dimensions developed by Page (1995) [19]—cohesion,
autonomy from political control, caste-like character and
non-permeability of external interest—to construct and
index of “Weberian bureaucratic tradition” (strong, me-
dium, weak), indicating to what degree a national admin-
istrative culture corresponds to the Weberian model
(strong cohesion, large degree of autonomy from politi-
cal control, strong caste-like character of the bureaucracy
and low permeability of external interests).
Other studies have attempted to find a relationship
between key demographic indicators and the institutions
of welfare states. For example, Mellens (1999) [20] tried
to relate birth rate, migration, family formation and the
death rate to dominant socio-economic (level of income,
educational attainment and health status of the population)
and cultural treats of welfare states (gender equality,
conservatism, individualism and post-modernism).
In summary, five groups of states can be distinguished
in Europe according to all these characteristics (see Ta-
ble 1). These country-clusters are the Scandinavian or
Northern European, the Mediterranean or Southern Eu-
ropean, the Continental or Western European, the Anglo-
Saxon, and the Eastern European. Countries differ in
terms of system characteristics, resource use and per-
formance of the public sector (this public performance
will be analyzed in detail in the next section). Neverthe-
less, it is possible to group European countries in to these
clusters that take account of each of those dimensions.
These clusters are almost entirely consistent with gener-
ally accepted geographical/historical classifications of
countries in Europe.
After the rapid expansion of the welfare state in the
50s and 60s, the public sector has been under consider-
able pressure in the past few decades. Declining public
confidence in government institutions and growing de-
mands on public finances have prompted governments to
initiate measures to trim the public sector and make it
more efficient and effective. Thus, after the great crisis in
the 80s, a “new” state was being built during the 90s in
the European Union. The objective of these new public
administration management theories is to build a state
that responds to the needs of its citizens, a democratic
state where bureaucrats respnd accountably to politi- o

A. MAROTO, L. RUBALCABA 876
Table 1. Typology of states in Europe.
Scandinavian or
Northern European Mediterranean or Southern European Continental or Western European Anglo-Saxon Eastern European
(a) According to general and socio economic characteristics
Administrative
culture 1 Public interest No clear Rule of law Public interest Transition
Insipration 6 Socialism Mix Christian-democraticLiberal Post-communist
State tradition 2 Mixture of Germ anic
and French French Napoleonic Germanic or organicistAnglo-Saxon Communist
Type of
administration 3 Medium medium-weak medium-weak* strong Strong/weak
Social 4 Medium ageing, high
crime rate High ageing, low crime rate Medium ageing, medium crime rate Low ageing, mi x e d crime rate Low ageing, low crime rate
Economic 4 Average GDP per capita, average
economic growth
Low GDP per capita,
high economic growth
Average GDP per
capita, low economic
growth
High GDP per capita,
average economic
growth
Low GDP per capita,
high economic growth
(b) According to public sector characteristics
General
characteristics High size, high quality and high confidence
Low size, low-medium
quality and low-medium
confidence
Mixed size, medium
quality and
medium-high
confidence
Medium size,
medium-high quality
and average
confidence
Low-medium size,
low-medium quality
and low-medium
confidence
Public Service sector
characteristics 4
Low private share,
public orientation, less
repressive, Beveridge
type, uniform education
and adversarial
criminal law system
Low-medium
private share, average
repressive, Beveridge
type, medium
differentiated
education
Medium private share,
public orientation,
less-average repressive,
Bismarck type,
differentiated education
and inquisitorial
law system
Medium-high
private share, mixed
repressive, Beveridge
type, low-medium
differentiated
education
Medium-high private
share, Bismarck
type, low-medium
differentiated
education
PS performance 5
Medium-high
overall performance,
medium-high in
education, high in
health care, low
overall efficiency
Low overall
performance, low in
education, medium-high
in health care, medium
overall efficiency
Medium-high
overall performance,
medium-high in
education, high in
health care, low
overall efficiency
Medium overall
performanc e, high in
education, medium-high
in health care, high
overall efficiency
Medium-low overall
performance,
low-medium
in education,
ow-medium in health
care, medium-low
overall efficiency
(c) According to social protection systems
Referring system 6 Redistribution
(equality) Household attendanceSecurity Attendance Transition towards Civil Society
Secondary protection
(income guarantees) 6
High social
expenditure level,
impositive financing
structure, universal
cover and social right
of citizens like criterion
for access
Low social expenditure
level, impositive (taxes)
financing structure,
universal cover and
labour belonging like
criterion for access
Average social
expenditure level,
contributively financing
structure, selective
cover and labour
belonging like criterion
for access
Low expenditure level,
impositive (taxes)
financing structure,
selective cover and
need like criterion
for access
Medium social
expenditure level,
impositive financing
structure, universal
cover and social right
of citizens like
criterion for access
Primary protection
(labour market
conditions) 6
Average regulative
density, very centralized
and coordinated
collective agreements
structure, high cover
rate of these agreements,
very high union
affiliation density
Highly regulated
system. Intermediate
systems for collective
agreements and
centralisation. Rigidity
and black labour. Low
union affiliation density
High regulative density,
less centralized and by
sector collective
agreements structure,
very high cover rate
of these agreements,
average union
affiliation density
Low regulative
density, decentralized
and by company
collective agreements
structure, average-high
cover rate of these
agreements, high uni on
affiliation density
Transition systems from
fully regulated markets
towards liberal markers
Very centralized and
coordinated collective
agreements structure,
high cover rate of these
agreements, very high
union affiliation density
1Pollit and Bouckaert (2004); 2Louhglin (1994); 3Hooghe (2002); 4SCP/CERP (2004); 5Afonso et al. (2 003); 6Maroto and Rubalcaba (2006); *With the excep -
on of France (strong). ti

A. MAROTO, L. RUBALCABA 877
cians and politicians to voters (Hood, 1991 [21]; Freder-
ickson, 1996 [22]). For that reason, there are essential
moves: political reform to increase the legitimacy of
governments; fiscal adjustment, privatization, deregula-
tion to reduce the size of the state and improve its finan-
cial health; and administrative reform that, in addition to
improving the financial situation of the state, will provide
the means of good governance. Reform strategies adopted
can be catalogued as a four-fold aim: maintain, modern-
ize, marketize and minimize (Pollit and Bouckaert 2004
[23]) the public sector functioning and development.
Recent reforms in the public sector have often been
carried out as a response to pressures to limit public
spending, to strengthen economic performance or to keep
up with the innovations introduced in the private sector,
such as the introduction of information technologies.
Country-specific forces are usually at the root of public
sector reforms (Knox, 2002 [24]). In the international
discourse concerning these reform developments there is
a key interpretation arguing that, instead of a singular
pattern of adaptation, there have been and there are sev-
eral different paths in developed economies (Premfors,
1998 [25]; Torres and Pina, 2004 [26]; Capano, 2003
[27]).
Figure 1 summarizes three types of reforms handled
to enhance efficiency in the public sector—management
reforms, introduction of information technology, and
outsourcing processes, use of knowledge-intensive ser-
vices and public-private partnership (Maroto and Rubal-
caba, 2006 [6])—and their implications in R&D activi-
ties; the role of pro-innovation actions leading to chang es
in the way R&D is promoted and managed. In this sense
R&D is more than some “ad hoc” expenditure and serves
Figure 1. Public sector reforms and implications for R&D.
to promote a certain pro-innovation culture in public ad-
ministrations. This culture dealing with R&D can be
useful to develop pro-innovative activities such as the
implementation of performance monitoring in educa-
tional reforms (Henr y and Dickey, 1993 [28]) or may add
new discussion elements suitable to be incorporated in
organizational innovation studies (e.g., Pope, Robert,
Bate and Le May, 2006 [29], Koch and Windrum, 2008
[30]) or innovation indicators in public administrations
(e.g., Walker, Jeanes and Rowlands, 2002 [31]). The
orientation towards more and better R&D (public or
business R&D) may potentially reinforce the pro-inno-
vative behaviors of administrations through the use of
direct research (e.g., demanded by the public sector itself)
and the pro-innovation climate (e.g., pro-innovation atti-
tudes derived from the R&D environment). The ex- tent
and synergies between the R&D dimension in public
sector and trends towards modernization will depend on
many factors, among which the structure and type of
public administration can act as a major one, as will be
explored in next sections.
3. Data and Introductory Results: Testing
Inter-Type D i ff e r en c e s
Firstly, to test the role of typologies in reshaping public
sector in Europe a database is prepared for the analysis. It
is structured into two blocks: one referred to public sec-
tor and overall economic indicators (35 variables, see
Appendix), and the other referred to R&D indicators3. 25
countries have been chosen clustered according the
above mentioned five public sector typologies: Nordic or
Northern (Denmark, Finland, Sweden, Norway and Ice-
land), Eastern (Czech Republic, Hungary, Poland and
Slovak Republic), Central or Continental (Austria, Bel-
gium, France, Germany, Luxembourg, Netherlands and
Switzerland), Mediterranean or Southern (Greece, Italy,
Portugal and Spain), and Anglo-Saxon (Ireland, United
Kingdom, United States, Australia and Canada).
Secondly, the statistical significance of the differ-
ences between the five typologies was assessed using
ANOVAs, after having checked that all variables met the
assumption of parametric tests; when necessary, vari-
ables were log-transformed to achieve a normality and
homogeneity of variances. As a working hypothesis, it
confirms whether the typologies have different behaviors
in respect to a series of features, on the basis of the ex-
isting differences stated in the previous sections (R&D
variabl e s an d general variables).
Table 2 shows the results for 34 variables on general
socio-economic characteristics and performance of pub-
lic sectors (26 countries). Just 5 (14.7 percent) are sig-
3Definition and description of variables (displayed at Tables 2 and 3)
are available by the authors under demand.

A. MAROTO, L. RUBALCABA 878
Table 2. ANOVA results for overall and public sector variables.
N Variation
coefficient F p
Population 26 1.86 0.96 0.4468
Population per m2 26 0.89 4.75a 0.0068a
Health Expenditure 26 0.22 1.58 0.2149
Health Expenditure per capita 26 0.41 6.03a 0.0021a
Life expectancy 26 0.02 14.04c 0.0000c
GDP 26 2.29 1.02 0.4164
GDP per capita 26 0.31 7.34b 0.0007b
Ec Growth 94-04 26 0.41 1.85 0.1561
Ec Growth 03-04 26 0.40 4.80a 0.0065a
Government Final Consumption
Expenditure Growth 2003-2004 26 1.14 3.10 0.0375
Net National Saving 26 0.67 1.48 0.2495
Civilian Employment Growth 94-04 26 0.97 2.59 0.0658
Female Participation Rate 26 0.13 5.56a 0.0032a
Part-time Employment Rate 26 0.49 7.22b 0.0008b
Unemployment rate 26 0.54 3.77 0.0183
PS revenue 26 0.15 11.65c 0.0000c
PS expenditure 26 0.14 6.01a 0.0021a
PS net saving 26 7.91 3.40 0.0268
Tax receipts 26 0.16 6.77b 0.0011b
Highest tax rate 26 0.19 2.38 0.0839
Public employment 26 0.37 1.35 0.2914
Inflation 03-04 26 0.52 7.33b 0.0007b
Expenditure on education 26 0.16 3.34 0.0288
Expenditure on public education 26 0.16 4.59a 0.0080a
Tertiary education Rate 26 0.34 4.46a 0.0091a
Upper secondary or higher education Rate 26 0.25 6.03a 0.0021a
PTVL 26 0.26 13.44c 0.0000c
PTVH 26 0.31 15.08c 0.0000c
PTVL growth 94-04 26 0.63 8.03b 0.0004b
PTVH growth 94-04 26 0.54 5.13a 0.0048a
PSP 26 0.14 8.21b 0.0003b
PSE 26 0.29 23.23c 0.0000c
Quality of public administration 22 0.26 8.86b 0.0004b
Political stability 26 4.22 1.07 0.3920
Inequality 25 0.17 3.46 0.0262
aVariables significant at 1%; bVariables significant at Bonferroni coefficient (
 = 0.05); and cVariables significant at Bonferroni
coefficient (  = 0.01).

A. MAROTO, L. RUBALCABA 879
nificant using the Bonferroni correction test for 1 per-
cent of confidence level4, while 21 (61.7 percent) with-
out using this correction. The proposed typology seems
to be appropriate for differences in economic productive-
ity and performance of public sectors among other sig-
nificant variables such as GDP per capita or life expec-
tancy. Variables with no significant differences among
types of public sectors are related to taxes and savings,
unemployment rates or growth of spending.
Table 3 presents the results for 29 R&D related-vari-
ables. In this case, at 1 percent of confidence level, the
relative number of significant variables is similar than in
the overall and public sector performance variables: 16
(55.2 percent). However, the number of significant vari-
ables at 1 percent after the Bonferroni correction is larger:
8 variables (27.6 percent) related to governmental ex-
penditures in R&D, total business expenditure, re-
searchers per employment and government expenditures
in high education.
The main aim of this paper is to analyze the actual
differences in R&D performance and systems across
European countries according to the structure and model
of public sector which characterized each one. Do R&D
patterns in EU countries differ according to public sector
typologies? In order to answer this, the statistical signify-
cance of the differences among the five public sector
clusters explained before was assessed using ANOVAs.
It seems to be clear that intensity of the R&D investment
(as a percentage of GDP) and business sector R&D
expenditures (as a percentage of GDP) actually differs
among groups. Nordic or Scandinavian countries present
the highest ratios of gross and private sector R&D, fol-
lowed by Continental or Western and Anglo-Saxon ones.
On the other hand, Eastern and Southern or Mediterra-
nean group invest a lower proportion of their GDP in
R&D activities. Nevertheless, these differences are
smoothing when public sector R&D is analyzed. Even
more, in the case of government R&D and R&D fi-
nanced by the government the differences are not sig-
nificant, while the differences on the rest of variables
related to R&D are.
Figure 2 presents the main results. It shows the pat-
terns of each model of public sector in EU countries
about four key variables within the innovation system
(top graph of the figure)—gross R&D investment, Public
R&D investment, R&D performed in public sector, and
R&D services (Nace. 73). Eastern and Southern countries
present higher ratios between public and private R&D.
Public sector R&D in these countries represent a higher
proportion of the total of R&D investment. Another key
variable of R&D activities, R&D services (Nace. 73)
does not differ signi ficantly among gro ups.
Similar results conclude if public sector performance
(middle graph of Figure 2) and general economic indi-
cators (bottom graph of Figure 2) are analyzed. Again,
Nordic, Continental and, specially, Anglo-Saxon coun-
tries behaves better than Eastern and Mediterran ean ones.
Differences observed in terms of R&D patterns, appear
in terms of public sector and overall performance indica-
tors. Those countries with more developed innovation
systems are those with better numbers in terms of public
sector efficiency and economic performance. At first
sight, differences observed would seem to respond to
income and wealth differences, and not to public sector
model differences. However, following the ANOVA
results, this doubt is refuted.
Although differences among groups in terms of GDP
per capita follow the same path than previously analyzed
differences on R&D and public sector performance, the
rank of each cluster differs. In terms of income per capita,
Anglo-Saxon countries leads, followed by Nordic and
Continental countries and Southern or Mediterranean
ones behaves clearly better than Eastern economies. This
ranking slightly changes when focusing R&D patterns.
Thus, Nordic countries, such as Sweden or Finland,
achieve R&D numbers higher than expected, while An-
glo-Saxon and, specially, Mediterranean countries worsen
related to expected ranking according to economic posi-
tion. To sum up, diversity of public sector models in EU
countries plays a key role both in terms of R&D patterns
and public sector performance and efficiency. Not only
economic differences are significant, but differences on
the way structuring and administering R&D activities
among these five clustering groups are observed in
European countries at this time.
4. Results: Testing Disparities within Public
Sector’s Typologies
Though this suggests that our conclusions are plausible,
there is a need to take a more self-critical view in some
related aspects. Firstly, some authors ask to what extent
is there really an Anglo-Saxon model. The United States
and the United Kingdom are very different in many ways,
and have different trends, so one could turn this around
and suggest that the United Kingdom is far more like
France, while United States is far more like Switzerland.
Secondly, the current Germany system is now under
radical changes, so its belonging to a narrow cluster can
be discussed5. Finally, some authors (see, for example,
Frenken, 2003 [32]) suggest that national boundaries are
being broken down and a pan-European system is instead
taking its place, not only in erms of convergence due to t
5For example, there is no such thing as the Rhineland model in Ger-
many, but a changing German traditional system over time (Schweiger,
2004 [33]).
4If confidence level, after Bonferroni test, is 5 percent, there are 12
significant variables (35.3 percents).

A. MAROTO, L. RUBALCABA 880
Figure 2. Structure, performance and innovation in public sector in Europe and US (normalized variables).
fiscal constraints imposed by the Euro stability pact.
These critics could make the adopted typology here dif-
fer, but, in any case, it is the more extended one in the
literature.
To cope with the intra-typolog y disparities, the idea of
whether the differences between each cluster are greater
than the differences within each typology is sought to be
confirmed. For such a confirmation, Pearson variation
coefficients have been used. Firstly, they have been es-
timated among the five groups and, later, within each one.

A. MAROTO, L. RUBALCABA 881
Table 3. ANOVA results for R&D variables.
N Variation coefficientF p
R&D/Total 25 0.46 9.40c 0.0002c
GERD 25 0.48 13.40c 0.0000c
GERD per capita 25 0.58 20.03c 0.0000c
% GERD financed by Government 25 0.35 8.11b 0.0004b
GERD financed by Government 24 0.38 3.74 0.0208
BERD (% GERD) 25 0.26 6.23a 0.0020a
% BERD financed by Government 25 0.74 3.10 0.0386
BERD 25 0.61 11.58c 0.0000c
GOVERD (% GERD) 25 0.62 11.41c 0.0000c
GOVERD 25 0.55 1.34 0.2882
HERD 25 0.48 5.87a 0.0027a
HERD (% GERD) 25 0.37 3.49 0.0255
PUBLIC R&D (% GERD) 25 0.37 5.99a 0.0024a
PUBLIC R&D 25 0.40 5.05a 0.0055a
Ratio Public-Private (% GERD) 25 0.74 5.36a 0.0042a
Ratio Public-Private 25 0.78 4.01 0.0149
GBOARD 24 0.36 2.97 0.0457
GBOARD (defence) 22 1.55 0.88 0.4932
Total researchers 25 2.37 1.30 0.3019
Researchers per 1000 employment 24 0.47 10.12c 0.0001c
R&D researchers per 1000 employment 22 0.42 12.40c 0.0000c
Triadic patents 25 2.50 1.08 0.3920
EPO patents 25 2.04 1.07 0.3952
Average patents 25 2.16 1.06 0.3982
%GERD in Business sector 25 0.24 5.42a 0.0039a
%GERD in Higher education 24 0.53 7.37c 0.0009c
%GERD in Government 24 0.35 4.08 0.0148
%GERD in Public Sector 25 0.36 5.27a 0.0045a
GVA R&D Services 23 0.90 2.19 0.1113
Employment R&D Services 23 0.83 1.94 0.1468
aVariables significant at 1%; bVariables significant at Bonferroni coefficient (
 = 0.05); and cVariables significant at Bonferroni
coefficient (  = 0.01).
Then, between the various pair wise combinations of
individual countries belonging to each cluster, aiming to
confirm that there are inter-typologies and intra-typolo-
gies differences. Our research hypothesis is that each
typology maintains a kind of heterogeneous behavior,
and nothing objects that the differences within each
group are in some cases larger than the differences
among groups, although the idea that the differences
among these five public sector typologies are irrelevant
cannot be derived from the previous assertion.
Figure 3 displays the disparities (measured as Pearson
variation coefficients) within each type of public sector

A. MAROTO, L. RUBALCABA 882
face to the disparities among the 5 types. The Anglo-
Saxon type is the only one for which differences both in
general items and in R&D indicators are larger than those
among the 5 types. The continental model is more ho-
mogeneous in general public sector and economic items
but diversity in R&D indicators is larger. In the Mediter-
ranean, Eastern and Nordic models, the intra-heteroge-
neity is less noticeable than the inter-types one. The Nor-
dic type, in particular, is the most homogeneous type
within the five clusters identified in the previous sec-
tions.
Concerning the balance between overall indicators and
R&D indicators, Figure 4 shows how intra-type varia-
tions in R&D are much larger than inter-types ones than
in economic or public sector performance indicators,
where inter-types differences are more outstanding.
5. Concluding Remarks
The debate of the role of the public sector has shifted in
these years towards empirical assessments of the effi-
ciency and usefulness of its activities. Economic theory
and empirical researches have shown that innovation and,
concretely, R&D achieve better economic performance at
aggregate level. Focusing on public sector, the results on
Figure 3. Variation coefficients within and between public
sector-typologies.
Figure 4. Percentage of variables for which differences
among countries are higher than among country-typologies.
this paper show that this relationship persists. R&D be-
haves a key dimension within performance and effi-
ciency of public administrations. Those countries with
higher R&D are those with better performance of their
public sector activities. Gross R&D and private sector
R&D have a longer effect on the public sector perform-
ance, while public R&D has importance as supporting
and stimulating innovation and research within private
firms.
The second main research hypothesis of this paper
asked for the influence of diversity of public sector mod-
els in the European countries. Different ways of struc-
turing and administering public activities across the EU
should lead to different ways to performing R&D sys-
tems. It seems to be clear that countries with higher R&D,
such as Scandinavian and Continental countries, are
those with better public performance show, while Medi-
terranean and Eastern countries present a worse per-
formance in public administrations and lower general
R&D figures. This pattern also can be observed if R&D
services are analyzed. Continental and Scandinavian
countries are those with a more developed R&D services
sector, although Eastern economies show a high relative
development in these kinds of tertiary activities. On the
other hand, variables related to public sector R&D play
the opposite role. Thus, Mediterranean and Eastern
countries present the highest values in public R&D (as a
percentage of total R&D) and R&D performed within the
public administrations, while those countries with higher
general R&D spending, such as Scandinavian and Con-
tinental ones, present lower values in these two variables.
A certain complementary but asymmetric role between
public and private R&D can be suggested since those
countries leading both types of R&D develop much more
business R&D than those countries lagging behind. Pub-
lic and private R&D deem to be considered as initially
complementary but, once a certain level is obtained,
countries with a high public sector performance develop
much more private R&D than public R&D. This result
suggests that a key dimension of the public sector per-
formance should be the capacity of transmitting public
R&D efforts in private investments: the capacity of
spreading the public funding in economic system and
innovation. Further research is needed to complement
this type of results with innovation indicators: R&D is
just an input where the returns into innovative products,
process or organizational changes do not necessarily to
be the same in all countries.
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