Efficiency of Government-Sponsored R&D Projects: A Metafrontier DEA Approach

Government R&D investments are steadily increasing with the perception that R&D plays an important role in technological innovation and sustainable economic growth. In particular, because biotechnology is recognized as one of the next growth engines, the Korean government has recently increased their investment in biotechnology R&D. However, careful analysis of the efficiency of government-sponsored R&D projects is still lacking. In this paper, we measured the technical efficiency and technology gap ratio to investigate the efficiency of Korean government-sponsored R&D projects of 16 sub-biotechnologies from 2007 to 2013 using a metafrontier Data Envelopment Analysis approach. There was no improvement in overall efficiency between 2007 and 2013. Biochip development technology has been the most efficient sub-biotechnology field and the least efficient fields have been biotechnology product safety and efficacy assessment technology. Medical science and engineering is the closest to optimal production technology among sub-biotechnologies. The efficiency of universities and government-funded research institutes is high, while the efficiency of companies is relatively low. The results suggest that the government should improve the R&D planning process and establish a customized R&D investment strategy that considers the characteristics of technologies and the seven organization types of R&D conductors to increase R&D efficiency.