This study investigates international knowledge spillovers arising from government-funded R&D projects (GFPs). While GFPs are often justified by their domestic benefits, their international effects remain less clear. We posit that GFPs amplify international spillovers by signalling technological promise: government selection legitimises priority fields and attracts foreign attention. Using patent data from Japanese GFPs and a matched sample of private R&D, we find that GFPs' patents receive significantly more international forward citations, especially when projects are highlighted in national budget plans. These results suggest that GFPs, though designed to enhance national competitiveness, simultaneously strengthen the global circulation of knowledge. The findings highlight the need for policy designs that balance openness with appropriation by enhancing absorptive capacity and incentivising follow-up innovation.
Takada et al. (Wed,) studied this question.