Why are governmental R&D and private R&D complements?

It is well known that government R&D and private R&D have a complementary relationship. However, no previous study has provided an explanation for why that complementary relationship exists. This paper argues that infratechnology is the critical link between governmental and private R&D and that the observed complementarity is the result of technical complementarity at the production level between funding, infratechnology, and knowledge sharing. A theoritical framework based on this argument is developed and examined empirically for supporting evidence. Evidence of technical complementary is found as well as evidence that governmental R&D stimulates the sharing of knowledge.