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Economic Analysis: Theory and Practice

Econometric estimation of the cost of implementing the science-intensive projects based on efficient markets data

Vol. 22, Iss. 2, FEBRUARY 2023

Received: 9 January 2023

Received in revised form: 19 January 2023

Accepted: 2 February 2023

Available online: 28 February 2023


JEL Classification: C65, D60, E22, G17, K34

Pages: 291–315


Evgenii N. LUKASH Lomonosov Moscow State University, Moscow, Russian Federation

ORCID id: not available

Aleksandr S. MAL'TSEV JSC State Specialized Design Institute (JSC GSPI), Moscow, Russian Federation

ORCID id: not available

Subject. The article investigates cost drivers of research and development, analyzes key indicators of R&D costs characterizing the technical and operational perfection of science-intensive products, using the case of civilian and multipurpose helicopters.
Objectives. The aim is to develop an econometric model of dependence of R&D costs on basic performance specifications of the helicopter to decide whether R&D should be undertaken.
Methods. The study rests on the theory of fundamental value of assets, econometric methods of data analysis, the time value of money, and also on the theory of purchasing power parity, and unbiased expectations theory of interest rates.
Results. The paper unveils the main sources of R&D cost growth for new-generation products in the science-intensive industries. Based on the econometric analysis, we highlight the main determinants of R&D costs, i.e. flight and technical characteristics of the helicopter, which determine the operational efficiency of design and technological decisions taken. We constructed a model to obtain the predictive estimate of R&D cost for Russian helicopters costs.
Conclusions. The statistics on R&D costs of Russian civil helicopters does not sufficiently reflect their fair (market) value. Efficient markets are sources of more objective data on R&D costs of science-intensive products. When modeling the market value of R&D for Russian helicopters, it is advisable to rely on the Western markets data, with recalculation of development costs according to the economic conditions of the Russian aviation market. The analog method enables to quickly obtain a preliminary estimate of R&D costs.

Keywords: Research, Development, Test & Evaluation (RDT&E), econometric modeling, Balassa–Samuelson effect, yield to maturity, country risk


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