A politico-economic analysis of the European Union's R&D policy
AbstractThis paper develops an open-economy growth model to analyze the growth and welfare effects of the European Union's R&D policy. In the case of independent countries, each national government chooses the level of government-funded research non-cooperatively and fails to internalize the spillover effects across countries. Consequently, government-funded research is underprovided. In an economic union, the central government budget causes the common-pool problem and leads to an overprovision of government-funded research. Within this framework, we find that although an economic union dominates independent countries in economic growth, the welfare domination is ambiguous. In particular, there is a critical degree of cross-country spillover above (below) which an economic union dominates (is dominated by) independent countries in social welfare.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Macroeconomics.
Volume (Year): 31 (2009)
Issue (Month): 4 (December)
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Web page: http://www.elsevier.com/locate/inca/622617
Economic growth Government-funded research Policy coordination;
Other versions of this item:
- Chu, Angus C., 2008. "A Politico-Economic Analysis of the European Union’s R&D Policy," MPRA Paper 10329, University Library of Munich, Germany.
- O38 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Government Policy
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
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