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On the Global Supply of Basic Research

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Abstract

In this paper we study the incentives for basic-research investments by governments in a globalized world. For this purpose, we develop a two-country Schumpeterian growth model in which each country chooses its basic-research investments. We find that a country's basic-research investments increase with the country's level of human capital and decline with its own market size. This may explain the large basic-research investments by small open economies. Compared with the optimal investments achievable when countries coordinate their basic-research policies, a single country may over-invest in basic research. However, in the decentralized case the total amount of basic-research investments is always below the socially optimal investment level, which justifies policy coordination in this area.

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  • Hans Gersbach & Maik T. Schneider, 2013. "On the Global Supply of Basic Research," CER-ETH Economics working paper series 13/175, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  • Handle: RePEc:eth:wpswif:13-175
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    Cited by:

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    2. Alberto Santillán-Fernández & Yolanda Salinas-Moreno & José René Valdez-Lazalde & Santiago Pereira-Lorenzo, 2021. "Spatial-Temporal Evolution of Scientific Production about Genetically Modified Maize," Agriculture, MDPI, vol. 11(3), pages 1-14, March.
    3. Lehmann-Hasemeyer, Sibylle & Prettner, Klaus & Tscheuschner, Paul, 2023. "The scientific revolution and its implications for long-run economic development," World Development, Elsevier, vol. 168(C).
    4. Roberto Savona & Cristina Maria Alberini & Lucia Alessi & Iacopo Baussano & Petros Dellaportas & Ranieri Guerra & Sean Khozin & Andrea Modena & Sergio Pecorelli & Guido Rasi & Paolo Daniele Siviero & , 2023. "Towards a Framework for a New Research Ecosystem," Papers 2312.07065, arXiv.org, revised Dec 2023.
    5. Cozzi, Guido & Galli, Silvia, 2017. "Should the government protect its basic research?," Economics Letters, Elsevier, vol. 157(C), pages 122-124.
    6. Werner, Katharina & Prettner, Klaus, 2014. "Human capital, basic research, and applied research: three dimensions of human knowledge and their differential growth effects," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100448, Verein für Socialpolitik / German Economic Association.
    7. Gersbach, Hans & Schneider, Maik & Schetter, Ulrich, 2015. "How Much Science? The 5 Ws (and 1 H) of Investing in Basic Research," CEPR Discussion Papers 10482, C.E.P.R. Discussion Papers.
    8. Gersbach, Hans & Riekhof, Marie-Catherine, 2021. "Permit markets, carbon prices and the creation of innovation clusters," Resource and Energy Economics, Elsevier, vol. 65(C).
    9. Lehmann-Hasemeyer, Sibylle H. & Prettner, Klaus & Tscheuschner, Paul, 2020. "The scientific revolution and its role in the transition to sustained economic growth," Hohenheim Discussion Papers in Business, Economics and Social Sciences 06-2020, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    10. Kunihiko Konishi, 2018. "Basic and Applied Research: A Welfare Analysis," The Japanese Economic Review, Springer, vol. 69(4), pages 414-437, December.
    11. Fukuda, Katsufumi, 2019. "Effects of trade liberalization on growth and welfare through basic and applied researches," Journal of Macroeconomics, Elsevier, vol. 62(C).
    12. Hans Gersbach & Ulrich Schetter & Maik T. Schneider, 2021. "Macroeconomic Rationales For Public Investments In Science," Economic Inquiry, Western Economic Association International, vol. 59(2), pages 575-599, April.
    13. Christos Karydas, 2017. "The inter-temporal dimension to knowledge spillovers: any non-environmental reason to support clean innovation?," CER-ETH Economics working paper series 17/267, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    14. Qinghua Xia & Qinwei Cao & Manqing Tan, 2020. "Basic research intensity and diversified performance: the moderating role of government support intensity," Scientometrics, Springer;Akadémiai Kiadó, vol. 125(1), pages 577-605, October.
    15. Prettner, Klaus & Werner, Katharina, 2016. "Why it pays off to pay us well: The impact of basic research on economic growth and welfare," Research Policy, Elsevier, vol. 45(5), pages 1075-1090.
    16. Qinwei Cao, 2020. "Contradiction between input and output of Chinese scientific research: a multidimensional analysis," Scientometrics, Springer;Akadémiai Kiadó, vol. 123(1), pages 451-485, April.
    17. Kunihiko Konishi, 2015. "Basic and Applied Research: A Welfare Analysis," Discussion Papers in Economics and Business 15-08, Osaka University, Graduate School of Economics.
    18. Bingyue Wan & Lixin Tian & Wenbin Zhang & Guangyong Zhang, 2023. "Environmental effects of behavior growth under green development," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 10821-10855, October.
    19. Cozzi, Guido, 2022. "Shall we fear a Patent Waiver? Not for Covid-19 Vaccines," MPRA Paper 111990, University Library of Munich, Germany.
    20. Parui, Pintu, 2023. "Health, basic research, human capital accumulation, and R&D-based economic growth," MPRA Paper 118769, University Library of Munich, Germany.

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    More about this item

    Keywords

    basic research; public goods; economic growth; coordination of governments.;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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