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European Technology Policy

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  • Jonathan Eaton
  • Eva Gutierrez
  • Samuel Kortum

Abstract

European countries do less research than Japan and the United States. We use a quantitative multi-country growth model to ask: (i) Why is this so? (ii) Would there be any benefit to expanding research in Europe? (iii) What would various European research promotion policies do? We find that (i) Europe's lower research effort has more to do with the smaller markets facing European inventors than with lower research productivity. (ii) Europe has substantial research potential in that increased research effort in most European countries generates bigger income benefits there than increased effort in the United States and Japan of equivalent amounts. (iii) Policies to stimulate research in Europe raise productivity not only there but elsewhere. But a problem with pursuing these policies at the national level is the potential for free riding. A second possible problem with promoting research is distributional: While all countries within the European Union benefit, the countries that are already best at doing research, which tend to be the richer members, fare best. The benefits of policies that facilitate the adoption of innovations are more evenly spread.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6827.

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Date of creation: Dec 1998
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Publication status: published as Economic Policy, Vol. 27 (October 1998): 405-438.
Handle: RePEc:nbr:nberwo:6827

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  1. Mansfield, Edwin & Romeo, Anthony, 1980. "Technology Transfer to Overseas Subsidiaries by U.S.-Based Firms," The Quarterly Journal of Economics, MIT Press, vol. 95(4), pages 737-50, December.
  2. Lynne G. Zucker & Michael R. Darby, 1995. "Virtuous Circles of Productivity: Star Bioscientists and the Institutional Transformation of Industry," NBER Working Papers 5342, National Bureau of Economic Research, Inc.
  3. Ginarte, Juan C. & Park, Walter G., 1997. "Determinants of patent rights: A cross-national study," Research Policy, Elsevier, vol. 26(3), pages 283-301, October.
  4. Eaton, Jonathan & Kortum, Samuel, 1999. "International Technology Diffusion: Theory and Measurement," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(3), pages 537-70, August.
  5. Gene M. Grossman & Elhanan Helpman, 1989. "Quality Ladders in the Theory of Growth," NBER Working Papers 3099, National Bureau of Economic Research, Inc.
  6. Jonathan Eaton & Akilo Tamura, 1994. "Bilateralism and Regionalism in Japanese and U.S. Trade and Direct Foreign Investment Patterns," Boston University - Institute for Economic Development 48, Boston University, Institute for Economic Development.
  7. Nicholas Bloom & Lucy Chennells & Rachel Griffith & John Van Reenen, 1997. "How has tax affected the changing cost of R&D? Evidence from eight countries," IFS Working Papers W97/03, Institute for Fiscal Studies.
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