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Macroeconomic Rationales For Public Investments In Science

Author

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  • Hans Gersbach
  • Ulrich Schetter
  • Maik T. Schneider

Abstract

What is the economic rationale for investing in science? Based on an open economy model of creative destruction, we characterize four key factors of optimal investment in basic research: the stage of economic development, the strength of the manufacturing base, the degree of openness, and the share of foreign‐owned firms. For each of these factors, we analyze its bearings on optimal basic research investment. We then show that the predicted effects are consistent with patterns observed in the data and discuss how the factor‐based approach might inform basic research policies. (JEL H41, O30, O32, O33, O38)

Suggested Citation

  • 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.
    • Handle: RePEc:bla:ecinqu:v:59:y:2021:i:2:p:575-599
    DOI: 10.1111/ecin.12921
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    References listed on IDEAS

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    Cited by:

    1. Gersbach, Hans & Mamageishvili, Akaki & Pitsuwan, Fikri, 2023. "Crowdsearch," CEPR Discussion Papers 18529, C.E.P.R. Discussion Papers.
      • Hans Gersbach & Akaki Mamageishvili & Fikri Pitsuwan, 2023. "Crowdsearch," Papers 2311.08532, arXiv.org.
    2. Gersbach, Hans & Schetter, Ulrich & Schmassmann, Samuel, 2023. "From local to global: A theory of public basic research in a globalized world," European Economic Review, Elsevier, vol. 160(C).
    3. Thomas H. W. Ziesemer, 2022. "Foreign R&D spillovers to the USA and strategic reactions," Applied Economics, Taylor & Francis Journals, vol. 54(37), pages 4274-4291, August.

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    More about this item

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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