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Research policy and endogenous growth

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Listed author(s):
  • María Morales

    ()

Abstract

This paper studies the effects of different types of research policy on economic growth. We find that while subsidies to private research, public funding of private projects, and basic research performed at public institutions have unambiguously positive effects on growth, performing applied research at public institutions could have negative growth effects. This is due to the large crowding out of private research caused by public R&D when it competes with private firms in the “patent race”. Copyright Springer-Verlag Berlin/Heidelberg 2004

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File URL: http://hdl.handle.net/10.1007/s10108-004-0081-7
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Article provided by Springer & Spanish Economic Association in its journal Spanish Economic Review.

Volume (Year): 6 (2004)
Issue (Month): 3 (October)
Pages: 179-209

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Handle: RePEc:spr:specre:v:6:y:2004:i:3:p:179-209
DOI: 10.1007/s10108-004-0081-7
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Keywords: Research policy; basic and applied research; endogenous growth;

Other versions of this item:

Find related papers by 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
  • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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  1. Fuente,Angel de la, 2000. "Mathematical Methods and Models for Economists," Cambridge Books, Cambridge University Press, number 9780521585293, February.
  2. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
  3. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders in the Theory of Growth," Review of Economic Studies, Oxford University Press, vol. 58(1), pages 43-61.
  4. Mamuneas, Theofanis P. & Ishaq Nadiri, M., 1996. "Public R&D policies and cost behavior of the US manufacturing industries," Journal of Public Economics, Elsevier, vol. 63(1), pages 57-81, December.
  5. Aghion, P. & Tirole, J., 1993. "On the Management of Innovation," Working papers 93-12, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. David, Paul A. & Hall, Bronwyn H., 2000. "Heart of darkness: modeling public-private funding interactions inside the R&D black box," Research Policy, Elsevier, vol. 29(9), pages 1165-1183, December.
  7. Aghion, Philippe & Tirole, Jean, 1994. "Opening the black box of innovation," European Economic Review, Elsevier, vol. 38(3-4), pages 701-710, April.
  8. David, Paul A. & Hall, Bronwyn H. & Toole, Andrew A., 2000. "Is public R&D a complement or substitute for private R&D? A review of the econometric evidence," Research Policy, Elsevier, vol. 29(4-5), pages 497-529, April.
  9. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
  10. Cassiman, Bruno & Perez-Castrillo, David & Veugelers, Reinhilde, 2002. "Endogenizing know-how flows through the nature of R&D investments," International Journal of Industrial Organization, Elsevier, vol. 20(6), pages 775-799, June.
  11. Delbono, Flavio & Denicolo, Vincenzo, 1993. "Regulating innovative activity : The role of a public firm," International Journal of Industrial Organization, Elsevier, vol. 11(1), pages 35-48, March.
  12. Park, Walter G., 1998. "A theoretical model of government research and growth," Journal of Economic Behavior & Organization, Elsevier, vol. 34(1), pages 69-85, January.
  13. Philippe Aghion & Jean Tirole, 1994. "The Management of Innovation," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 1185-1209.
  14. Gerhard Glomm & B. Ravikumar, 1994. "Growth-Inequality Trade-Offs in a Model with Public Sector R&D," Canadian Journal of Economics, Canadian Economics Association, vol. 27(2), pages 484-493, May.
  15. Mamuneas, Theofanis P., 1999. "Spillovers from publicly financed R&D capital in high-tech industries," International Journal of Industrial Organization, Elsevier, vol. 17(2), pages 215-239, February.
  16. Peter Howitt, 1999. "Steady Endogenous Growth with Population and R & D Inputs Growing," Journal of Political Economy, University of Chicago Press, vol. 107(4), pages 715-730, August.
  17. Alessandra Pelloni, 1997. "Public Financing of Education and Research in a Model of Endogenous Growth," LABOUR, CEIS, vol. 11(3), pages 517-539, November.
  18. Paul A. David, 1999. "The Political Economy of Public Science," Working Papers 99022, Stanford University, Department of Economics.
  19. Howitt, Peter & Aghion, Philippe, 1998. "Capital Accumulation and Innovation as Complementary Factors in Long-Run Growth," Journal of Economic Growth, Springer, vol. 3(2), pages 111-130, June.
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Cited by:

  1. Gersbach, Hans & Schneider, Maik & Schneller, Olivier, 2010. "Optimal Mix of Applied and Basic Research, Distance to Frontier, and Openness," CEPR Discussion Papers 7795, C.E.P.R. Discussion Papers.
  2. Hans Gersbach & Maik T. Schneider & Olivier Schneller, 2008. "On the Design of Basic-Research Policy," CER-ETH Economics working paper series 08/79, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  3. Nicolas Serrano-Velarde & Douglas Hanley & Ufuk Akcigit, 2012. "Back to Basics: Basic Research Spillovers, Innovation Policy and Growth," 2012 Meeting Papers 665, Society for Economic Dynamics.
  4. repec:pit:wpaper:535 is not listed on IDEAS
  5. Werner, Katharina & Prettner, Klaus, 2014. "Human capital, basic research, and applied research: three dimensions of human knowledge and their differential growth effects," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100448, Verein für Socialpolitik / German Economic Association.
  6. Schetter, Ulrich & Gersbach, Hans & Schneider, Maik, 2013. "Taxation, Innovation and Entrepreneurship," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79776, Verein für Socialpolitik / German Economic Association.
  7. Rivas-Aceves, Salvador, 2013. "El sector público y el cambio tecnológico
    [The public sector and technological change]    ," MPRA Paper 58267, University Library of Munich, Germany, revised 2013.
  8. Lai, Chung-hui, 2013. "(In)determinacy, bargaining, and R&D policies in an economy with endogenous technological change," Economics Discussion Papers 2013-14, Kiel Institute for the World Economy (IfW).
  9. Hans Gersbach & Gerhard Sorger & Christian Amon, 2009. "Hierarchical Growth: Basic and Applied Research," CER-ETH Economics working paper series 09/118, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  10. Pierluigi Murro, 2007. "Public Funding for Basic Research in an Endogenous Growth Model," Rivista di Politica Economica, SIPI Spa, vol. 97(6), pages 203-228, November-.
  11. Suen, Richard M.H., 2013. "Research Policy and U.S. Economic Growth," MPRA Paper 49103, University Library of Munich, Germany.
  12. 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.

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