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Economic Rationales for Investments in Science

Author

Listed:
  • Hans Gersbach

    (ETH Zurich, Switzerland)

  • Ulrich Schetter

    (University of St. Gallen, Switzerland)

  • Maik Schneider

    (University of Bath, UK)

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 analyse 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.

Suggested Citation

  • Hans Gersbach & Ulrich Schetter & Maik Schneider, 2018. "Economic Rationales for Investments in Science," CER-ETH Economics working paper series 18/298, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    • Handle: RePEc:eth:wpswif:18-298
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    File URL: http://www.cer.ethz.ch/content/dam/ethz/special-interest/mtec/cer-eth/cer-eth-dam/documents/working-papers/WP-18-298.pdf
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    More about this item

    Keywords

    Basic Research; Economic Growth; Growth Policy;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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