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European Technology Policy

  • Jonathan Eaton
  • Eva Gutierrez
  • Samuel Kortum

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 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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Paper provided by Boston University, Institute for Economic Development in its series Boston University - Institute for Economic Development with number 87.

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Date of creation: Aug 1998
Date of revision:
Handle: RePEc:fth:bosecd:87
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  1. 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.
  2. Eaton Jonathan & Tamura Akiko, 1994. "Bilateralism and Regionalism in Japanese and U.S. Trade and Direct Foreign Investment Patterns," Journal of the Japanese and International Economies, Elsevier, vol. 8(4), pages 478-510, December.
  3. 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.
  4. Grossman, G.M. & Helpman, E., 1989. "Quality Ledders In The Theory Of Growth," Papers 148, Princeton, Woodrow Wilson School - Public and International Affairs.
  5. 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.
  6. repec:tpr:qjecon:v:95:y:1980:i:4:p:737-50 is not listed on IDEAS
  7. 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.
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