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Understanding R&D Policy: Efficiency or Politics?

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  • Fidel Pérez Sebastián

    () (Universidad de Alicante)

Abstract

This paper searches for the determinants of government-funded R&D. The goal is to disentangle whether the efficiency considerations overwhelmingly emphasized by the theoretical literature are indeed the main driving force behind public R&D expenditures. Another goal of the paper is to assess whether other types of innovation policy such as the degree of patent protection can have an impact on private R&D. I find that there are important differences between rich and poor nations at this respect. In particular, R&D-specific efficiency factors are not significant to explain public R&D in rich nations, whereas related variables such as the access to private credit and knowledge spillovers are important in less developed economies; in rich countries, public innovation effort can be better explained by the political economy variables that determine the size of governments. Private R&D, on the other hand, depends in high income economies on R&D policies that try to improve R&D efficiency, but is highly determined by government size in less income nations. Results suggest that more research on political economy theories of innovation is essential to understand R&D investment.

Suggested Citation

  • Fidel Pérez Sebastián, 2011. "Understanding R&D Policy: Efficiency or Politics?," Working Papers. Serie AD 2011-17, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  • Handle: RePEc:ivi:wpasad:2011-17
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    References listed on IDEAS

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    More about this item

    Keywords

    R&D; policy; market failures; political factors;

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • 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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