IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/19473.html
   My bibliography  Save this paper

Back to Basics: Basic Research Spillovers, Innovation Policy and Growth

Author

Listed:
  • Ufuk Akcigit
  • Douglas Hanley
  • Nicolas Serrano-Velarde

Abstract

This paper introduces a general equilibrium model of endogenous technical change through basic and applied research. Basic research differs from applied research in the nature and the magnitude of the generated spillovers. We propose a novel way of empirically identifying these spillovers and embed them in a framework with private firms and a public research sector. After characterizing the equilibrium, we estimate our model using micro-level data on research expenditures by French firms. Our key finding is that standard innovation policies (e.g., uniform R&D tax credits) can accentuate the dynamic misallocation in the economy by oversubsidizing applied research. Policies geared towards public basic research and its transmission to the private sector are significantly welfare improving.

Suggested Citation

  • Ufuk Akcigit & Douglas Hanley & Nicolas Serrano-Velarde, 2013. "Back to Basics: Basic Research Spillovers, Innovation Policy and Growth," NBER Working Papers 19473, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19473 Note: EFG IO PR
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w19473.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Luis Garicano & Claire Lelarge & John Van Reenen, 2016. "Firm Size Distortions and the Productivity Distribution: Evidence from France," American Economic Review, American Economic Association, vol. 106(11), pages 3439-3479, November.
    2. Ufuk Akcigit & Murat Alp Celik & Jeremy Greenwood, 2016. "Buy, Keep, or Sell: Economic Growth and the Market for Ideas," Econometrica, Econometric Society, vol. 84, pages 943-984, May.
    3. Mairesse, Jacques & Mohnen, Pierre, 2010. "Using Innovation Surveys for Econometric Analysis," Handbook of the Economics of Innovation, Elsevier.
    4. Philippe Aghion & Mathias Dewatripont & Jeremy C. Stein, 2008. "Academic freedom, private-sector focus, and the process of innovation," RAND Journal of Economics, RAND Corporation, vol. 39(3), pages 617-635.
    5. Daniel J. Wilson, 2009. "Beggar Thy Neighbor? The In-State, Out-of-State, and Aggregate Effects of R&D Tax Credits," The Review of Economics and Statistics, MIT Press, vol. 91(2), pages 431-436, May.
    6. Blundell, Richard & Griffith, Rachel & Windmeijer, Frank, 2002. "Individual effects and dynamics in count data models," Journal of Econometrics, Elsevier, vol. 108(1), pages 113-131, May.
    7. Daron Acemoglu & Ufuk Akcigit & Douglas Hanley & William Kerr, 2016. "Transition to Clean Technology," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 52-104.
    8. Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 577-598.
    9. Mansfield, Edwin, 1980. "Basic Research and Productivity Increase in Manufacturing," American Economic Review, American Economic Association, vol. 70(5), pages 863-873, December.
    10. Gersbach, Hans & Schneider, Maik T., 2015. "On the global supply of basic research," Journal of Monetary Economics, Elsevier, vol. 75(C), pages 123-137.
    11. Rebecca Henderson & Adam B. Jaffe & Manuel Trajtenberg, 1998. "Universities As A Source Of Commercial Technology: A Detailed Analysis Of University Patenting, 1965-1988," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 119-127, February.
    12. Ariél Pakes & Zvi Griliches, 1984. "Estimating Distributed Lags in Short Panels with an Application to the Specification of Depreciation Patterns and Capital Stock Constructs," Review of Economic Studies, Oxford University Press, vol. 51(2), pages 243-262.
    13. Tor Jakob Klette & Samuel Kortum, 2004. "Innovating Firms and Aggregate Innovation," Journal of Political Economy, University of Chicago Press, vol. 112(5), pages 986-1018, October.
    14. Aghion, Philippe & Akcigit, Ufuk & Howitt, Peter, 2014. "What Do We Learn From Schumpeterian Growth Theory?," Handbook of Economic Growth,in: Handbook of Economic Growth, edition 1, volume 2, chapter 0, pages 515-563 Elsevier.
    15. María Morales, 2004. "Research policy and endogenous growth," Spanish Economic Review, Springer;Spanish Economic Association, vol. 6(3), pages 179-209, October.
    16. 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.
    17. repec:spr:isbuec:978-981-10-1684-4 is not listed on IDEAS
    18. Giammario Impullitti, 2010. "International Competition And U.S. R&D Subsidies: A Quantitative Welfare Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(4), pages 1127-1158, November.
    19. Hans Gersbach & Maik Schneider & Olivier Schneller, 2013. "Basic research, openness, and convergence," Journal of Economic Growth, Springer, vol. 18(1), pages 33-68, March.
    20. Sînâ T. Ateş & Felipe E. Saffie, 2014. "Fewer but Better: Sudden Stops, Firm Entry, and Financial Selection," PIER Working Paper Archive 14-043, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    21. Link, Albert N, 1981. "Basic Research and Productivity Increase in Manufacturing: Additional Evidence," American Economic Review, American Economic Association, vol. 71(5), pages 1111-1112, December.
    22. Segerstrom, Paul S, 1998. "Endogenous Growth without Scale Effects," American Economic Review, American Economic Association, vol. 88(5), pages 1290-1310, December.
    23. Guido Cozzi & Silvia Galli, 2009. "Science-Based R&D In Schumpeterian Growth," Scottish Journal of Political Economy, Scottish Economic Society, vol. 56(s1), pages 474-491, September.
    24. Partha, Dasgupta & David, Paul A., 1994. "Toward a new economics of science," Research Policy, Elsevier, vol. 23(5), pages 487-521, September.
    25. Estelle Dhont-Peltrault & Etienne Pfister, 2011. "R&D cooperation versus R&D subcontracting: empirical evidence from French survey data," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 20(4), pages 309-341.
    26. Sharon Belenzon & Tomer Berkovitz & Patrick Bolton, 2009. "Intracompany Governance and Innovation," NBER Working Papers 15304, National Bureau of Economic Research, Inc.
    27. E. Bacchiocchi & F. Montobbio, 2009. "Knowledge diffusion from university and public research. A comparison between US, Japan and Europe using patent citations," The Journal of Technology Transfer, Springer, vol. 34(2), pages 169-181, April.
    28. Andrew Atkeson & Ariel T. Burstein, 2011. "Aggregate Implications of Innovation Policy," NBER Working Papers 17493, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. “Back to Basic: Basic Research Spillovers, Innovation Policy and Growth,” U. Akcigit, D. Hanley & N. Serrano-Velarde (2013)
      by afinetheorem in A Fine Theorem on 2013-10-29 12:48:37

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stefanie Stantcheva, 2015. "Optimal Taxation and R&D Policies," 2015 Meeting Papers 1533, Society for Economic Dynamics.
    2. William Kerr & Ufuk Akcigit & Nicholas Bloom & Daron Acemoglu, 2012. "Innovation, Reallocation and Growth," 2012 Meeting Papers 1137, Society for Economic Dynamics.
    3. Cozzi, Guido & Galli, Silvia, 2017. "Should the government protect its basic research?," Economics Letters, Elsevier, vol. 157(C), pages 122-124.
    4. Guido Cozzi & Silvia Galli, 2014. "Sequential R&D and blocking patents in the dynamics of growth," Journal of Economic Growth, Springer, vol. 19(2), pages 183-219, June.
    5. Aghion, Philippe & Akcigit, Ufuk & Howitt, Peter, 2014. "What Do We Learn From Schumpeterian Growth Theory?," Handbook of Economic Growth,in: Handbook of Economic Growth, edition 1, volume 2, chapter 0, pages 515-563 Elsevier.
    6. Sasan Bakhtiari & Antonio Minniti & Alireza Naghavi, "undated". "Multinational Production and the Scope of Innovation," Development Working Papers 378, Centro Studi Luca d'Agliano, University of Milano.
    7. Andrew Atkeson & Ariel Burstein, 2011. "Aggregate implications of innovation policy," Staff Report 459, Federal Reserve Bank of Minneapolis.
    8. Bloom, Nicholas & Jones, Charles I & Reenen, John Van & Webb, Michael, 2017. "Are ideas getting harder to find?," LSE Research Online Documents on Economics 86588, London School of Economics and Political Science, LSE Library.
    9. 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.
    10. Gersbach, Hans & Schetter, Ulrich & Schneider, Maik, 2015. "How Much Science? The 5 Ws (and 1 H) of Investing in Basic Research," CEPR Discussion Papers 10482, C.E.P.R. Discussion Papers.
    11. Ufuk Akcigit & William R. Kerr, 2010. "Growth Through Heterogeneous Innovations," NBER Working Papers 16443, National Bureau of Economic Research, Inc.
    12. Dutz, Mark A., 2013. "Resource reallocation and innovation : converting enterprise risks into opportunities," Policy Research Working Paper Series 6534, The World Bank.
    13. Isabel Busom & Beatriz Corchuelo & Ester Martínez-Ros, 2015. "Dynamics of firm participation in R&D tax credit and subsidy programs," Working Papers wpdea1503, Department of Applied Economics at Universitat Autonoma of Barcelona.
    14. Dan ANDREWS & Chiara CRISCUOLO & Dirk PILAT, 2015. "The Future of Productivity Improving the Diffusion of Technology and Knowledge," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(100), pages 85-105, 4th quart.
    15. Michel Dumont, 2015. "Working Paper 05-15 - Evaluation of federal tax incentives for private R&D in Belgium: An update," Working Papers 1505, Federal Planning Bureau, Belgium.
    16. Liu, Runjuan & Rosell, Carlos, 2013. "Import competition, multi-product firms, and basic innovation," Journal of International Economics, Elsevier, vol. 91(2), pages 220-234.
    17. repec:eee:jetheo:v:172:y:2017:i:c:p:247-272 is not listed on IDEAS
    18. Suen, Richard M.H., 2013. "Research Policy and U.S. Economic Growth," MPRA Paper 49103, University Library of Munich, Germany.
    19. Alessandro Saia & Dan Andrews & Silvia Albrizio, 2015. "Productivity Spillovers from the Global Frontier and Public Policy: Industry-Level Evidence," OECD Economics Department Working Papers 1238, OECD Publishing.
    20. 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.
    21. Piotr Lewandowski & Pawel Chrostek & Jan Baran & Iga Magda & Maciej Lis & Anna Pankowiec & Piotr Szczerba & Maciej Bitner & Magdalena Kaminska, 2014. "Employment in Poland 2013. Labour in the Age of Structural Change," Books and Reports published by IBS, Instytut Badan Strukturalnych, number zwp2013 edited by Piotr Lewandowski & Iga Magda, january.
    22. repec:eee:respol:v:46:y:2017:i:6:p:1118-1132 is not listed on IDEAS

    More about this item

    JEL classification:

    • L78 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Government Policy
    • 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
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:19473. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.