On the Global Supply of Basic Research

Hans Gersbach and Maik Schneider

No 13/175, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: In this paper we study the incentives for basic-research investments by governments in a globalized world. For this purpose, we develop a two-country Schumpeterian growth model in which each country chooses its basic-research investments. We find that a country's basic-research investments increase with the country's level of human capital and decline with its own market size. This may explain the large basic-research investments by small open economies. Compared with the optimal investments achievable when countries coordinate their basic-research policies, a single country may over-invest in basic research. However, in the decentralized case the total amount of basic-research investments is always below the socially optimal investment level, which justifies policy coordination in this area.

Keywords: basic research; public goods; economic growth; coordination of governments. (search for similar items in EconPapers)
JEL-codes: O31 O38 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2013-02
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: On the global supply of basic research (2015)
Working Paper: On the Global Supply of Basic Research (2015)
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