Fueling the Fire? How Government Support Drives Technological Progress and Complexity

Carolin Nast, Tom Broekel () and Doris Entner

No 2407, Papers in Evolutionary Economic Geography (PEEG) from Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography

Abstract: This study investigated two major trends shaping contemporary technological progress: the growing complexity of innovation and the increasing reliance on government support for private research and development (R&D). We analyzed United States patent data from 1981 to 2016 using structural vector autoregressions and uncovered an indirect interplay between these trends. Our findings showed that government incentives and support played a crucial role in spurring private-sector innovation. This government-fueled innovation, in turn, paved the way for advancements in more intricate and sophisticated technological areas. Our study sheds light on the dual role of the United States' innovation policy over the past four decades; the policy has not only accelerated technological advancement but also steered it toward increasingly complex domains. While this trend presents opportunities for economic growth and technological breakthroughs, it also poses challenges, including the potential for further escalating R&D costs. This research has significant implications for policymakers and industry leaders, suggesting a need for a balanced approach to fostering innovation while considering the long-term economic and technological landscape.

Keywords: Innovation; patents; technological complexity; government R&D (search for similar items in EconPapers)
JEL-codes: O31 O33 O38 (search for similar items in EconPapers)
Date: 2024-04, Revised 2024-04
New Economics Papers: this item is included in nep-cse, nep-gro, nep-ino, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Fueling the fire? How government support drives technological progress and complexity (2024)
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