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Research and development, productive structure and economic effects: Assessing the role of public financing in Brazil

Admir Antonio Betarelli Junior, Weslem Rodrigues Faria, Rosa Livia Gonçalves Montenegro, Domitila Santos Bahia and Eduardo Goncalves

Economic Modelling, 2020, vol. 90, issue C, 235-253

Abstract: Investments in research and development (R&D) have played a key role in promoting productivity improvements and economic growth. This paper explores the economics effects of public R&D investment funding in Brazil, taking into account the changes in total factor productivity (TFP) in high-, medium- and low-technology sectors. Public funding plays an important role in the development of R&D activities in Brazil and its participation has increased since 2010. Our paper simulates a withdrawal of R&D investments and TFP linked to public financing from an R&D-based computable general equilibrium (CGE) model, which recognizes the stock-flow relation between R&D investment and knowledge capital. Without public R&D investment funding, the main findings indicate losses in TFP, adverse effects on the formation of physical capital, shrinkage of more intensive R&D industries, and more future dependence on the public sector for knowledge stock, especially for education.

Keywords: Public funding; R&D; TFP elasticity; R&D-based CGE model (search for similar items in EconPapers)
JEL-codes: C68 O32 O38 O47 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.econmod.2020.04.017

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