Basic research, openness, and convergence

Hans Gersbach, Maik Schneider and Olivier Schneller

Journal of Economic Growth, 2013, vol. 18, issue 1, 33-68

Abstract: We study a model where economic growth is fueled by public basic-research investment and the importation of leading technology from foreign countries. In each period, the government chooses the amount of basic research, balancing the costs and benefits of stimulating growth through both channels. We establish the existence of steady states and the long-run share of technologically advanced sectors in the economy. Then we explore how different degrees of openness affect long-term incentives to invest in basic research. Our main insight is that higher openness tends to encourage more investment in basic research, which, in turn, yields a larger share of leading sectors. If, however, there are prospects of importing major technology advances, highly open countries will reduce basic research as such imports become particularly valuable. Copyright Springer Science+Business Media, LLC 2013

Keywords: Basic research; Openness; Economic growth; O31; O38 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (30)

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Working Paper: Basic Research, Openness, and Convergence (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jecgro:v:18:y:2013:i:1:p:33-68

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DOI: 10.1007/s10887-012-9082-9

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