On the Global Supply of Basic Research

Hans Gersbach and Maik Schneider

No 10357, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In a two-country Schumpeterian growth model, we study the incentives for basic research investments by governments in a globalized world. 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 that some smaller countries invest a lot in basic research. Compared with the optimal investments achievable when countries coordinate their basic research policies, a single country may over-invest in basic research. However, the total amount of decentralized 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)
Date: 2015-01
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Citations: View citations in EconPapers (26)

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Journal Article: On the global supply of basic research (2015)
Working Paper: On the Global Supply of Basic Research (2013)
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