Basic Research, Openness, and Convergence

Hans Gersbach, Maik Schneider and Olivier Schneller ()
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Olivier Schneller: CER-ETH - Center of Economic Research at ETH Zurich, Switzerland

No 10/139, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

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 cost 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 large technology advancements, highly open countries will reduce basic research as such imports become particularly valuable.

Keywords: basic research; openness; economic growth (search for similar items in EconPapers)
JEL-codes: O31 O38 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2010-10
References: View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Basic research, openness, and convergence (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eth:wpswif:10-139

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