From Local to Global: A Unified Theory of Public Basic Research
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Date
2019-01-03
Publication Type
Working Paper
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yes
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Abstract
We analyze public investment in basic research in a multi-country, multiindustry
environment with international trade. In our economy, basic research
generates ideas which private rms take up in applied research to develop new
varieties. Such development requires industry-speci c know-how. A country's
current specialization in international trade thus determines which ideas can be
commercialized domestically. We demonstrate that the equilibrium is consistent
with key patterns observed from the data. We then compare basic research investments
of national governments with optimal investments of a global social
planner. We show that national investments are ine cient along three dimensions:
(1) There is typically too little total investment in basic research. (2) Basic
research is too heavily concentrated in industrialized countries. (3) And basic
research is potentially insu ciently directed to support innovation in complex,
high-tech industries.
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published
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Pages / Article No.
3303825
Publisher
Social Science Research Network
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Subject
basic research; economic growth; knowledge spillover
Organisational unit
03729 - Gersbach, Hans / Gersbach, Hans
Notes
University of St. Gallen, SEPS Discussion Paper 2018-16