On the Design of Basic-Research Policy

CER-ETH Center of Economic Research at ETH Zurich, Working Paper No. 08/79

44 Pages Posted: 5 Feb 2008

See all articles by Hans Gersbach

Hans Gersbach

ETH Zurich - CER-ETH -Center of Economic Reseaarch; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Maik T. Schneider

University of Bath

Olivier Schneller

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich

Date Written: January 1, 2008

Abstract

We augment a Schumpeterian growth model with a public basic-research sector to examine how much a country should invest in basic research. We find that the closer the country is to the world's technological frontier the more the government should invest in basic research. Basic-research expenditures are increasing with a country's degree of openness as long as innovation sizes are small. We provide possible explanations for the empirical evidence available on basic-research expenditures across countries.

Keywords: basic research, openness, distance to frontier, economic growth

JEL Classification: O31, O38

Suggested Citation

Gersbach, Hans and Schneider, Maik T. and Schneller, Olivier, On the Design of Basic-Research Policy (January 1, 2008). Available at SSRN: https://ssrn.com/abstract=1090246 or http://dx.doi.org/10.2139/ssrn.1090246

Hans Gersbach (Contact Author)

ETH Zurich - CER-ETH -Center of Economic Reseaarch ( email )

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IZA Institute of Labor Economics

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CESifo (Center for Economic Studies and Ifo Institute)

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Centre for Economic Policy Research (CEPR)

London
United Kingdom

Maik T. Schneider

University of Bath ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

Olivier Schneller

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland
+41 44 632 87 92 (Phone)
+41 44 632 18 67 (Fax)

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