European Technology Policy

51 Pages Posted: 22 Jul 1999 Last revised: 11 Oct 2010

See all articles by Jonathan Eaton

Jonathan Eaton

Leonard N. Stern School of Business - Department of Economics; National Bureau of Economic Research (NBER)

Eva Gutierrez

Boston University - Department of Economics

Samuel S. Kortum

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: December 1998

Abstract

European countries do less research than Japan and the United States. We use a quantitative multi-country growth model to ask: (i) Why is this so? (ii) Would there be any benefit to expanding research in Europe? (iii) What would various European research promotion policies do? We find that (i) Europe's lower research effort has more to do with the smaller markets facing European inventors than with lower research productivity. (ii) Europe has substantial research potential in that increased research effort in most European countries generates bigger income benefits there than increased effort in the United States and Japan of equivalent amounts. (iii) Policies to stimulate research in Europe raise productivity not only there but elsewhere. But a problem with pursuing these policies at the national level is the potential for free riding. A second possible problem with promoting research is distributional: While all countries within the European Union benefit, the countries that are already best at doing research, which tend to be the richer members, fare best. The benefits of policies that facilitate the adoption of innovations are more evenly spread.

Suggested Citation

Eaton, Jonathan and Gutierrez, Eva and Kortum, Samuel S., European Technology Policy (December 1998). NBER Working Paper No. w6827. Available at SSRN: https://ssrn.com/abstract=159876

Jonathan Eaton (Contact Author)

Leonard N. Stern School of Business - Department of Economics ( email )

269 Mercer Street
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HOME PAGE: http://www.econ.nyu.edu/user/eatonj/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Eva Gutierrez

Boston University - Department of Economics ( email )

270 Bay State Road
Boston, MA 02215
United States
617-353-4142 (Phone)
617-353-4449 (Fax)

Samuel S. Kortum

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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