On the Global Supply of Basic Research

CER-ETH - Center of Economic Research at ETH Zurich Working Paper No. 13/175

40 Pages Posted: 12 Mar 2013

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

Multiple version iconThere are 2 versions of this paper

Date Written: Feburary 12, 2013

Abstract

In this paper we study the incentives for basic-research investments by governments in a globalized world. For this purpose, we develop a two-country Schumpeterian growth model in which each country chooses its basic-research investments. 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 the large basic-research investments by small open economies. Compared with the optimal investments achievable when countries coordinate their basic-research policies, a single country may over-invest in basic research. However, in the decentralized case the total amount of 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

JEL Classification: O31, O38

Suggested Citation

Gersbach, Hans and Schneider, Maik T., On the Global Supply of Basic Research (Feburary 12, 2013). CER-ETH - Center of Economic Research at ETH Zurich Working Paper No. 13/175. Available at SSRN: https://ssrn.com/abstract=2231959 or http://dx.doi.org/10.2139/ssrn.2231959

Hans Gersbach

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

Zürichbergstrasse 18
Zurich, 8092
Switzerland
+41 44 632 82 80 (Phone)
+41 44 632 18 30 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Maik T. Schneider (Contact Author)

University of Bath ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
75
Abstract Views
537
rank
317,013
PlumX Metrics