Low Returns in R&D Due to the Lack of Entrepreneurial Skills
CEMFI Working Paper No. 0201
31 Pages Posted: 16 Jan 2002
There are 2 versions of this paper
Low Returns in R&D Due to the Lack of Entrepreneurial Skills
Low Returns in R&D Due to the Lack of Entrepreneurial Skills
Date Written: January 2002
Abstract
This paper proposes a model of endogenous growth where innovating requires both researchers, who produce inventions, and entrepreneurs who implement them. As research and entrepreneurship compete in the allocation of aggregate resources, the relation between growth and research effort is hump-shaped. When entrepreneurs appropriate too little rents from innovation, too few resources are allocated to entrepreneurship and returns to R&D are low because of this lack of entrepreneurial skills. When so, innovation should be promoted by encouraging entrepreneurship rather than research.
Keywords: R&D, Entrepreneurship, Search with endogenous growth
JEL Classification: O32, O40, J24
Suggested Citation: Suggested Citation
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