Government-Funded Basic Research: What's in It for Firms?

6 Pages Posted: 3 Aug 2017

See all articles by Klaus Prettner

Klaus Prettner

Vienna University of Economics and Business - Department of Economics

Katharina Werner

University of Goettingen (Göttingen) - Department of Economics

Date Written: April 1, 2017

Abstract

We rely on previous research and highlight the subtle pathways by which state-funded basic research has the potential to affect economic growth and livings standards in the long run. In so doing we acknowledge that basic research itself does not immediately lead to marketable products. The channel that we focus on is that basic research paves the way for profit-driven applied R&D. Without a sound knowledge base about how nature works (the “epistemic base”), new technologies would be difficult to develop and firms would be less willing to invest in applied R&D in the first place. In other words, government-funded basic research has a strong effect on the productivity of private profit-driven applied research. In many cases, government-funded basic research is even a necessary input for profit-driven applied R&D.

Suggested Citation

Prettner, Klaus and Werner, Katharina, Government-Funded Basic Research: What's in It for Firms? (April 1, 2017). Rutgers Business Review, Vol. 2, No. 1, 2017, Available at SSRN: https://ssrn.com/abstract=3012245

Klaus Prettner (Contact Author)

Vienna University of Economics and Business - Department of Economics ( email )

Augasse 2-6
A-1090 Wien
Austria

Katharina Werner

University of Goettingen (Göttingen) - Department of Economics ( email )

Platz der Goettinger Sieben 3
Goettingen, 37073
Germany

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