Collective Norms in Basic Research and Economic Growth

Abstract

In this paper we have put forward a model of basic research and long-run economic growth in which the system of incentives to scientific work may produce positive feedbacks and increasing returns. The organization of basic research presents both real and non-real incentives to workers. The state organizes production of new knowledge - a public good that improves firms' technology - with resources taken from the private sector. Scientists compete with one another to attain priority over a discovery and be awarded both a real prize and prestige in the scientific community. Also, scientists derive job motivation from their search for status in the community. The model shows interesting dynamics and we focus on two locally stable steady-states. The picture that emerges shows, on the one hand, an economy endowed with a small science sector where researchers have high relative income but low prestige, and competition for discoveries is weak. On the other hand, the high growth steady-state describes an economy with a large science sector. The scientific community rewards members who obtain new findings with high prestige, but as the effect of creative destruction is strong, there is fierce competition among researchers. Comparative statics shows that if the scientific infrastructure is poor, policies that increase tha marginal benefits from a discovery have perverse effects, while policies aimed at improving the selection mechanism of the science sector work well. The same policies have opposite effects at the high steady state.

Keywords: Science, social interactions, growth, multiple equilibria

JEL Classification: O3, O41