Growth through Research and Development - what does ... - Vinnova

The Government can perform R&D itself at its own universities or researchinstitutes. However, the Government can also stimulate R&D that isconducted by companies, either by reducing the private cost for R&D or byincreasing the return on R&D, or by helping companies to understand theopportunities offered by new technology, i.e. by reducing uncertainty. Theaim of this report is to summarise what the research literature in the field ofeconomics says about how publicly-funded R&D affects productivity andgrowth. Above all, however, the report addresses how government researchpolicy and the Government-funding of R&D should be organised to be aseffective as possible. This covers both publicly-funded R&D that isperformed by companies and R&D at Government-controlled universitiesand research institutes.The report is arranged as follows. Section 2 discusses the advantages anddisadvantages of different types of public-funding of R&D. Section 3analyses what differentiates R&D from other forms of input and whyspillover effects occur. The empirical literature on the return on R&D andthe relationship between R&D and growth is presented. This applies to bothprivate R&D and public R&D. How publicly-funded R&D affects privateR&D theoretically and empirically is presented in section 4. How R&D atuniversities can be transferred to business and industry and who should ownthe results of university research is discussed in section 5. Europe iscompared to the USA here. Section 6 analyses the issue of how theGovernment should finance the universities – by means of a fixed allocationor on a project basis (competition). The consequences of funding on acompetitive basis are discussed and advantages of scale in the universitysphere are analysed. Section 7 summarises the conclusions.8