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Research and development, productive structure and economic effects: Assessing the role of public financing in Brazil

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  • Betarelli Junior, Admir Antonio
  • Faria, Weslem Rodrigues
  • Gonçalves Montenegro, Rosa Livia
  • Bahia, Domitila Santos
  • Gonçalves, Eduardo

Abstract

Investments in research and development (R&D) have played a key role in promoting productivity improvements and economic growth. This paper explores the economics effects of public R&D investment funding in Brazil, taking into account the changes in total factor productivity (TFP) in high-, medium- and low-technology sectors. Public funding plays an important role in the development of R&D activities in Brazil and its participation has increased since 2010. Our paper simulates a withdrawal of R&D investments and TFP linked to public financing from an R&D-based computable general equilibrium (CGE) model, which recognizes the stock-flow relation between R&D investment and knowledge capital. Without public R&D investment funding, the main findings indicate losses in TFP, adverse effects on the formation of physical capital, shrinkage of more intensive R&D industries, and more future dependence on the public sector for knowledge stock, especially for education.

Suggested Citation

  • Betarelli Junior, Admir Antonio & Faria, Weslem Rodrigues & Gonçalves Montenegro, Rosa Livia & Bahia, Domitila Santos & Gonçalves, Eduardo, 2020. "Research and development, productive structure and economic effects: Assessing the role of public financing in Brazil," Economic Modelling, Elsevier, vol. 90(C), pages 235-253.
    • Handle: RePEc:eee:ecmode:v:90:y:2020:i:c:p:235-253
    DOI: 10.1016/j.econmod.2020.04.017
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    More about this item

    Keywords

    Public funding; R&D; TFP elasticity; R&D-based CGE model;
    All these keywords.

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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