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The Financing Of R&D Investments: Effects On Growth And Financial Structure

Author

Listed:
  • Giuseppe GAROFALO
  • Patrizio MORGANTI

Abstract

The financing of innovation impacts on economic growth. What’s, among bank-based or market-based system, the best organizational form? The paper supports the view that both forms have to be merged into a unique approach (law and finance view) embracing not only the overall quality of the financial services’ supply (financial services view) but also the related legal aspects. In particular, the paper agrees with the thesis that the financial structure of the economy emerges endogenously depending both on the firms’ R&D investment choices and on their initial wealth level. The paper presents also an empirical validation of the financial services and, more specifically, of the law and finance view, carried out over the period 1980-2008. A focus is dedicated to the Chinese case, which shows strong economic growth and increasingly efficient financial sector, in despite of the weakness of the legal system.

Suggested Citation

  • Giuseppe GAROFALO & Patrizio MORGANTI, 2010. "The Financing Of R&D Investments: Effects On Growth And Financial Structure," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 5(2(12)/Sum), pages 70-93.
    • Handle: RePEc:ush:jaessh:v:5:y:2010:i:2(12)_spring2010:p:102
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    More about this item

    Keywords

    R&D investment; finance and growth; financial system and institutions;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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