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Do R&D subsidies necessarily stimulate economic growth?

Author

Listed:
  • Chen, Ping-ho
  • Chu, Hsun
  • Lai, Ching-Chong

Abstract

This paper analyzes the growth effect of subsidy policies in a modified R&D-based growth model of Romer (1990), in which both innovation and capital accumulation are engines of long-run economic growth. We show that, under certain conditions, subsidizing the R&D sector may be growth-impeding.

Suggested Citation

  • Chen, Ping-ho & Chu, Hsun & Lai, Ching-Chong, 2015. "Do R&D subsidies necessarily stimulate economic growth?," MPRA Paper 66061, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:66061
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    File URL: https://mpra.ub.uni-muenchen.de/66061/1/MPRA_paper_66061.pdf
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    References listed on IDEAS

    as
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    2. Grossmann, Volker & Steger, Thomas & Trimborn, Timo, 2013. "Dynamically optimal R&D subsidization," Journal of Economic Dynamics and Control, Elsevier, vol. 37(3), pages 516-534.
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    4. Zeng, Jinli & Zhang, Jie, 2007. "Subsidies in an R&D growth model with elastic labor," Journal of Economic Dynamics and Control, Elsevier, vol. 31(3), pages 861-886, March.
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    7. Segerstrom, Paul S, 2000. "The Long-Run Growth Effects of R&D Subsidies," Journal of Economic Growth, Springer, vol. 5(3), pages 277-305, September.
    8. Beason, Richard & Weinstein, David E, 1996. "Growth, Economies of Scale, and Targeting in Japan (1955-1990)," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 286-295, May.
    9. Angus C. Chu & Yuichi Furukawa & Lei Ji, 2016. "Patents, R&D subsidies, and endogenous market structure in a schumpeterian economy," Southern Economic Journal, John Wiley & Sons, vol. 82(3), pages 809-825, January.
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    13. repec:wly:soecon:v:82:3:y:2016:p:809-825 is not listed on IDEAS
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    R&D; subsidy policy; endogenous growth;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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