- A-Z
- Jena Economics Rese...
- Volume 5
- The Impact of Gover...
- Author
- published
- Thu Sep 1 2011
- Number of discussion paper
-
2011-036
- keyword(s)
-
endogenous growth
public demand
technological change
- abstract
-
This paper addresses the question of whether government procurement can work as a de facto innovation policy tool. We develop an endogenous growth model with quality-improving in-novation that incorporates industries with heterogeneous innovation sizes. Government demand in high-tech industries increases the market size in these industries and, with it, the incentives for private firms to invest in R&D. At the economy-wide level, the additional R&D induced in high-tech industries outweighs the R&D foregone in all remaining industries. The implications of the model are empirically tested using a unique data set that includes federal procurement in U.S. states. We find evidence that a shift in the composition of government purchases toward high-tech industries indeed stimulates privately funded company R&D.
- article pub. typess JER
- Research article
- article languages JER
- Englisch
- JEL-Classification for JER
- E62 - Fiscal Policy ; H54 - Infrastructures; Other Public Investment and Capital Stock ; O31 - Innovation and Invention: Processes and Incentives ; O32 - Management of Technological Innovation and R&D ; O41 - One, Two, and Multisector Growth Models
- URN
- urn:nbn:de:urmel-255bd3a5-c961-491c-aa20-c893ef5e1eca4-00211258-18