Growth and Public Support to Research and Imitation: The International Connection

This paper studies technology policy within the context of an R&D-based growth model. We first use cross-country data to document several empirical regularities regarding the relationship between public support to research and imitating, and relative income levels. We then construct a model in which the possibilibty of copying foreing ideas through a technology that exhibits diminishing imitation opportunities is sufficient to account for the observed average patterns. We also find that policy intervention can produce important welfare benefits; capital accumulation subsidies show a slightly larger contribution to the welfare improvement than R&D support.