Literature/202311281141 companies will invest more on applied research

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Assuming the tenant of a company is profit maximizing, then there would be little incentives for them to invest in basic research, when applied research will yield returns on investment much quicker, and hence more valuable.

This would lead to believe that basic research is an example of market failures, and that is when the state needs to step up and invest in it.

Not all innovations lead to economic growth. General Purpose Technologies (GPT) have few treats in common that explain their large impact:

  • Pervasive (spread into many sectors)
  • Improve over time (keep lowering costs to users)
  • They foster the spawn of innovation (they trigger the creation of new processes and products).


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