Hostname: page-component-cd9895bd7-lnqnp Total loading time: 0 Render date: 2024-12-26T20:31:55.739Z Has data issue: false hasContentIssue false
  • English
  • Français

Centralized R&D Subsidy Policy in an NEGG Model: A Welfare Analysis

Published online by Cambridge University Press:  09 January 2015

Benjamin Montmartin
Get access

Summary

Since the Lisbon agenda (2000), European policies are increasingly oriented towards R&D and innovation. In this context, we analyze the effects of a centralized R&D subsidy policy upon steady state and welfare using an agglomeration and growth model composed of two asymmetric countries. If the policy leads to a steady state characterized by a higher growth rate and lower inequalities, the welfare analysis provides a more contrasted vision on the effects of the policy. Indeed, even though such a policy can eliminate some distortions and improve global welfare, it implies a zero-sum game at national level (the policy increases the welfare in the periphery country and decreases the welfare in the core country) when knowledge spillovers are sufficiently localized. Consequently, a centralized R&D subsidy policy conducted in an economy composed of two asymmetric countries would be a positive-sum game only if international knowledge spillovers are sufficiently large.

Depuis l'agenda de LisDonne (2000), les politiques européennes sont de plus en plus orientées vers le soutien à la R&D et àl'innovation. Dans ce contexte, cet article propose une analyse approfondie d'une politique centralisée de soutien à la R&D mise en place dans une zone économique composée de deux pays hétérogènes. Pour ce faire, nous développons un modèle de croissance spatialisée et explorons l'impact de la politique sur l'état d'équilibre et le bien-être. Si nos résultats montrent que cette politique permet d'augmenter le taux de croissance de la zone et d'y réduire les inégalités, l'analyse de bien-être apporte une vision plus contrastée des effets de la politique. En effet, même si cette dernière est en mesure d'éliminer certaines distorsions et d'améliorer le bien-être de la zone, elle conduit à un jeu à somme nulle au niveau national (la politique augmente le bien-être dans le petit pays mais réduit celui du grand pays) lorsque la diffusion des externalités de connaissances entre pays n'est pas très élevée. En conséquence, la mise en place d'une politique centralisée de soutien à la R&D dans une zone économique composée de deux pays hétérogènes ne sera bénéfique à l'ensemble de ses membres qu'à la faveur d'une diffusion spatiale très large des connaissances entre pays.

Keywords

NEGG modelR&D subsidy policywelfare criteriaF43H50R12Modèle de croissance spatialiséePolitique de soutien à la R&Dcritères de bien-êtreF43H50R12
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 79 , Issue 1 , March 2013 , pp. 5 - 34
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 2013 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

*

Université de Lyon, Lyon, F-69007, France; CNRS, GATE Lyon Saint-Etienne, Ecully, F-69130, France; Université Jean Monnet, Saint-Etienne, F-42000, France, e-mail: benjamin.montmartin@univ-st-etienne.fr

References

Baldwin, R. & Forslid, R. (2000a), “Trade liberalisation and endogenous growth: A q-theory approach”, Journal of International Economics, vol.50, pp.497–517 Google Scholar
Baldwin, R. & Forslid, R. (2000b), “The Core-Periphery model and endogenous growth: stabilizing and de-stabilizing integration”, Economica, n°67, pp.307–324 Google Scholar
Baldwin, R., Martin, P. & Ottaviano, G. (2001), “Global Income Divergence, Trade, and Industrialization: The Geography of Growth Take-Offs”, Journal of Economic Growth, vol.6, pp.5–37 Google Scholar
Baldwin, R., Forslid, R., Martin, P., Ottaviano, G. & Robert-Nicoud, F. (2003), “Economic Geography and Public Policy”, Princeton University Press Google Scholar
Baldwin, R. & Martin, P. (2004), “Agglomeration and Regional Growth”, in Vernon Henderson, J. & Thisse, J-F., Handbook of Regional and Urban Economics, vol.4 Cities and Geography, Elsevier, chap. 60, pp.2670–2711 Google Scholar
Barro, R. & Sala-I-Martin, X. (1996), “La croissance economique”, Ediscience / McGraw-Hill, Collection sciences EconomiquesGoogle Scholar
Begg, I., Hodson, D. & Maher, I. (2003), “Economic policy coordination in the European Union”, National Institute Economic Review, n°183, pp.66–77 Google Scholar
Buiter, W. & Kletzer, K. (1992), “Fiscal policy coordination as fiscal federalism”, European Economic Review, n°36, pp.647–653 Google Scholar
Casella, A. (2005), “Redistribution policy : A European model”, Journal of Public Economics, vol. 89, pp.1305–1331 Google Scholar
Charlot, S., Gaigné, C, Robert-Nicoud, F. & J-F, Thisse. (2006), “Agglomeration and welfare: The core-periphery model in the light of Bentham, Kaldor and Rawls”, Journal of Public Economics, vol.90, pp.325–347 Google Scholar
Chu, A. (2009), “A politico-economic analysis of the European Union's R&D policy”, Journal of Macroeconomics, n°31, pp.582–590 Google Scholar
D'Aspremont, C, & Jacquemin, A. (1987), “Cooperative and Noncooperative R&D in Duopoly with Spillovers”, American Economic Review, vol.78, n°5, pp.1133–1137 Google Scholar
Feldman, M. (2000), “Location and Innovation: The New Economic Geography of Innovation, Spillovers, and Agglomeration”, in Clark, G., Feldman, M. & Gertler, M., The Oxford Handbook of Economic Geography, Oxford University Press, chap. 19, pp.373–394 Google Scholar
Fuest, C. & Huber, B. (2006), “Can regional policy in a federation improve economic efficiency?”, Journal of Public Economics, vol. 90, pp.499–511 Google Scholar
Glaeser, E., Kallal, H., Scheinkman, J. & Schleifer, A. (1992), “Growth in Cities”, Journal of Political Economy, vol.100, n°6, pp.1126–1152 Google Scholar
Grossman, G. & Helpman, E. (1991), “Innovation and Growth in the Global Economy”, MIT Press, Cambridge CA Google Scholar
Haaland, J. & Kind, H. (2006), “Cooperative and Non-Cooperative R&D Policy in an Economic Union”, Review of World Economics, vol. 142, n°4, pp.720–745 Google Scholar
Jones, C. & Williams, J. (2000), “Too Much of a Good Thing? The Economics of Investment in R&D”, Journal of Economic Growth, vol.5, pp.65–85 Google Scholar
Krugman, P. (1991), “Increasing Returns and Economic Geography”, Journal of Political Economy, n°99, pp.483–499 Google Scholar
Martin, P. & Ottaviano, G. (1996), “Growth and Agglomeration”, Document de travail n°96-14, CEPII Google Scholar
Martin, P. & Ottaviano, G. (1999), “Growing locations: Industry Location in a Model of Endogenous Growth”, European Economic Review n°43, pp.281–302 Google Scholar
Martin, P. (1999), “Public policies, regional inequalities and growth”, Journal of Public Economics, n°73, pp.85–105 Google Scholar
Minniti, A. & Parello, C.P (2011), “Trade integration and regional disparity in a model of scale-invariant growth”, Regional Science and Urban Economics, vol.41, pp.20–31 Google Scholar
Musgrave, R. (1959), “The Theory of Public Finance”, New York, McGraw Hill Google Scholar
Oates, W. (1972), “Fiscal federalism”, New York, Harcourt, Brace, Jovanovitch Google Scholar
Oates, W. (2005), “Toward a Second-Generation Theory of Fiscal Federalism”, International Tax and Public Finance, n°12, pp.349–373 Google Scholar
Riou, S. (2003), “How growth and location are sensitive to transport and telecommunications infrastructures”, Recherches Economiques de Louvain, vol. 69, pp.241–265 Google Scholar
Rogers, C. & Martin, P. (1995), “Industrial location and public infrastructure”, Journal of International Economics, n°39, pp.333–351 Google Scholar
Romer, P. (1990), “Endogenous Technological Change”, The Journal of Political Economy, vol. 98, n°5, pp.71–102 Google Scholar
Tiebout, C.M. (1956), “A Pure Theory of Local Expenditures”, Journal of Political Economy, n°64, pp.416–424 Google Scholar
Walz, U. (1996), “Transport costs, intermediate goods and localized growth”, Regional Science and Urban Economics, n°26, pp.671–695 Google Scholar
Walz, U. (1999), “Dynamics of Regional Integration”, New York, Physica-Verlag Google Scholar