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

Published online by Cambridge University Press:  09 January 2015

Benjamin Montmartin
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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 

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Footnotes

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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

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