Edited by Neri Salvadori and Renato Balducci
Chapter 2: Scientific research, externalities and economic growth
Maria Rosaria Carillo and Erasmo Papagni 2.1. INTRODUCTION Study of the causes of economic growth since the industrial revolution has highlighted the importance of technological development. This interpretation of long-period growth has come to the fore in the applied literature, and recently also in the theoretical literature which recasts Schumpeter’s theories of the first half of the 20th century. On closer inspection, however, this interpretation is incomplete because it fails to consider the origin of technological advancement, namely the progress of science. Historians and scholars of science, in fact, stress the concomitance between the appearance of important scientific discoveries and the transition from a period of slow productivity growth to that of exponential expansion which led up to the contemporary age. The alliance between basic research, technology and growth has been particularly close and fruitful since the 19th century. Rosenberg and Birdzell (1986, 1990) argue that the economic miracle of the Western world can be explained by the marked increase in science’s ability to investigate the secrets of nature. This greater efficiency of basic research was initially due to important changes in its organization and closer interaction with the rest of society and with the economy. In this chapter we put forward an analytical approach to economic growth which seeks to capture the essential features of the interaction between the work of the scientific community and long-period economic activity. The traditional theory of growth, which originated with Solow (1956), considers the academic world to be exogenous with respect to the...
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