Wednesday, September 14, 2011

Why fund basic research?

I agree with this editorial's point that the government should not, generally, have an active industrial policy. This is especially true in developed countries and when the government is "playing venture capitalist."

But I'm not sure what to make of this comment:
Government can fund basic research that is too expensive and too uncertain for struggling companies.
I thought basic research was important to fund because it has positive externalities. If it really were a good investment (I don't think it is) then wouldn't banks still make loans to fund it and big enough companies still invest? I can see how you can start to make the case but I think this article makes clear that there isn't exactly a consensus on what government should be involved in and why even on basic issues.

No comments:

Post a Comment