Based on the endogenos growth model with horizontal innoation, we propose an R&D-driven growth model with both basic research and applied research,
and discuss both the growth rate and the R&D allocation in the decentralized economy and the social planner economy. It is found that when the economy converges to the balanced growth path, the growth rate in the decentralized economy is equal to that of the social planner economy. However, the ratio of the R&D in GDP and the ratio of the basic research in R&D expenditure in the decentralized economy are less than that of the social planner economy. The policy implication of these results is that, thegovernment could subsidy the R&D investment and the basic research, and so that the decentralized economy could reach the optimal stage.
YAN Chengliang.
BASIC RESEARCH, APPLIED RESEARCH AND OPTIMAL R&D ALLOCATION. Journal of Systems Science and Mathematical Sciences, 2013, 33(8): 879-891 https://doi.org/10.12341/jssms12153