Public science vs. mission-oriented policies in long-run growth: An agent-based model

Abstract

This paper offers a contribution to the literature on science policies and on the possible trade-off between broad science-technology policies and mission-oriented programs. We develop a multi-country, multi-sectoral agent-based model that represents a small-scale monetary union. Findings are threefold. Firstly, symmetric science policies from governments significantly reduce cross-country growth divergence. Secondly, even if economic growth is largely driven by the sectors with absolute advantages, having some flow of open science investments is sufficient for the other industries to survive and innovate. Thirdly, science policy limits monopolistic tendencies and reduces income inequality. Yet, the working of the model suggests that supply-side science policies should be paired with demand-side policies to meet grand societal challenges.