Empirical Discussion of Economics Theory for R&D Policy in Positive Economics

Abstract

In this discussion paper explains economic theory for research and development (R&D) policy. Dasgupta and Stiglitz (1980) illustrated the reasons for economic theory to be much complicated in the information field. Because economic results in an asymmetric information condition. This in turn causes a market failure. Therefore, technological policy was noted that Research and development (R&D) benefits depended on the technological opportunities. This technological condition is combined with several other structures, industries, patent laws, maintaining secrecy etc. Therefore, economic theory in the field of technology becomes more complicated. As a reason the most important concept of the economy theory engages in Research and development (R&D) because of R&D expenditure is designed to locate new or improved products and to reduce the manufacturing cost of the industry. At the same time, industrial structure determines the process of the R&D in the economy. This concept and indeed most of the theoretical investigations in recent years on the economic and technological changes have contributed to new economic trends. We called this “Positive economics”. These Positive economies are mainly oriented with research, because the Research can be described as a science that was developed to meet crucial problems. It is basically relevant to the countries engage in the R&D, to international relationships and to technological arguments. It is solely depended on the government Expenditure of the R&D. According to the empirical data shows government expenditure of the R&D in large six industrial countries in 1981, US 54%, UK 49%, France 39%, Sweden 15%, Switzerland 12%, Germany 9%, Japan 2%. These countries focus on a small number of technologies of strategic importance, primarily in aerospace, electronics, and nuclear energy. Therefore, today these countries were reached number of significant economics results and growth. In conclusion this structure of the investment in R&D yield two outcomes; research, and a higher level of intermediate skill in the working population (Human capital) . The fact that these skills are certified through a standardized system of examinations makes the internal labor market efficiency and informational efficiency of the human capital. Finally, this strong R&D policy motivated these countries to industrialize, and this process impacted on education push or countries establishing innovative education systems and rapid economic growth.