An injection of government support for business R&D can boost growth for decades, says Lucy Minford.
Over recent decades, R&D has frequently been lauded as an engine of national economic growth, one that policy should maintain and enhance.
This belief stems from the endogenous growth theory of the 1990s, which holds that economic growth is driven more by investment in intellectual resources such as education and technological innovation than by exploiting inputs such as labour and physical capital. In this picture, R&D generates innovation, which raises productivity.
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