Editing Funding of science (section)

==== Rationale for funding ====
R&D is a costly, and long-term investment to which disruptions are harmful.<ref>{{Cite journal |last=Mansfield |first=Edwin |date=February 1991 |title=Academic research and industrial innovation |url=https://linkinghub.elsevier.com/retrieve/pii/004873339190080A |journal=Research Policy |language=en |volume=20 |issue=1 |pages=1–12 |doi=10.1016/0048-7333(91)90080-A |archive-date=2022-10-31 |access-date=2022-03-28 |archive-url=https://web.archive.org/web/20221031233034/https://linkinghub.elsevier.com/retrieve/pii/004873339190080A |url-status=live }}</ref>

The public sector has multiple reasons to fund science. The private sector is said to focus on the closer to the market stage of R&D policy, where [[wikt:appropriability|appropriability]] hence private returns are high.<ref name="Jones 1119–1135">{{Cite journal |last1=Jones |first1=C. I. |last2=Williams |first2=J. C. |date=1998-11-01 |title=Measuring the Social Return to R&D |url=https://academic.oup.com/qje/article-lookup/doi/10.1162/003355398555856 |journal=The Quarterly Journal of Economics |language=en |volume=113 |issue=4 |pages=1119–1135 |doi=10.1162/003355398555856 |issn=0033-5533 |archive-date=2023-11-01 |access-date=2022-03-28 |archive-url=https://web.archive.org/web/20231101043705/https://academic.oup.com/qje/article-abstract/113/4/1119/1916988?redirectedFrom=fulltext |url-status=live |url-access=subscription }}</ref> Basic research is weak on appropriability and so remains risky and under-financed.<ref>{{Cite journal |last=Nelson |first=Richard R. |date=June 1959 |title=The Simple Economics of Basic Scientific Research |url=https://www.journals.uchicago.edu/doi/10.1086/258177 |journal=Journal of Political Economy |language=en |volume=67 |issue=3 |pages=297–306 |doi=10.1086/258177 |s2cid=154159452 |issn=0022-3808 |archive-date=2023-05-17 |access-date=2022-03-28 |archive-url=https://web.archive.org/web/20230517064719/https://www.journals.uchicago.edu/doi/10.1086/258177 |url-status=live }}</ref><ref>{{Cite book |last=Arrow |first=K. J. |title=Readings in Industrial Economics |chapter-url=http://www.nber.org/chapters/c2144.pdf |chapter=Economic Welfare and the Allocation of Resources for Invention |publisher=Palgrave |year=1972 |pages=219–236 |isbn=978-0-333-10964-9 |location=London |doi=10.1007/978-1-349-15486-9_13 |s2cid=38456056 |oclc= |archive-date=2020-10-15 |access-date=2022-06-13 |archive-url=https://web.archive.org/web/20201015165241/https://www.nber.org/chapters/c2144.pdf |url-status=live }}</ref> Consequently, although governmental sponsorship of research may provide support across the R&D value chain, it is often characterized as a [[market failure]] induced intervention.   Market incentives to invest in early-stage research are low. The theory of [[Public good (economics)|public goods]] seconds this argument.<ref>{{Citation |last1=Ostrom |first1=Vincent |title=Public Goods and Public Choices |date=2019-08-26 |url=https://www.taylorfrancis.com/books/9780429706899/chapters/10.4324/9780429047978-2 |work=Alternatives for Delivering Public Services |pages=7–49 |editor-last=Savas |editor-first=E. S. |edition=1 |publisher=Routledge |language=en |doi=10.4324/9780429047978-2 |isbn=978-0-429-04797-8 |access-date=2022-04-13 |last2=Ostrom |first2=Elinor |s2cid=150900527 |archive-date=2023-11-01 |archive-url=https://web.archive.org/web/20231101043706/https://www.taylorfrancis.com/chapters/edit/10.4324/9780429047978-2/public-goods-public-choices-vincent-ostrom-elinor-ostrom |url-status=live |url-access=subscription }}</ref> Publicly funded research often supports research fields where social rate of return may be higher than private rate of return.  Appropriability potential is the potential for an entity to capture the value of an innovation or research outcome.<ref>{{Cite journal|last1=Vuong|first1=Quan-Hoang|date=2018|title=The (ir)rational consideration of the cost of science in transition economies |journal=Nature Human Behaviour|volume=2|issue=1|pages=5|doi=10.1038/s41562-017-0281-4|pmid=30980055 |s2cid=46878093 |doi-access=free}}</ref> The general [[Free-rider problem|free rider problem]] of public goods is a threat especially in case of global public goods such as [[climate change research]], which may lower incentives to invest by both the private sector but also other governments.<ref>{{Cite book |last1=Archibugi |first1=Daniele |last2=Filippetti |first2=Andrea |date=2015-01-29 |title=Knowledge as Global Public Good |url=https://papers.ssrn.com/abstract=2557339 |language=en |location=Rochester, NY |ssrn=2557339 |archive-date=2023-11-01 |access-date=2022-03-28 |archive-url=https://web.archive.org/web/20231101043708/https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2557339 |url-status=live }}</ref> &nbsp;

In [[Endogenous growth theory|endogenous growth theories]], R&D contributes to growth.<ref>{{Cite journal |last1=Nelson |first1=Richard R. |last2=Romer |first2=Paul M. |date=January 1996 |title=Science, Economic Growth, and Public Policy |url=https://www.tandfonline.com/doi/full/10.1080/05775132.1996.11471873 |journal=Challenge |language=en |volume=39 |issue=1 |pages=9–21 |doi=10.1080/05775132.1996.11471873 |issn=0577-5132 |archive-date=2023-11-01 |access-date=2022-03-28 |archive-url=https://web.archive.org/web/20231101043705/https://www.tandfonline.com/doi/abs/10.1080/05775132.1996.11471873 |url-status=live |url-access=subscription }}</ref> Some have depicted this relationship in the inverse, claiming that growth drives innovation.<ref>{{Cite book |last=Mensch |first=Gerhard |url=https://www.worldcat.org/oclc/4036883 |title=Stalemate in technology : innovations overcome the depression |date=1979 |publisher=Ballinger Pub. Co |isbn=0-88410-611-X |location=Cambridge, Mass. |oclc=4036883}}</ref><ref>{{Cite book |last=Schmookler |first=Jacob |url=https://www.degruyter.com/document/doi/10.4159/harvard.9780674432833/html |title=Invention and Economic Growth |date=2013-10-01 |publisher=Harvard University Press |isbn=978-0-674-43283-3 |language=en |doi=10.4159/harvard.9780674432833 |archive-date=2023-08-04 |access-date=2022-03-28 |archive-url=https://web.archive.org/web/20230804170737/http://www.degruyter.com/document/doi/10.4159/harvard.9780674432833/html |url-status=live }}</ref> As of 2013, science workers applying their (tacit) knowledge may be considered an economic driver.<ref>{{Cite journal |last=Kastrinos |first=N. |date=2013-12-01 |title=The financial crisis and Greek R&D policy from a Schumpeterian perspective |url=https://academic.oup.com/spp/article-lookup/doi/10.1093/scipol/sct025 |journal=Science and Public Policy |language=en |volume=40 |issue=6 |pages=779–791 |doi=10.1093/scipol/sct025 |issn=0302-3427 |archive-date=2022-04-05 |access-date=2022-03-28 |archive-url=https://web.archive.org/web/20220405164403/https://academic.oup.com/spp/article-lookup/doi/10.1093/scipol/sct025 |url-status=live |url-access=subscription }}</ref> When this knowledge and/or human capital emigrates, countries face the so-called [[Human capital flight|brain–drain]]. Science policy can assist to avoid this as large shares of governmental R&D is spent on researchers and supporting staff personnel salaries.<ref name=":1" /><ref>{{Cite journal |last=Goolsbee |first=Austan |date=April 1998 |title=Does Government R&D Policy Mainly Benefit Scientists and Engineers? |url=http://www.nber.org/papers/w6532.pdf |journal=American Economic Review |language=en |location=Cambridge, MA |pages=w6532 |doi=10.3386/w6532 |s2cid=2763177 |archive-date=2018-06-02 |access-date=2022-03-28 |archive-url=https://web.archive.org/web/20180602045353/http://www.nber.org/papers/w6532.pdf |url-status=live }}</ref> In this sense, science funding is not only [[discretionary spending]] but also has elements of [[Mandatory spending|entitlement spending]].{{cn|date=March 2025}}

R&D funded and especially performed by the State may allow greater influence over its direction.<ref>{{Cite journal |last=Mazzucato |first=Mariana |date=December 2015 |title=6. Innovation, the State and Patient Capital |url=https://onlinelibrary.wiley.com/doi/10.1111/1467-923X.12235 |journal=The Political Quarterly |language=en |volume=86 |pages=98–118 |doi=10.1111/1467-923X.12235 |archive-date=2023-04-29 |access-date=2022-03-28 |archive-url=https://web.archive.org/web/20230429103045/https://onlinelibrary.wiley.com/doi/10.1111/1467-923X.12235 |url-status=live |url-access=subscription }}</ref> This is particularly important in the case of R&D contributing to public goods. However, the ability of governments have been criticized over whether they are best positioned to pick winners and losers.<ref>{{Citation |last1=Falck |first1=Oliver |title=Arguments for and against Policies to Promote National Champions |date=2011 |url=https://mitpress.universitypressscholarship.com/10.7551/mitpress/9780262016018.001.0001/upso-9780262016018-chapter-1 |work=Industrial Policy for National Champions |publisher=The MIT Press |doi=10.7551/mitpress/9780262016018.001.0001 |isbn=978-0-262-01601-8 |access-date=2022-03-28 |last2=Gollier |first2=Christian |last3=Woessmann |first3=Ludger |archive-date=2023-11-01 |archive-url=https://web.archive.org/web/20231101043706/https://academic.oup.com/mit-press-scholarship-online |url-status=live |url-access=subscription }}</ref> In the EU, dedicated safeguards have been enacted under a dedicated form of competition law called [[State aid (European Union)|State Aid]]. State Aid safeguards business activities from governmental interventions. This invention was largely driven by the German [[Ordoliberalism|ordoliberal]] school as to eliminate state subsidies advocated by the French [[Dirigisme|dirigiste]].<ref>{{Cite journal |last=Warlouzet |first=Laurent |date=January 2019 |title=The EEC/EU as an Evolving Compromise between French Dirigism and German Ordoliberalism (1957–1995) |url=https://doi.org/10.1111/jcms.12817 |journal=JCMS: Journal of Common Market Studies |volume=57 |issue=1 |pages=77–93 |doi=10.1111/jcms.12817 |s2cid=159378013 |issn=0021-9886 |archive-date=2023-11-01 |access-date=2022-04-06 |archive-url=https://web.archive.org/web/20231101043707/https://onlinelibrary.wiley.com/doi/10.1111/jcms.12817 |url-status=live }}</ref> Threats to global public goods has refueled the debate on the role of governments beyond a mere market failure fixer, the so-called mission-driven policies.<ref>{{Cite book |last=Mazzucato |first=Mariana |url=https://www.worldcat.org/oclc/841672270 |title=The entrepreneurial state : debunking public vs. private sector myths |date=2014 |isbn=978-0-85728-252-1 |edition=Revised |location=London |oclc=841672270}}</ref>