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The Impact of Public Basic Research on Industrial Innovation: Evidence from the Pharmaceutical Industry

This paper examines the hypothesis that publicly funded basic research contributes to product innovation in the pharmaceutical industry. New data are collected on pharmaceutical product introductions, pharmaceutical industry R&D investment, and publicly funded basic science investment. A production framework is used to model the number of new products as a function of private and public research investment in seven technology classes over the period 1978-1994. The elasticity estimates indicate that a 1% increase in the stock of public basic research ultimately leads to a 2.0% to 2.4% increase in the number of commercially available new compounds.

Author(s)
Andrew Toole
Publication Date
November, 2000