How efficient is public spending on R&D

In the context of current discussions about the government spending on R&D and more broadly on science, technology and innovation the key question should be how to use the public resources in the most efficient way. While the fact that markets do not provide sufficient incentives for individuals and firms to engage in socially optimal R&D and innovation is well established in theory and documented by existing empirical evidence (due to positive externalities private returns to R&D investment are lower than social returns), in some cases government action may not provide effectively appropriate incentives at sufficiently low administrative and compliance cost, and without creating further distortions (crowding out).

Given scarce public funds, assessing the efficiency and effectiveness of public spending on R&D and their determinants should be given a high attention in Ireland.