Political Institutions and Public R&D Expenditures in Democratic Countries

Abstract

While research and development (R&D) expenditure is crucial in a nation's competitive advantage, factors determining levels of public investment in R&D have yet to be examined. This article seeks to fill this void, focusing on different democratic institutions such as presidential versus parliamentary systems, majoritarian versus proportional electoral systems, federal versus unitary systems, bicameral versus unicameral legislatures, and the effective number of parties. Building upon theories of political institutions and government size and utilizing public R&D appropriations data from 18 Organization for Economic Cooperation and Development (OECD) countries between 1981 and 2007, this article reports that democratic institutions do matter in the levels of public R&D spending. However, the effect is more complicated across the different types and performers of research than expected. Additionally, the effect of one institutional dimension is found to be moderated by the existence of the other dimensions, which makes it clearly more challenging to sort out different degrees and directions of the relationships between R&D expenditures and political institutions.