Public R&D under different electoral rules: evidence from OECD countries

Abstract

Despite research on R&D and innovation policies, the effect of constitutional rules in this area has not received adequate attention yet. The paper contributes to filling this research gap by proposing that electoral systems affect governments’ decisions regarding R&D spending. It is expected that investment in R&D is closer to a bounded public good than to transfer payment. Therefore, governments in countries with majoritarian electoral rules should be willing to use this instrument to influence election outcomes. Both the amount invested and structure of funding is expected to depend on whether a government is elected via proportional or majoritarian rules. The analysis covers 25 OECD countries between 1981 and 2014, and relies on panel data analysis. The findings suggest that governments elected under majoritarian rules project higher government budget appropriations or outlays for research and development (GBAORD) than governments elected under proportional rules. Furthermore, GBAORD is more fragmented thematically in countries with proportional electoral rules.