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Making a Market for Scientific Research

Scientific advances are the fundamental cause of economic progress, and yet many nations often apparently hope to piggyback on discoveries made in more scientifically-advanced countries. This is the most practical and efficient strategy in the early stages of development. But, to reach the advanced stages of economic growth, a country needs scientific research at home.

Every government tries to encourage scientific research through education in science. But education by itself is of only limited use here. After all, science is a form of enterprise, requiring a sophisticated organization of resources and workers, an adventuresome attitude, and a willingness to take risks for possibly great rewards.

Normally, the market fosters the advance of entrepreneurial endeavors. Were such a market for science to exist, scientists would form enterprises, just like businesses, the best of which would succeed, while others would fail. The problem is that basic scientific research is mostly a public good that cannot be withheld from those who use it and which seeps into the body of scientific know-how in unanticipated ways.

But if there is no market that impersonally values and rewards scientific achievement, how are good scientific projects to be selected and rewarded without the great waste that often accompanies non-market, bureaucratic solutions to the problems of provision of public goods?