1. Basic research is a systematic study directed toward greater knowledge or understanding of the fundamental aspects of phenomena. It is required and its effect will be seen in the economy in the long run. It is required for the next two types of research.

2. Applied research deals with solving practical problems and generally employs empirical methodologies.

3. Development research is to develop products based on basic and applied research results. Its effects will be seen as immediate because it can be applied directly for the products.

For any economy all three types are required and the country need to decide what will be the best mix depending upon their development level. A good report on the trend in US research funding is given here.

http://economics.stanford.edu/files/Theses/SamShapiroHonorsThesis-May2013.pdf

While applied research normally have a direct effect. I have always believed that basic research has the greatest impact. Basic research has the potential to open new areas and fields of study, while applied tends to be focused.

1. Basic research is a systematic study directed toward greater knowledge or understanding of the fundamental aspects of phenomena. It is required and its effect will be seen in the economy in the long run. It is required for the next two types of research.

2. Applied research deals with solving practical problems and generally employs empirical methodologies.

3. Development research is to develop products based on basic and applied research results. Its effects will be seen as immediate because it can be applied directly for the products.

For any economy all three types are required and the country need to decide what will be the best mix depending upon their development level. A good report on the trend in US research funding is given here.

http://economics.stanford.edu/files/Theses/SamShapiroHonorsThesis-May2013.pdf

Dear Nageswara, thank you for the Stanford Thesis.

Here is an excerpt from the conclusion:

Economic theory states that all types of research and development create positive

externalities and therefore merit some type of government intervention in their markets.

However, basic research has much larger externalities because of its capacity to create knowledge spillovers that benefit other researchers and many market spillovers from any companies that commercialize their research discoveries.

To "add more value" and to "have more value creation potential" have two different meanings, in my view. "To add more value" means to increase the gross national product. To "have more value creation potential" signifies to increase possibilities for new markets. The first has the national economy as its real or actual frame of reference. The second refers to economic potential. Basic research, applied research, and developmental research therefore acquire different rankings as referred to gross national product or to economic potential. Furthermore, everything depends on how gross national product and economic potential are calculated for a given nation in a given period. Therefore, I do not see how the question can be answered IN GENERAL.

Only specifics allow an answer: what, where, and when is the economic frame of reference?

I believe that the applied research is likely to add more value to the economy. This is because it contributes to solving practical problems, especially in developing countries.

@Nelson

I am grateful to you for the intervention and the detailed answer.

Value creation potential must be assessed, at least in theory, in order to adopt a particular strategy and determine which research areas require a specific focus. Added value is the outcome of the adopted strategy. So, yes you are absolutely right in pointing to this difference. Indeed, the question could have been refined to a provide more clarity.

The respected scholars, who answered before me, highlighted important points. My contribution is aimed at younger scholars, by way of an example, so as they have a clear picture:

Since its production in the times of the Roman Empire, solid soap used to have this "annoying" property: it does not function well in hard water (one which contains extra calcium and/or magnesium ions). Chemists did "basic research" to understand the reaction by which soap is made, the mechanism of cleaning, and alternative procedures for making solid soap.

After WW2, chemists became engaged in "applied research" & this led to the production of a powder detergent. Proctor & Gamble in U.S.A carried out "development research" and manufactured, in an industrial plant, the first marketed powder detergent under the trade name "Tide" in the late 1950s.The detergent was suitable for washing machines & people were amazed by its "foaming power".

Later on, the detergent was found to cause negative environmental impact. So research went on (basic -> applied -> development) until biodegradable powder detergents were manufactured & marketed containing the basic ingredient LABS (linear alkyl benzene sulfonate).

Basic ( or fundamental) research has advantage on the long-run but applied & development research display the "fruits" in a short time.

I concur with the other contributors. I find a clear explanation provided by @Nageswara Rao Posinasetti and a link makes it quite visible that these three are phases that support economy of any country. However, to determine ratio for good mix as envisions Dr. Rao is the responsibility of the candidate country.

That research which is concerned with the health and wealth of people will directly influence the economy of a country.

Team,

I found that most of the social economic article I came across are very mathematical based and inclined , it looks like , most of the researchers either from econometric background or from pure economics academician , I have never doubt the mathematical model will help to understand the system or explain what are the changes in the economic system , figure do tell some part of the actual situation , but overuse of calculus ,and model have make us more confusing ,and hard to to infer what re the actual meaning of the change in economic on the current situation .

The most important part of behavioral economic theory also become some abstract that , it drive away the interest of some new researcher like me.

I will suggest go back to the Micro -economic ,and study the basic contemporary new business model like E-commerce could be another new break through !

Chin

Open University Malaysia

I thing that the economic issues, change rapidly, and there is time for deep analyses. What is needed is a took for treating such uncertainties. I believe that classical mathematical tools are not appropriate. A lot of catastrophic crises shows this. The needed tool should incorporate fuzziness, and give fast answers.

Also we need another system of "money" based on international agreement.

the research which is really in customised user requirement acting as ready to use product for either industry or government or market

In the USA, the Justice Department and FBI underutilized their research skills in the wake of the 2007 global financial breakdown. Research related to what happened and what kind of financial regulation has to be implemented in the USA is still long coming. The failure of law enforcement/investigators in helping oversee reform by thoroughly asking the right research questions concerning law and justice (in the realm of finance and investment may lead to new bubbles (if we are not already in one).

So, I would suggest that a proper set of cases be implemented around the topic of "criminal negligence" should be investigated (and should have been investigated).

Negligence or criminal negligence?

" The failure to use reasonable care to avoid consequences that threaten or harm the safety of the public and that are the foreseeable outcome of acting in a particular manner."

NOTE: "Criminal negligence is a statutory offense that arises primarily in situations involving the death of an innocent party as a result of the operation of a motor vehicle by a person who is under the influence of Drugs and Narcotics or alcohol. Most statutes define such conduct as criminally negligent Homicide. Unlike the tort of Negligence, in which the party who acted wrongfully is liable for damages to the injured party, a person who is convicted of criminal negligence is subject to a fine, imprisonment, or both, because of the status of the conduct as a crime."

Definitions cited here come from: http://legal-dictionary.thefreedictionary.com/Criminal+Negligence

My opinion is : it all depends (ok, I'm an economist).

Beyond the joke, I guess there are sort of "ages" to be considered. When a new "basic" knowledge spread up, it is necessary, so useful, to discover its potential and deploy applications. It is the time of applied and development research. However, if such potential is yet exploited, then push on basic research would be more rewarding.