ABSTRACT
In Australia most research and development (R&D) is undertaken and self-financed by businesses themselves, although government agencies and universities are also important. This chapter looks at the basis of this policy approach to see if there are any economic arguments for government support of R&D. It focuses on whether there were any substantial market failures or imperfections that may have justified government intervention of this sort. As markets became more open to competition because of the fall in tariffs and decline in support to farmers, the government in Australia began to have a renewed look at the way in which it supported industrial development. One way in which governments decided to provide renewed assistance was in the form of the subsidy and granting of tax concessions on spending on R&D. Governments in Australia, at both the state and the national level, have a long history of involvement in the support of research that assists businesses.
