Science and Research as an Important Positive Externality

The work focuses on the issue of research and development funding from public resources, mainly on the project funding of applied research. The aim of the work is to describe some aspects, which were brought to this area by Science, research and innovations reform approved by the Czech Government on 26th March 2008. Public intervention in this area is discussed in terms of the basic economic theories. The efficiency of public funds spending is discussed in terms of the cost-output-quality output-benefit chain. The part of the work is a comparison of the state funding of the applied research and development in the Czech Republic and other countries. The work tries to find some connections between changes in the way of assessing research quality and direction of financial flows in this area