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Evaluating a place-based innovation policy: Evidence from the innovative Regional Growth Cores Program in East Germany

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  • Falck, Oliver
  • Koenen, Johannes
  • Lohse, Tobias

Abstract

We evaluate one of the largest place-based innovation policies in Germany – the Innovative Regional Growth Cores (IRGC) program. It subsidizes collaborative development and commercialization projects of firms and public research institutes co-located in regions in Eastern Germany, with the explicit goal of generating local spillovers to promote regional economic development. We evaluate three potential types of effects with regard to a broad set of outcomes at the firm and regional level: (1) The policy's effects on directly subsidized firms; (2) spillover effects on non-subsidized innovative firms located in the same region; (3) (aggregate) effects on regional-level economic outcomes. We find that directly treated firms increase their R&D activities in the short- and medium-run. However, we are not able to provide significant or economically meaningful evidence for the effectiveness of channels (2) and (3), applying a wide range of econometric methods. Overall, these results cast doubt about the effectiveness of the program.

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  • Falck, Oliver & Koenen, Johannes & Lohse, Tobias, 2019. "Evaluating a place-based innovation policy: Evidence from the innovative Regional Growth Cores Program in East Germany," Regional Science and Urban Economics, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:regeco:v:79:y:2019:i:c:s0166046218303776
    DOI: 10.1016/j.regsciurbeco.2019.103480
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    7. Justin T Callais & Linan Peng, 2021. "The Impact of Place-Based Policy: Evidence from a Multiple Synthetic Control Analysis of the Northeastern Revitalization Program in China," Working Papers 2021-03, DePauw University, School of Business and Leadership and Department of Economics and Management.

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    More about this item

    Keywords

    Innovation; Place-based policy; Germany;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General

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