R&D crowding out or R&D leverage effects: An evaluation of the french cluster-oriented technology policy

The purpose of this paper is to provide an econometric evaluation of the impact of the French cluster policy on firm-financed research and development (R&D) and public R&D subsidies. To conduct the evaluation, we have used the conditional difference-in-difference method and mobilized business data covering a relatively long period (2006–2012) to provide a better evaluation of the policy's effects over time. Our estimates indicate that belonging to a cluster creates a significant leverage effect rather than a crowding-out effect: compared with firms outside clusters, firms inside clusters receive more R&D subsidies and invest even more in R&D. However, the leverage effect is not immediate since it appears four years after the launch of the cluster policy and is mainly driven by small- and medium-sized enterprises (SMEs). Thus, the policy should be i) pursued over time to produce tangible results and ii) relevant not only for SMEs but also for intermediate-sized firms and large firms, which can constitute the core of collaborative projects initiated within the framework of the cluster policy.