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The impact of public R&D subsidy on small firm productivity: evidence from Korean SMEs

Author

Listed:
  • Beom Cheol Cin

    (Kyonggi University)

  • Young Jun Kim

    (Korea University)

  • Nicholas S. Vonortas

    (The George Washington University
    University of Campinas)

Abstract

This paper explores the effects of R&D promotion policy on SME performance. We use a large panel data set on public R&D subsidies to Korean manufacturing firms. We control for counterfactual outcomes employing the DID (difference in differences) estimation procedure as well as for the endogeneity of the R&D investment and the R&D subsidy using the 2-stage Tobit/Logit DPD (dynamic panel data) procedure. We find significant evidence for positive effects of the public R&D subsidy on both the R&D expenditure and the value added productivity of Korean manufacturing SMEs. The policy thus appears to have been successful in fostering technological advancement and in promoting economic growth.

Suggested Citation

  • Beom Cheol Cin & Young Jun Kim & Nicholas S. Vonortas, 2017. "The impact of public R&D subsidy on small firm productivity: evidence from Korean SMEs," Small Business Economics, Springer, vol. 48(2), pages 345-360, February.
    • Handle: RePEc:kap:sbusec:v:48:y:2017:i:2:d:10.1007_s11187-016-9786-x
    DOI: 10.1007/s11187-016-9786-x
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