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The impact of R&D subsidy on innovation: evidence from New Zealand firms

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  • Trinh Le
  • Adam B. Jaffe

Abstract

This study examines the impact of government subsidy through R&D grants on innovation output for firms in New Zealand. Using a large database that links administrative and tax data with survey data, we find that R&D grants have a stronger effect on more novel innovation (e.g. applying for a patent or introducing new products to the world) than on incremental innovation (e.g. any product innovation) and that larger, project-based grants are more effective at promoting innovation than smaller, non-project-specific grants. There is little evidence that R&D grants have differential effects between smaller (<50 employees) and larger firms.

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  • Trinh Le & Adam B. Jaffe, 2017. "The impact of R&D subsidy on innovation: evidence from New Zealand firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 26(5), pages 429-452, July.
    • Handle: RePEc:taf:ecinnt:v:26:y:2017:i:5:p:429-452
    DOI: 10.1080/10438599.2016.1213504
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    2. Bofinger, Peter & Geißendörfer, Lisa & Haas, Thomas & Mayer, Fabian, 2023. "Credit as an instrument for growth: A monetary explanation of the Chinese growth story," W.E.P. - Würzburg Economic Papers 107, University of Würzburg, Department of Economics.
    3. Haiyan Wang & Yasinjan Sawur, 2022. "The Relationships between Government Subsidies, Innovation Input, and Innovation Output: Evidence from the New Generation of Information Technology Industry in China," Sustainability, MDPI, vol. 14(21), pages 1-22, October.
    4. Ryota Nakatani, 2019. "Firm performance and corporate finance in New Zealand," Applied Economics Letters, Taylor & Francis Journals, vol. 26(13), pages 1118-1124, July.
    5. Fang, Hongsheng & Wu, Xiao & Shen, Jim Huangnan & Zhao, Lexin, 2022. "The impact of technology identification policy on firm innovation: Evidence from China," China Economic Review, Elsevier, vol. 76(C).
    6. Kiman Kim & Sang Ok Choi & Sooyeon Lee, 2021. "The Effect of a Financial Support on Firm Innovation Collaboration and Output: Does Policy Work on the Diverse Nature of Firm Innovation?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(2), pages 645-675, June.
    7. Benjamin Montmartin & Marcos Herrera & Nadine Massard, 2017. "R&D Policy regimes in France: New Evidence from a spatio-temporal Analysis," GREDEG Working Papers 2017-22, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    8. Nadine Levratto & Aurelien Quignon, 2021. "Innovation Performance and the Signal Effect: Evidence from a European Program," Working Papers halshs-03466903, HAL.
    9. Nathaniel Lane, 2020. "The New Empirics of Industrial Policy," Journal of Industry, Competition and Trade, Springer, vol. 20(2), pages 209-234, June.
    10. Lee, Jeongwon & Hwang, Junseok & Kim, Hana, 2022. "Different government support effects on emerging and mature ICT sectors," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    11. Shiyuan Liu & Jiang Du & Weike Zhang & Xiaoli Tian, 2021. "Opening the box of subsidies: which is more effective for innovation?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 11(3), pages 421-449, September.
    12. Aurélien Quignon & Nadine Levratto, 2021. "Innovation Performance and the Signal Effect: Evidence from a European Program," EconomiX Working Papers 2021-34, University of Paris Nanterre, EconomiX.
    13. Stjepan Srhoj & Michal Lapinski & Janette Walde, 2021. "Impact evaluation of business development grants on SME performance," Small Business Economics, Springer, vol. 57(3), pages 1285-1301, October.
    14. de Souza, Gustavo, 2022. "The Labor Market Consequences of Appropriate Technology," CEPREMAP Working Papers (Docweb) 2208, CEPREMAP.
    15. Gustavo de Souza, 2022. "The Labor Market Consequences of Appropriate Technology," Working Paper Series WP 2022-53, Federal Reserve Bank of Chicago.
    16. Wu, Wei & Hu, Yingying & Wu, Qinwen, 2023. "Subsidies and tax incentives - Does it make a difference on TFP? Evidences from China's photovoltaic and wind listed companies," Renewable Energy, Elsevier, vol. 208(C), pages 645-656.
    17. Xiao-Bo Zhou & Wei Wei & Chyi-Lu Jang & Chun-Ping Chang, 2019. "The Impacts Of Government R&D Expenditure On Innovation In Chinese Provinces: What’S The Role Of Corruption," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 21(3), pages 1-22, January.
    18. Stjepan Srhoj & Michael Lapinski & Janette Walde, 2019. "Size matters? Impact evaluation of business development grants on SME performance," Working Papers 2019-14, Faculty of Economics and Statistics, Universität Innsbruck.
    19. Maoyan She & Die Hu & Yuandi Wang & Li Li, 2023. "How do top management team characteristics affect government R&D subsidy grants? Evidence from an information economics perspective," Asian Business & Management, Palgrave Macmillan, vol. 22(1), pages 330-353, February.

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