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A Micro-econometric Analysis of Public Support to Private R&D in Argentina

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Author Info

  • Chiara Binelli
  • Alessandro Maffioli

Abstract

This paper investigates the relationship between government interventions to promote investments in innovation and firm-financed R&D. Merging a unique panel data set on Argentinean firms in the 1990s with a data base on different types of public support received through the FONTAR (Fondo Tecnologico Argentino) program, we estimate a fixed effects model and find evidence of a significant positive impact of FONTAR on private R&D. A 1 per cent increase in the amount received through FONTAR induces an average increase of 547.6 real pesos in annual R&D expenditures. The result is robust to the use of an instrumental variable estimator that controls for the potential bias induced by changes in the structure of the program. An analysis by type of financial support reveals that the impact is mainly due to targeted and fiscal credit with no evidence that funding received through matching grants has an additionality effect on private investments. This result is in line with the predictions of a simple theoretical model that investigates the impact of different policy interventions to promote investments in R&D. When firms' preferences are not directly observable, the provision of direct subsidies is more likely to incur the risk of adverse selection attracting firms that would have invested in innovation even in the absence of public support or dismiss some of the non-financed projects, thus leaving unchanged or decreasing the overall level of expenditures in R&D.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/02692170701390320
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal International Review of Applied Economics.

Volume (Year): 21 (2007)
Issue (Month): 3 ()
Pages: 339-359

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Handle: RePEc:taf:irapec:v:21:y:2007:i:3:p:339-359

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Related research

Keywords: Innovation and R&D; policy evaluation; panel data;

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Cited by:
  1. Bronwyn Hall & Alessandro Maffioli, 2008. "Evaluating the impact of technology development funds in emerging economies: evidence from Latin America," European Journal of Development Research, Taylor and Francis Journals, vol. 20(2), pages 172-198.
  2. repec:idb:brikps:38498 is not listed on IDEAS
  3. repec:idb:brikps:58758 is not listed on IDEAS
  4. Ramiro De Elejalde & David Giuliodori & Rodolfo Stucchi, 2013. "Employment and innovation: Firm level evidence from Argentina," ILADES-Georgetown University Working Papers inv291, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.

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