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Space policy drives innovation through technological procurement: evidence from Italy

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  • Paolo Castelnuovo
  • Stefano Clo
  • Massimo Florio

Abstract

To what extent public procurement for mission-oriented policies drives innovation? Space policy is a particularly interesting case study, and we investigate the impact of technological procurement of the Italian Space Agency (ASI) on suppliers’ innovation output. We have built an empirical model that takes advantage of unique data on ASI orders merged with patent and company data of more than 460 firms involved in a procurement relationship with ASI over the period 2004-2018. We combine matching techniques with a diff-in-diff approach with heterogeneous timing in treatment to assess whether becoming a space agency technological supplier has an impact on the extent and quality of firms’ patenting activity. Our findings, that are novel for space policy studies, suggest a statistically significant effect of space agency procurement. The effect is stronger for high-tech suppliers. These results are robust to several alternative specifications and estimation methods and provide evidence about the importance of space policy in enhancing firms’ innovation capacity through the procurement pathway.

Suggested Citation

  • Paolo Castelnuovo & Stefano Clo & Massimo Florio, 2021. "Space policy drives innovation through technological procurement: evidence from Italy," Working Papers - Economics wp2021_08.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    • Handle: RePEc:frz:wpaper:wp2021_08.rdf
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    More about this item

    Keywords

    Public procurement; space industry; space policy; innovation.;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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