Subsidy Policy for Innovation: A way to reach objectives of both higher growth and equity?
AbstractSince the Lisbon Agenda (2000), the European Union policies are in- creasingly oriented towards innovation as attested to by the deep change of the new Regional Policy. This paper proposes an analysis of an innovation subsidy policy in an agglomeration and growth model à la Martin and Ottaviano (1999). In this two-regions model, we assume that the policy is implemented by a central authority that taxes the proﬁt of industrial firms to subsidy employment in innovative activities. We show that the positive effects on growth and equity of such a policy, as highlighted by Martin (1999), hold in the case where the policy is not geographically differentiated. In the case where the government however grants larger subsidies to the poorer region in order to reduce the concentration of the innovative sector, we show that the policy can be inefficient if it is not of sufficient magnitude.
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Date of creation: 2010
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economic geography; endogenous growth; public policy; subsidies; Regional Policy;
Other versions of this item:
- Benjamin Montmartin, 2010. "Subsidy Policy for Innovation : A way to reach objectives of both higher growth and equity ?," Working Papers 1031, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-12-04 (All new papers)
- NEP-GEO-2010-12-04 (Economic Geography)
- NEP-INO-2010-12-04 (Innovation)
- NEP-URE-2010-12-04 (Urban & Real Estate Economics)
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- Berumen, Sergio A., 2012. "Evaluación del impacto de la política de incentivos sectoriales en el desarrollo de los municipios mineros de Castilla y León," Journal of Economics, Finance and Administrative Science, Universidad ESAN, vol. 17(33), pages 15-30.
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