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Public Support to Firm-Level Innovation: An Evaluation of the FONTEC Program

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Author Info
José Miguel Benavente () (INTELIS, Department of Economics, University of Chile)
Gustavo Crespi () (International Development Research Centre)
Alessandro Maffioli () (Inter-American Development Bank)

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Abstract

In this paper, we analyzed the effectiveness of a Chilean TDF, the FONTEC program. We found that FONTEC’s subsides partially crowded-out private investments in innovation and they more effectively promoted technological upgrades and process innovations, rather than radical product innovations. In the empirical analysis, we considered four levels of potential impact: input additionality, behavioral additionality, innovative output, and performances. In terms of input additionality, although FONTEC increased the overall R&D budget of the firms, it did not stimulate additional private investment in innovation activities. In terms of behavioral additionality, FONTEC effectively promoted process innovation and induced changes in the innovation strategy of the firms. In terms of innovative outputs, FONTEC did not significantly foster patenting activities and had no significant impact on the creation and adoption of new products. In terms of performances, although FONTEC increased the sales, employment and export, it did not significantly foster productivity. In the absence of randomized experiments, we estimated these impacts through a quasi-experimental approach that combines difference-in-difference and propensity score matching techniques.

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Paper provided by Inter-American Development Bank, Office of Evaluation and Oversight (OVE) in its series OVE Working Papers with number 0507.

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Length: 28 pages
Date of creation: Dec 2007
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Handle: RePEc:idb:ovewps:0507

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Related research
Keywords: FONTEC; Chile; Research and Development; Matching Grants; Policy Evaluation.;

Find related papers by JEL classification:
O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General
O38 - Economic Development, Technological Change, and Growth - - Technological Change - - - Government Policy
H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

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References listed on IDEAS
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    Other versions:
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  4. Paul A. David & Bronwyn H. Hall & Andrew A. Toole, 2000. "Is Public R&D a Complement or Substitute for Private R&D? A Review of the Econometric Evidence," Development and Comp Systems 9912002, EconWPA. [Downloadable!]
    Other versions:
  5. Lach, Saul, 2002. "Do R&D Subsidies Stimulate or Displace Private R&D? Evidence from Israel," Journal of Industrial Economics, Blackwell Publishing, vol. 50(4), pages 369-90, December. [Downloadable!] (restricted)
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  6. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1987. "Appropriating the Returns from Industrial Research and Development," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(1987-3), pages 783-832. [Downloadable!]
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  8. repec:fth:harver:1473 is not listed on IDEAS
  9. Cimoli, Mario & Dosi, Giovanni, 1995. "Technological Paradigms, Patterns of Learning and Development: An Introductory Roadmap," Journal of Evolutionary Economics, Springer, vol. 5(3), pages 243-68, September.
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  14. Lerner, Josh, 1999. "The Government as Venture Capitalist: The Long-Run Impact of the SBIR Program," Journal of Business, University of Chicago Press, vol. 72(3), pages 285-318, July. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Fernandes, Ana M. & Paunov, Caroline, 2009. "Does tougher import competition foster product quality upgrading ?," Policy Research Working Paper Series 4894, The World Bank. [Downloadable!]
  2. Pedro Cerdan-Infantes & Alessandro Maffioli & Diego Ubfal, 2009. "Improving Technology Adoption in Agriculture through Extension Services: Evidence from Uruguay," OVE Working Papers 0309, Inter-American Development Bank, Office of Evaluation and Oversight (OVE). [Downloadable!]
  3. Veronica González & Pablo Ibarrarán & Alessandro Maffioli & Sandra Rozo, 2009. "The Impact of Technology Adoption on Agricultural Productivity: The Case of the Dominican Republic," OVE Working Papers 0509, Inter-American Development Bank, Office of Evaluation and Oversight (OVE). [Downloadable!]
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