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Are R&D subsidies a substitute or a complement to privately funded R&D? Evidence from France using propensity score methods for non- experimental data

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  • DUGUET Emmanuel

    (EPEE - University of Evry)

Abstract

This study examines the effect of research and development subsidies on the private funding of R&D in France. We address this issue from the annual R&D survey over 1985-1997, which provides information about the R&D subsidies given by all the ministries to the firms having at least one full-time person working on R&D. In order to determine whether the supported firms would have invested the same amount of private R&D without the subsidies, we use matching methods. We show that the use of these methods is important because the global evaluations, in this paper, more often give a potential effect among the non-supported firms than a real effect among the supported firms. We first study the probability to get a subsidy. We find that this probability is increasing with size, the debt ratio and the importance of privately funded R&D. In a second step, controlling for the past public support the firms benefited from, we find that, on average, public funds add to private funds, so that there would be no significant crowding out effect.

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File URL: http://128.118.178.162/eps/pe/papers/0411/0411007.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Public Economics with number 0411007.

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Length: 38 pages
Date of creation: 16 Nov 2004
Date of revision:
Handle: RePEc:wpa:wuwppe:0411007

Note: Type of Document - pdf; pages: 38
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Web page: http://128.118.178.162

Related research

Keywords: propensity score; non-experimental data; policy evaluation; research and development; subsidies;

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References

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  1. Paul A. David & Bronwyn H. Hall & Andrew A. Toole, 2005. "Is Public R&D a Complement or Substitute for Private R&D? A Review of the Econometric Evidence," Development and Comp Systems 0502011, EconWPA.
  2. Isabel Busom, 2000. "An Empirical Evaluation of The Effects of R&D Subsidies," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 9(2), pages 111-148.
  3. Crepon, B. & Duguet, E. & Mairesse, J., 1998. "Research Investment, Innovation and Productivity: An Econometric Analysis at the Firm Level," Papiers d'Economie Mathématique et Applications 98.15, Université Panthéon-Sorbonne (Paris 1).
  4. DUGUET Emmanuel, 2004. "Innovation height, spillovers and TFP growth at the firm level: Evidence from French manufacturing," Development and Comp Systems 0411017, EconWPA.
  5. Cohen, Wesley M & Klepper, Steven, 1996. "A Reprise of Size and R&D," Economic Journal, Royal Economic Society, vol. 106(437), pages 925-51, July.
  6. Crepon, B. & Duguet, E. & Kabla, I., 1995. "A Moderate Support to Schumpeterian Conjectures from Various Innovation Measures," Papiers d'Economie Mathématique et Applications 95.06, Université Panthéon-Sorbonne (Paris 1).
  7. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
  8. Donald W. K. Andrews & Moshe Buchinsky, 2000. "A Three-Step Method for Choosing the Number of Bootstrap Repetitions," Econometrica, Econometric Society, vol. 68(1), pages 23-52, January.
  9. Andrews, Donald W. K. & Buchinsky, Moshe, 2001. "Evaluation of a three-step method for choosing the number of bootstrap repetitions," Journal of Econometrics, Elsevier, vol. 103(1-2), pages 345-386, July.
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