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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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Author Info
DUGUET Emmanuel (EPEE - University of Evry)

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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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Publisher 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
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Handle: RePEc:wpa:wuwppe:0411007

Note: Type of Document - pdf; pages: 38
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Web page: http://129.3.20.41

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

Find related papers by JEL classification:
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods
H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
O38 - Economic Development, Technological Change, and Growth - - Technological Change - - - Government Policy

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References listed on IDEAS
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. Emmanuel Duguet, 2006. "Innovation height, spillovers and tfp growth at the firm level: Evidence from French manufacturing," Economics of Innovation and New Technology, Taylor and Francis Journals, vol. 15(4-5), pages 415-442, June. [Downloadable!] (restricted)
    Other versions:
  2. Paul A. David & Bronwyn H. Hall & Andrew A. Toole, 1999. "Is Public R&D a Complement or Substitute for Private R&D? A Review of the Econometric Evidence," Working Papers 99023, Stanford University, Department of Economics. [Downloadable!]
    Other versions:
  3. 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.
  4. 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).
  5. 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. [Downloadable!]
  6. 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. [Downloadable!] (restricted)
  7. 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).
  8. 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. [Downloadable!] (restricted)
Full references

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. Lööf, Hans & Heshmati, Almas, 2004. "The Impact of Public Funding on Private R&D investment: New Evidence from a Firm Level Innovation Study," Working Paper Series in Economics and Institutions of Innovation 6, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies, revised 01 Mar 2005. [Downloadable!]
  2. Nathalie Greenan & Emmanuelle Walkowiak, 2005. "Informatique, organisation du travail et intéractions sociales," Econometrics 0505008, EconWPA. [Downloadable!]
  3. Daniel Chudnovsky & Andrés López & Martín Rossi & Diego Ubfal, 2006. "Evaluating A Program of Public Funding of Private Innovation Activities. An Econometric Study of FONTAR in Argentina," OVE Working Papers 1606, Inter-American Development Bank, Office of Evaluation and Oversight (OVE). [Downloadable!]
  4. Cerulli Giovanni, 2008. "Modelling and measuring the effects of public subsidies on business R&D: theoretical and econometric issues," CERIS Working Paper 200803, Institute for Economic Research on Firms and Growth - Moncalieri (TO). [Downloadable!]
  5. Tommy Clausen, 2007. "Access (not) granted: What kinds of firms participate in technology programs?," Working Papers on Innovation Studies 20070612, Centre for Technology, Innovation and Culture, University of Oslo. [Downloadable!]
  6. Aschhoff, Birgit & Sofka, Wolfgang, 2008. "Innovation on Demand: Can Public Procurement Drive Market Success of Innovations," ZEW Discussion Papers 08-052, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
    Other versions:
  7. Beatriz Corchuelo & Ester Martinez-Ros, 2009. "The Effects of Fiscal Incentives for R & D in Spain," Business Economics Working Papers wb092302, Universidad Carlos III, Departamento de Economía de la Empresa. [Downloadable!]
  8. Cerulli Giovanni & Poti' Bianca, 2008. "Evaluating the Effect of Public Subsidies on firm R&D activity: an Application to Italy Using the Community Innovation Survey," CERIS Working Paper 200809, Institute for Economic Research on Firms and Growth - Moncalieri (TO). [Downloadable!]
  9. Tommy Clausen, 2008. "Do subsidies have positive impacts on R&D and innovation activities at the firm level?," Working Papers on Innovation Studies 20070615, Centre for Technology, Innovation and Culture, University of Oslo. [Downloadable!]
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