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The Effect of R&D Subsidies on Private R&D

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  • HOLGER GÖRG
  • ERIC STROBL

Abstract

This paper investigates the relationship between government support for R&D and R&D expenditure financed privately by firms using a comprehensive plant level data set for the manufacturing sector in the Republic of Ireland. We find that for domestic plants small grants serve to increase private R&D spending, while too large a grant may crowd out private financing of R&D. In contrast, evidence for foreign establishments suggests that grant provision causes neither additionality nor crowding out effects of private R&D financing, regardless of the size of the subsidy.

Suggested Citation

  • Holger Görg & Eric Strobl, 2007. "The Effect of R&D Subsidies on Private R&D," Economica, London School of Economics and Political Science, vol. 74(294), pages 215-234, May.
    • Handle: RePEc:bla:econom:v:74:y:2007:i:294:p:215-234
    DOI: 10.1111/j.1468-0335.2006.00547.x
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    1. Barbara Sianesi, 2001. "Propensity score matching," United Kingdom Stata Users' Group Meetings 2001 12, Stata Users Group, revised 23 Aug 2001.
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