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Are RαD subsidies a substitute or a complement to privately funded RαD ?. An econometric analysis at the firm level


  • Emmanuel Duguet


This study examines the effect of research and development subsidies on the private funding of RαD in France. We address this issue from the annual RαD survey over 1985-1997, which provides information about the RαD subsidies given by all the ministries to the firms having at least one full-time person working on RαD. In order to determine whether the supported firms would have invested the same amount of private RαD 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 RαD. 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.

Suggested Citation

  • Emmanuel Duguet, 2004. "Are RαD subsidies a substitute or a complement to privately funded RαD ?. An econometric analysis at the firm level," Revue d'économie politique, Dalloz, vol. 114(2), pages 245-274.
  • Handle: RePEc:cai:repdal:redp_142_0245

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    References listed on IDEAS

    1. 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).
    2. 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).
    3. Hans Loof & Almas Heshmati, 2006. "On the relationship between innovation and performance: A sensitivity analysis," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(4-5), pages 317-344.
    4. Lööf, Hans & Heshmati, Almas & Asplund, Rita & Nåås, Svein-Olav, 2001. "Innovation and Performance in Manufacturing Industries: A Comparison of the Nordic Countries," SSE/EFI Working Paper Series in Economics and Finance 0457, Stockholm School of Economics.
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    Cited by:

    1. Becker, Lasse, 2015. "Effectiveness of public innovation support in Europe: Does public support foster turnover, employment and labour productivity?," Center for European, Governance and Economic Development Research Discussion Papers 236, University of Goettingen, Department of Economics.
    2. Emmanuel Duguet, 2012. "The effect of the incremental R&D tax credit on the private funding of R&D an econometric evaluation on french firm level data," Revue d'économie politique, Dalloz, vol. 122(3), pages 405-435.
    3. Özçelik, Emre & Taymaz, Erol, 2008. "R&D support programs in developing countries: The Turkish experience," Research Policy, Elsevier, vol. 37(2), pages 258-275, March.
    4. Marino, Marianna & Parrotta, Pierpaolo & Sala, Davide, 2010. "New Perspectives on the Evaluation of Public R&D Funding," Working Papers 11-2, University of Aarhus, Aarhus School of Business, Department of Economics.
    5. Kammerer, Hannes, 2013. "Lobbying for Subsidies with Heterogeneous Firms," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79767, Verein für Socialpolitik / German Economic Association.
    6. Becker, Lasse & Bizer, Kilian, 2015. "Federalism and innovation support for small and medium-sized enterprises: Empirical evidence in Europe," Center for European, Governance and Economic Development Research Discussion Papers 245, University of Goettingen, Department of Economics.


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