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Do public subsidies stimulate private R&D spending?

  • González, Xulia
  • Pazó, Consuelo

The objective of this paper is to contribute to the empirical literature that evaluates the effects of public R&D support on private R&D investment. We apply a matching approach to analyze the effects of public R&D support in Spanish manufacturing firms. We examine whether or not the effects are different depending on the size of the firm and the technological level of the sectors in which the firms operate. We evaluate the effect of R&D subsidies on the subsidized firms, considering both the effect of subsidies on firms that would have performed R&D in the absence of public support and also the effect of inducement to undertake R&D activities. We also analyze the effect that concession of subsidies might have on firms which do not enjoy this type of support. The main conclusions indicate absence of "crowding-out", either full or partial, between public and private spending and that some firms - mainly small and operating in low technology sectors - might not have engaged in R&D activities in the absence of subsidies.

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Article provided by Elsevier in its journal Research Policy.

Volume (Year): 37 (2008)
Issue (Month): 3 (April)
Pages: 371-389

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Handle: RePEc:eee:respol:v:37:y:2008:i:3:p:371-389
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  1. Heijs, Joost, 2003. "Freerider behaviour and the public finance of R&D activities in enterprises: the case of the Spanish low interest credits for R&D," Research Policy, Elsevier, vol. 32(3), pages 445-461, March.
  2. J. Vicente Blanes & Isabel Busom, 2004. "WHO PARTICIPATES IN R&D SUBSIDY PROGRAMS?. The case of Spanish Manufacturing Firms," Working Papers wpdea0407, Department of Applied Economics at Universitat Autonoma of Barcelona.
  3. Klette, Tor Jakob & Moen, Jarle & Griliches, Zvi, 2000. "Do subsidies to commercial R&D reduce market failures? Microeconometric evaluation studies1," Research Policy, Elsevier, vol. 29(4-5), pages 471-495, April.
  4. Dirk Czarnitzki & Georg Licht, 2006. "Additionality of public R&D grants in a transition economy," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 14(1), pages 101-131, 03.
  5. Katrin Hussinger, 2008. "R&D and subsidies at the firm level: an application of parametric and semiparametric two-step selection models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(6), pages 729-747.
  6. Czarnitzki, Dirk & Fier, Andreas, 2002. "Do Innovation Subsidies Crowd Out Private Investment? Evidence from the German Service Sector," ZEW Discussion Papers 02-04, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  7. DUGUET Emmanuel, 2004. "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," Public Economics 0411007, EconWPA.
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