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Subsidies or loans? Evaluating the impact of R&D support programmes

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  • Huergo, Elena
  • Moreno, Lourdes

Abstract

The objective of this study is to compare the effect of different types of public direct support for R&D projects on firms’ technological capabilities. We distinguish between low-interest loans and national and European subsidies. Using data on 4407 Spanish firms during the period 2002–2005, we estimate a multivariate probit to analyse the determinants of firms’ participation in public R&D programmes and, later, the impact of this participation on firms’ R&D activities using two different procedures. Regardless of the methodology employed for the analysis, the results suggest that being awarded any type of direct aid clearly increases the probability of conducting R&D activities. In terms of being supported through a unique instrument, the greatest effect corresponds to the case of European grants, where the impact is more than three times larger than the one of loans. As for R&D intensity, the hypothesis of full crowding-out of private R&D is rejected for all types of support. In addition, we find that the impacts of subsidies and loans reinforce each other when they are jointly awarded to SMEs. However, for large firms we cannot rule out the existence of crowding-out effect between subsidies and loans.

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  • Huergo, Elena & Moreno, Lourdes, 2017. "Subsidies or loans? Evaluating the impact of R&D support programmes," Research Policy, Elsevier, vol. 46(7), pages 1198-1214.
  • Handle: RePEc:eee:respol:v:46:y:2017:i:7:p:1198-1214
    DOI: 10.1016/j.respol.2017.05.006
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    1. repec:spr:cejnor:v:25:y:2017:i:4:d:10.1007_s10100-016-0461-8 is not listed on IDEAS
    2. Ascensión Barajas & Elena Huergo & Lourdes Moreno Martín, 2017. "Public Support to Business R&D and the Economic Crisis: Spanish Evidence," Documentos de trabajo de la Facultad de Ciencias Económicas y Empresariales 17-03, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales.
    3. Edina Berlinger & Anita Lovas & Péter Juhász, 2017. "State subsidy and moral hazard in corporate financing," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 25(4), pages 743-770, December.
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    More about this item

    Keywords

    Soft loans; R & D subsidies; Impact assessment;

    JEL classification:

    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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