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An Empirical Analysis of Factors Explaining the Level of R&D Subsidies and their Productivity Effects. Evidence from Firm-Level Panel Data

Author

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  • Martin Falk

    (WIFO)

Abstract

The Industrial Research Promotion Fund (Forschungsförderungsfonds – FFF) is Austria's most important source of finance funding R&D projects carried out by business enterprises. However, the decision on the level of R&D subsidies will be affected by both the funding agency's objectives and firm characteristics. The paper analyses the factors explaining the intensity of R&D subsidies as well as their productivity effects. The analysis is based on unique panel data for about 1,000 Austrian firms receiving R&D subsidies for the period 1996-2002. The results of the panel data analysis suggest that the ratio of R&D subsidies to total R&D expenditures is significantly negatively related to both firm size and the current R&D intensity, but not to the cash-flow ratio in the past. Furthermore, we find that newly founded enterprises as well as firms in the electrical machinery and software industry have a significantly higher ratio of R&D subsidies to total R&D. In contrast, fast output growth in the past is associated with a lower R&D subsidy ratio. Overall, the results are consistent with the fund's strategy.

Suggested Citation

  • Martin Falk, 2004. "An Empirical Analysis of Factors Explaining the Level of R&D Subsidies and their Productivity Effects. Evidence from Firm-Level Panel Data," WIFO Studies, WIFO, number 25317, March.
    • Handle: RePEc:wfo:wstudy:25317
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    References listed on IDEAS

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    Cited by:

    1. Rahel Falk, 2006. "Measuring the Effects of Public Support Schemes on Firms' Innovation Activities. Survey Evidence from Austria," WIFO Working Papers 267, WIFO.
    2. Rahel Falk, 2004. "Behavioural Additionality Effects of R&D Subsidies," WIFO Studies, WIFO, number 25318.

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