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Government Support for Commercial R&D: Lessons from the Israeli Experience

In: Innovation Policy and the Economy, Volume 2

Listed author(s):
  • Manuel Trajtenberg

Israel constitutes an interesting laboratory case of government intervention in the realm of R&D policy. The recognized scientific and technological prowess of the country was leveraged by extensive government support to commercial R&D projects. The Israeli High Tech sector has grown remarkably fast since the mid-1980s, and it is quite likely that indeed government policies significantly contributed to its success. In this paper we review in detail these policies, as well as the challenges that confront them: The design of alternative allocation schemes for R&D grants in view of a rigid budget constraint; possible ways of departing from neutrality, the conditionality of production in Israel; the difficulties in setting a policy target for R&D spending, etc.

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This chapter was published in:
  • Adam B. Jaffe & Josh Lerner & Scott Stern, 2002. "Innovation Policy and the Economy, Volume 2," NBER Books, National Bureau of Economic Research, Inc, number jaff02-1, June.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 10786.
    Handle: RePEc:nbr:nberch:10786
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    1. Eaton, Jonathan & Kortum, Samuel, 1996. "Trade in ideas Patenting and productivity in the OECD," Journal of International Economics, Elsevier, vol. 40(3-4), pages 251-278, May.
    2. Lach, Saul, 2002. "Do R&D Subsidies Stimulate or Displace Private R&D? Evidence from Israel," Journal of Industrial Economics, Wiley Blackwell, vol. 50(4), pages 369-390, December.
    3. Tor Jakob Klette & Jarle Møen, 1999. "From Growth Theory to Technology Policy - Coordination Problems in Theory and Practice," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 25, pages 53-74.
    4. Bregman, Arie & Fuss, Melvyn & Regev, Haim, 1991. "High tech and productivity: Evidence from Israeli industrial firms," European Economic Review, Elsevier, vol. 35(6), pages 1199-1221, August.
    5. Zvi Griliches, 1998. "Productivity, R&D, and the Data Constraint," NBER Chapters,in: R&D and Productivity: The Econometric Evidence, pages 347-374 National Bureau of Economic Research, Inc.
    6. Charles I. Jones & John C. Williams, 1998. "Measuring the Social Return to R&D," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1119-1135.
    7. Trajtenberg, Manuel, 2001. "Innovation in Israel 1968-1997: a comparative analysis using patent data," Research Policy, Elsevier, vol. 30(3), pages 363-389, March.
    8. Goolsbee, Austan, 1998. "Does Government R&D Policy Mainly Benefit Scientists and Engineers?," American Economic Review, American Economic Association, vol. 88(2), pages 298-302, May.
    9. Scherer, F M, 1982. "Inter-Industry Technology Flows and Productivity Growth," The Review of Economics and Statistics, MIT Press, vol. 64(4), pages 627-634, November.
    10. Isabel Busom, 2000. "An Empirical Evaluation of The Effects of R&D Subsidies," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 9(2), pages 111-148.
    11. Paul M. Romer, 2001. "Should the Government Subsidize Supply or Demand in the Market for Scientists and Engineers?," NBER Chapters,in: Innovation Policy and the Economy, Volume 1, pages 221-252 National Bureau of Economic Research, Inc.
    12. Griliches, Zvi & Regev, Haim, 1995. "Firm productivity in Israeli industry 1979-1988," Journal of Econometrics, Elsevier, vol. 65(1), pages 175-203, January.
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