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Assessing the effect of public subsidies on firm R&D investment : a survey

  • César Alonso-Borrego
  • José I. Galán-Zazo
  • Francisco Javier Forcadell
  • José Ángel Zúñiga-Vicente

This survey examines the empirical literature on the relationship between public R&D subsidies and private R&D investment over the past five decades. The survey reveals a considerable heterogeneity of empirical results that cannot be explained fully by methodological issues. We aim to provide further explanations of the possible causes of that heterogeneity. In particular, we emphasise a set of issues that, in our view, are critical to understanding the potential effect of public R&D subsidies on private R&D spending. Special attention is paid to the dynamic aspects and composition of firm R&D, the constraints faced by the firm (such as financial constraints), and the amount and source of public subsidies. None of these issues have been investigated in depth. We formulate a set of research assumptions to guide future empirical research in this field.

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Paper provided by Universidad Carlos III, Departamento de Economía in its series Economics Working Papers with number we1215.

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Date of creation: Apr 2012
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Handle: RePEc:cte:werepe:we1215
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