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Subsidy and networking: The effects of direct and indirect support programs in the cluster policy

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  • Nishimura, Junichi
  • Okamuro, Hiroyuki

Abstract

Subsidy and networking: The effects of direct and indirect support programs in the cluster policy Industrial clusters have attracted considerable attention worldwide for regional innovation. Thus, policymakers in various countries have recently developed their specific cluster policies. However, there are few empirical studies yet on cluster policies. This paper empirically evaluates the “Industrial Cluster Project” (ICP) initiated by the Ministry of Economy, Trade and Industry (METI) in 2001, using original questionnaire data. We address two research questions on the effect of the ICP: if the participants of this project that exploit various support programs are more successful in alliance/network formation within the cluster than the others, and which kind of support program of the ICP contributes to firm performance. Different from similar preceding projects, the ICP aims at the autonomous development of regional industries and comprises both direct R&D support and indirect networking/coordination support. The main idea of public support of local firms clearly shifted toward networking and coordination for those who can help themselves. Thus, our special attention is paid to the differences between the direct R&D support and indirect networking/coordination support, which bring out the conditions necessary for the effective organization of cluster policies for improving firm performance. Our empirical evaluation is based on a sample of 511 firms from a recent original survey. We first employ the propensity score and the difference-in-differences (DID) estimation to analyze the degree of alliance/network formation before and after participating in the ICP. Then we use Heckman’s two-step procedure and the negative binomial model to examine the effects of support programs on firm performance. The estimation results suggest that cluster participants that exploit support programs (especially indirect support measures) expand industry-university-government network after participating in the ICP. Moreover, we find that not every support program contributes to firm performance, thus firms should select the most effective program according to their aims. Indirect support programs have an extensive and strong impact on outputs, especially innovation outcomes, while direct R&D support has a weak effect except for R&D subsidy.

Suggested Citation

  • Nishimura, Junichi & Okamuro, Hiroyuki, 2009. "Subsidy and networking: The effects of direct and indirect support programs in the cluster policy," CCES Discussion Paper Series 24, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
  • Handle: RePEc:hit:ccesdp:24
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    More about this item

    Keywords

    Cluster policy; industrial cluster; R&D support; subsidy; networking;

    JEL classification:

    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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