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The Impact of Public R&D Expenditure on Business R&D

  • Dominique Guellec
  • Bruno van Pottelsberghe de la Potterie

This document attempts to quantify the aggregate net effect of government funding on business R&D in 17 OECD Member countries over the past two decades. Grants, procurement, tax incentives and direct performance of research (in public laboratories or universities) are the major policy tools in the field. The major results of the study are the following: Direct government funding of R&D performed by firms (either grants or procurement) has a positive effect on business financed R&D (one dollar given to firms results in 1.70 dollars of research on average). Tax incentives have a positive (although rather short-lived) effect on business-financed R&D. Direct funding as well as tax incentives are more effective when they are stable over time: firms do not invest in additional R&D if they are uncertain of the durability of the government support. Direct government funding and R&D tax incentives are substitutes: increased intensity of one reduces the effect of the other on business R&D. The ... Ce document vise à quantifier l’effet des financements gouvernementaux sur la dépense de R-D des entreprises au niveau agrégé, pour 17 pays Membres de l’OCDE sur les deux dernières décennies. Les dons, les achats publics, les incitations fiscales et la réalisation directe de la recherche (dans les laboratoires publics ou les universités) sont les principaux outils de la politique dans ce domaine. Les principaux résultats de l’étude sont les suivants : Le financement direct par le gouvernement de la recherche réalisée par les entreprises (dons ou achats publics) a un effet positif sur le financement de la recherche par les entreprises (un dollar versé aux firmes se traduit en moyenne par 1.70 dollars de recherche). Les incitations fiscales ont un effet positif (bien de court terme) sur le financement de la recherche par les entreprises. Le financement direct comme les incitations fiscales sont plus efficaces lorsqu’ils sont stables dans le temps : les firmes n’effectuent pas de ...

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Paper provided by OECD Publishing in its series OECD Science, Technology and Industry Working Papers with number 2000/4.

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Date of creation: 14 Jun 2000
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Handle: RePEc:oec:stiaaa:2000/4-en
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  1. Lichtenberg, Frank R, 1984. "The Relationship between Federal Contract R&D and Company R&D," American Economic Review, American Economic Association, vol. 74(2), pages 73-78, May.
  2. David, Paul A. & Hall, Bronwyn H. & Toole, Andrew A., 1999. "Is Public R&D a Complement or Substitute for Private R&D? A Review of the Econometric Evidence," Department of Economics, Working Paper Series qt1sz6g8bv, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  3. Adams, James D, 1990. "Fundamental Stocks of Knowledge and Productivity Growth," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 673-702, August.
  4. David, P.A. & Hall, B.H., 1999. "Heart of Darkness: Public-Private Interaction Inside the R&D Black Box," Economics Papers 1999-w16, Economics Group, Nuffield College, University of Oxford.
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  6. Levy, David M., 1990. "Estimating the impact of government R&D," Economics Letters, Elsevier, vol. 32(2), pages 169-173, February.
  7. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
  8. John Scott, 1984. "Firm versus Industry Variability in R&D Intensity," NBER Chapters, in: R&D, Patents, and Productivity, pages 233-248 National Bureau of Economic Research, Inc.
  9. Lichtenberg, Frank R, 1987. "The Effect of Government Funding on Private Industrial Research and Development: A Re-assessment," Journal of Industrial Economics, Wiley Blackwell, vol. 36(1), pages 97-104, September.
  10. Keane, Michael P & Runkle, David E, 1992. "On the Estimation of Panel-Data Models with Serial Correlation When Instruments Are Not Strictly Exogenous," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(1), pages 1-9, January.
  11. Bruno Van Pottelsberghe & Henri Capron, 1997. "Public support to business R&D: a survey and some new quantitative evidence," ULB Institutional Repository 2013/6283, ULB -- Universite Libre de Bruxelles.
  12. Carmichael, Jeffrey, 1981. "The Effects of Mission-Oriented Public R&D Spending on Private Industry," Journal of Finance, American Finance Association, vol. 36(3), pages 617-27, June.
  13. Holemans, Benni & Sleuwaegen, Leo, 1988. "Innovation expenditures and the role of government in Belgium," Research Policy, Elsevier, vol. 17(6), pages 375-379, December.
  14. Hall, Bronwyn & Van Reenen, John, 2000. "How effective are fiscal incentives for R&D? A review of the evidence," Research Policy, Elsevier, vol. 29(4-5), pages 449-469, April.
  15. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-96, September.
  16. Klette, T.J. & Moen, J. & Griliches, Z., 1999. "Do Subsidies to Commercial R&D Reduce Market Failures? Microeconometric Evaluation Studies," Papers 16/99, Norwegian School of Economics and Business Administration-.
  17. 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.
  18. Czarnitzki, Dirk & Fier, Andreas, 2001. "Do R&D subsidies matter? Evidence for the German service sector," ZEW Discussion Papers 01-19, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  19. Bronwyn Hall, 1992. "R&D Tax Policy During the Eighties: Success or Failure?," NBER Working Papers 4240, National Bureau of Economic Research, Inc.
  20. Switzer, Lorne, 1984. "The Determinants of Industrial R&D: A Funds Flow Simultaneous Equation Approach," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 163-68, February.
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