Does Government Support for Private Innovation Matter? Firm-Level Evidence from Turkey and Poland
The aim of the project is to analyze government support for innovation in a comparative perspective by first examining the main existing instruments of financial support for innovation in Turkey and Poland, and secondly to assess their effectiveness by applying recent econometric techniques to firm-level data for both countries obtained from the Community Innovation Survey (CIS). Comparing Turkey to Poland is both meaningful and promising from a policy-analysis point of view. Both countries are comparable in terms of levels of economic development and technological capabilities, i.e. the ability of their economies to create knowledge and exploit it commercially. Both have undergone deep market-oriented reforms in the last decades – Turkey since 1980, Poland since 1989 – resulting in a significant catching-up of their economies. However, as the possibilities for further growth based on structural change and eliminating obstacles to business are shrinking, the problem of building a knowledge-based economy comes to the fore. In Turkey, one can observe the growing popularity and the generous practices of public incentives in industrial R&D and innovation, in addition to the recent trends in public policies to support technological entrepreneurship and the commercialization of research output. Since 2004, significant changes and improvements have taken place in Turkey concerning science and technology policy schemes that have actually influenced the national innovation system in a number of ways. These include: an important increase in public support provided to private R&D, the diversification of direct support programmes for private R&D and innovation (which was tailored to the needs of potential innovators), a widening of the scope of existing fiscal incentives for private R&D activities and the implementation of new ones, the implementation of new call-based grant programmes targeted at technology areas and industries based on national priorities. Considering the large resource allocation for the government involvement, there is a growing and urgent need for the systematic monitoring and evaluation of R&D and innovation policies in Turkey. In Poland, the science, technology and innovation (STI) policies were seen as less important than other reforms (financial system, privatization, pensions etc.) during the economic transition. The STI policies have lacked funding, co-ordination and vision. The institutional Architecture has evolved with a lack of continuity and a short institutional memory. A major breakthrough occurred after 2004 when considerable funds for innovation were provided via EU structural funds. The three principle areas of support were the creation of technologies, technology absorption and indirect support. However, with respect to public programmes targeting firms, technology absorption has dominated all other instruments. Consequently, it is legitimate to ask whether the EU funds are being spent in the best possible way, and in particular, whether they contribute to the enhanced innovation performance of economy. To assess the efficiency of public support, the same econometric methodology is applied to the Turkish and Polish 2008 and 2010 editions of the Community Innovation Survey for manufacturing firms. Two models are estimated: one following the now classical CDM model and assessing the role of innovation spending, but assuming government support to be exogenous, and another controlling for the endogeneity of support but assuming a simplified version of the innovation performance equation. Depending on data availability, extensions of the analysis for both countries are offered: for Turkey the estimation of a full-fledged CDM model and for Poland the analysis of panel data for 2006-2010 and an assessment of the Efficiency of specific kinds of public support. The evidence indicates that government support contributes to higher innovation spending by firms and this in turn improves their chances to introduce product innovations. The positive impact remains valid even when a possibly non-random selection of firms for government support programmes is controlled for. The extended analysis of Turkey has proved that there is a positive relationship between innovation and firm productivity. On the other hand, substantial differences between various kinds of public aid were identified. In particular, support from local government proved inefficient or less efficient than the support from central government or the European Union. Moreover, in Poland, grants for investment in new machinery and equipment and human resources upgrading proved to contribute significantly less to innovation performance than support for R&D activities in firms. In terms of policy recommendations, this report supports an increase in the volume of innovation support and in the number of instruments used in Turkey. However, a more specific analysis is needed to explain the inefficiency of support from local government. The recommendation for Poland is to redesign the innovation support schemes for firms so as to put more focus on R&D activities and the development of truly new products and technologies
|Date of creation:||Aug 2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +48 22 206 29 00
Fax: +48 22 206 29 01
Web page: http://www.case-research.eu/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pierre Mohnen & Pierre Therrien, 2002. "Comparing the Innovation Performance of Canadian Firms and those of Selected European Countries: An Econometric Analysis," CIRANO Working Papers 2002s-80, CIRANO.
- González, Xulia & Pazó, Consuelo, 2008.
"Do public subsidies stimulate private R&D spending?,"
Elsevier, vol. 37(3), pages 371-389, April.
- Xulia González & Consuelo Pazó, 2005. "Do public subsidies stimulate private R&D spending?," Working Papers 0601, Universidade de Vigo, Departamento de Economía Aplicada.
- Castellacci, Fulvio, 2008.
"The technology clubs: the distribution of knowledge across nations,"
27597, University Library of Munich, Germany.
- Castellacci, Fulvio & Archibugi, Daniele, 2008. "The technology clubs: The distribution of knowledge across nations," Research Policy, Elsevier, vol. 37(10), pages 1659-1673, December.
- Lööf, Hans & Heshmati, Almas, 2004. "The Impact of Public Funding on Private R&D investment: New Evidence from a Firm Level Innovation Study," Working Paper Series in Economics and Institutions of Innovation 6, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies, revised 01 Mar 2005.
- Metcalfe, J S, 1994. "Evolutionary Economics and Technology Policy," Economic Journal, Royal Economic Society, vol. 104(425), pages 931-44, July.
- Mohnen, Pierre & Lokshin, Boris, 2009.
"What does it take for an R&D tax incentive policy to be effective?,"
MERIT Working Papers
014, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
- Pierre Mohnen & Boris Lokshin, 2009. "What does it take for and R&D tax incentive policy to be effective?," Working Papers 2009/9, Institut d'Economia de Barcelona (IEB).
- Pierre Mohnen & Boris Lokshin, 2009. "What Does it Take for an R&D Tax Incentive Policy to Be Effective?," CIRANO Working Papers 2009s-11, CIRANO.
- Bruno van Pottelsberghe, 2008.
"The London Agreement and the cost of patenting in Europe,"
- Malwina Mejer & Bruno Van Pottelsberghe, 2008. "The London Agreement and the Cost of Patenting in Europe," Working Papers ECARES 2008_032, ULB -- Universite Libre de Bruxelles.
- Mejer, Malwina & van Pottelsberghe de la Potterie, Bruno, 2008. "The London Agreement and the Cost of Patenting in Europe," CEPR Discussion Papers 7033, C.E.P.R. Discussion Papers.
- David M. Levy & Nestor E. Terleckyj, 1983. "Effects of Government R&D on Private R&D Investment and Productivity: A Macroeconomic Analysis," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 551-561, Autumn.
- Heckman, James, 2013.
"Sample selection bias as a specification error,"
Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
- Daniele Archibugi & Alberto Coco, 2004.
"A New Indicator of Technological Capabilities for Developed and Developing Countries (ArCo),"
SPRU Working Paper Series
111, SPRU - Science and Technology Policy Research, University of Sussex.
- Archibugi, Daniele & Coco, Alberto, 2004. "A New Indicator of Technological Capabilities for Developed and Developing Countries (ArCo)," World Development, Elsevier, vol. 32(4), pages 629-654, April.
- Daniele Archibugi & Alberto Coco, 2004. "A New Indicator of Technological Capabilities for Developed and Developing Countries (ArCo)," CEIS Research Paper 44, Tor Vergata University, CEIS.
- Giovanni Cerulli & Bianca Poti', 2008. "Evaluating the Effect of Public Subsidies on firm R&D activity: an Application to Italy Using the Community Innovation Survey," CERIS Working Paper 200809, Institute for Economic Research on Firms and Growth - Moncalieri (TO).
- Archibugi, Daniele & Coco, Alberto, 2005. "Measuring technological capabilities at the country level: A survey and a menu for choice," Research Policy, Elsevier, vol. 34(2), pages 175-194, March.
- João Alberto De Negri & Mauro Borges Lemos & Fernanda De Negri, 2006.
"Impact of P&D Incentive Program on the Performance and Technological Efforts of Brazilian Industrial Firms,"
IDB Publications (Working Papers)
24578, Inter-American Development Bank.
- João Alberto De Negri & Mauro Borges Lemos & Fernanda De Negri, 2006. "Impact of P&D Incentive Program on the Performance and Technological Efforts of Brazilian Industrial Firms," OVE Working Papers 1406, Inter-American Development Bank, Office of Evaluation and Oversight (OVE).
- Metcalfe, J S, 1995. "Technology Systems and Technology Policy in an Evolutionary Framework," Cambridge Journal of Economics, Oxford University Press, vol. 19(1), pages 25-46, February.
- Aerts, Kris & Schmidt, Tobias, 2008. "Two for the price of one?: Additionality effects of R&D subsidies: A comparison between Flanders and Germany," Research Policy, Elsevier, vol. 37(5), pages 806-822, June.
When requesting a correction, please mention this item's handle: RePEc:sec:cnstan:0458. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Agata Kwiek)
If references are entirely missing, you can add them using this form.