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Do subsidies have positive impacts on R&D and innovation activities at the firm level?

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  • Tommy Clausen

    (Centre for Technology, Innovation and Culture, University of Oslo)

Abstract

In this paper we analyze whether and how “research” and “development” subsidies influence private R&D activity. Our empirical results show that “research” subsidies stimulate R&D spending within firms while “development” subsidies substitute such spending. At the theoretical level we find empirical support for the market failure argument that private R&D expenditure is best stimulated in areas where the gap between the social and the private rate of return to R&D is high. A policy implication is that technology programs should support research projects in the private sector in order to stimulate to more R&D.

Suggested Citation

  • Tommy Clausen, 2008. "Do subsidies have positive impacts on R&D and innovation activities at the firm level?," Working Papers on Innovation Studies 20070615, Centre for Technology, Innovation and Culture, University of Oslo.
    • Handle: RePEc:tik:inowpp:20070615
    Note: This is an updated version (November 2008) of the same paper published earlier as TIK working paper on 15.6.2007 (No. 20070615)
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    Cited by:

    1. Fulvio Castellacci, 2008. "Innovation in Norway in a European Perspective," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 34, pages 1-1.
    2. Huergo, Elena & Moreno, Lourdes, 2017. "Subsidies or loans? Evaluating the impact of R&D support programmes," Research Policy, Elsevier, vol. 46(7), pages 1198-1214.
    3. Michel Dumont, 2015. "Working Paper 05-15 - Evaluation of federal tax incentives for private R&D in Belgium: An update," Working Papers 1505, Federal Planning Bureau, Belgium.
    4. Dumont, Michel, 2017. "Assessing the policy mix of public support to business R&D," Research Policy, Elsevier, vol. 46(10), pages 1851-1862.

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