IDEAS home Printed from https://ideas.repec.org/p/tik/inowpp/20070615.html
   My bibliography  Save this paper

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

Author

Listed:
  • 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)
    as

    Download full text from publisher

    File URL: http://www.tik.uio.no/InnoWP/Clausen%202007%20subsidies.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Klette, Tor Jakob & Moen, Jarle & Griliches, Zvi, 2000. "Do subsidies to commercial R&D reduce market failures? Microeconometric evaluation studies1," Research Policy, Elsevier, vol. 29(4-5), pages 471-495, April.
    2. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2003. "Instrumental variables and GMM: Estimation and testing," Stata Journal, StataCorp LP, vol. 3(1), pages 1-31, March.
    3. Almus, Matthias & Czarnitzki, Dirk, 2003. "The Effects of Public R&D Subsidies on Firms' Innovation Activities: The Case of Eastern Germany," Journal of Business & Economic Statistics, American Statistical Association, vol. 21(2), pages 226-236, April.
    4. David, Paul A. & Hall, Bronwyn H. & Toole, Andrew A., 2000. "Is public R&D a complement or substitute for private R&D? A review of the econometric evidence," Research Policy, Elsevier, vol. 29(4-5), pages 497-529, April.
    5. Isabel Busom, 2000. "An Empirical Evaluation of The Effects of R&D Subsidies," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 9(2), pages 111-148.
    6. Bronwyn H. Hall, 2002. "The Assessment: Technology Policy," Oxford Review of Economic Policy, Oxford University Press, vol. 18(1), pages 1-9, Spring.
    7. DUGUET Emmanuel, 2004. "Are R&D subsidies a substitute or a complement to privately funded R&D? Evidence from France using propensity score methods for non- experimental data," Public Economics 0411007, University Library of Munich, Germany.
    8. Ebersberger, Bernd & Czarnitzki, Dirk & Fier, Andreas, 2004. "The Relationship between R&D Collaboration, Subsidies and Patenting Activity: Empirical Evidence from Finland and Germany," ZEW Discussion Papers 04-37, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    9. Lach, Saul, 2002. "Do R&D Subsidies Stimulate or Displace Private R&D? Evidence from Israel," Journal of Industrial Economics, Wiley Blackwell, vol. 50(4), pages 369-390, December.
    10. Bronwyn Hall, 2004. "The financing of research and development," Chapters,in: Financial Systems, Corporate Investment in Innovation, and Venture Capital, chapter 2 Edward Elgar Publishing.
    11. Mytelka, Lynn K. & Smith, Keith, 2002. "Policy learning and innovation theory: an interactive and co-evolving process," Research Policy, Elsevier, vol. 31(8-9), pages 1467-1479, December.
    12. Czarnitzki, Dirk & Fier, Andreas, 2002. "Do Innovation Subsidies Crowd Out Private Investment? Evidence from the German Service Sector," ZEW Discussion Papers 02-04, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    13. Blanes, J. Vicente & Busom, Isabel, 2004. "Who participates in R&D subsidy programs?: The case of Spanish manufacturing firms," Research Policy, Elsevier, vol. 33(10), pages 1459-1476, December.
    14. Czarnitzki, Dirk & Hussinger, Katrin, 2004. "The Link Between R&D Subsidies, R&D Spending and Technological Performance," ZEW Discussion Papers 04-56, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    15. Lichtenberg, Frank R, 1988. "The Private R&D Investment Response to Federal Design and Technical Competitions," American Economic Review, American Economic Association, vol. 78(3), pages 550-559, June.
    16. Tommy Clausen, 2007. "Access (not) granted: What kinds of firms participate in technology programs?," Working Papers on Innovation Studies 20070612, Centre for Technology, Innovation and Culture, University of Oslo.
    17. Sverre Herstad & Lillian Hatling & Arne Isaksen, "undated". "SND og distriktsutvikling – rolle, virkemidler og effekter," STEP Report series 200005, The STEP Group, Studies in technology, innovation and economic policy.
    18. Dirk Czarnitzki, 2006. "Research And Development In Small And Medium-Sized Enterprises: The Role Of Financial Constraints And Public Funding," Scottish Journal of Political Economy, Scottish Economic Society, vol. 53(3), pages 335-357, July.
    19. Aerts, Kris & Czarnitzki, Dirk, 2004. "Using Innovation Survey Data to Evaluate R&D Policy: The Case of Belgium," ZEW Discussion Papers 04-55, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    20. 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 569-596, September.
    21. Hujer, Reinhard & Radić, Dubravko, 2005. "Evaluating the Impacts of Subsidies on Innovation Activities in Germany," ZEW Discussion Papers 05-43, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    22. Tor Jakob Klette, 1996. "R&D, Scope Economies, and Plant Performance," RAND Journal of Economics, The RAND Corporation, vol. 27(3), pages 502-522, Autumn.
    23. Georghiou, Luke & Roessner, David, 2000. "Evaluating technology programs: tools and methods," Research Policy, Elsevier, vol. 29(4-5), pages 657-678, April.
    24. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1987. "Appropriating the Returns from Industrial Research and Development," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(3, Specia), pages 783-832.
    25. 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.
    26. David, Paul A. & Hall, Bronwyn H., 2000. "Heart of darkness: modeling public-private funding interactions inside the R&D black box," Research Policy, Elsevier, vol. 29(9), pages 1165-1183, December.
    27. 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.
    28. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters,in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
    29. Klevorick, Alvin K. & Levin, Richard C. & Nelson, Richard R. & Winter, Sidney G., 1995. "On the sources and significance of interindustry differences in technological opportunities," Research Policy, Elsevier, vol. 24(2), pages 185-205, March.
    30. Archibugi, Daniele & Iammarino, Simona, 1999. "The policy implications of the globalisation of innovation," Research Policy, Elsevier, vol. 28(2-3), pages 317-336, March.
    31. Levin, Richard C & Cohen, Wesley M & Mowery, David C, 1985. "R&D Appropriability, Opportunity, and Market Structure: New Evidence on Some Schumpeterian Hypotheses," American Economic Review, American Economic Association, vol. 75(2), pages 20-24, May.
    32. Reinhard Hujer & Dubravko Radic, 2005. "Evaluating The Impacts Of Subsidies On Innovation Activities In Germany," Scottish Journal of Political Economy, Scottish Economic Society, vol. 52(4), pages 565-586, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. 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.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tik:inowpp:20070615. 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: (H&kon Normann). General contact details of provider: http://edirc.repec.org/data/tkuiono.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.