R&D Subsidies and Private Sector Innovativeness: New Empirical Evidence for East German Firms
We analyse the effect of public Research and Development (R&D) subsidies on private sector innovativeness for a cross-section of East German firms applying different matching estimations, which are primary based on an estimate of a propensity score. To do so, we use a until now unexplored representative database for the federal state of Thuringia covering around 1500 firm and the period 2001 to 2003. From a methodological perspective we apply a two-step microeconometric policy evaluation approach that estimates a probit equation for R&D programme participation in a first step and then uses the fitted values (the so called propensity score) in a second step matching approach. Here we compare the outcome difference of subsidized and non-subsidized firms for a broad set of private sector R&D variables such as general patenting activity, total number of patents, R&D expenditure and employment as well as R&D intensity (defined as R&D expenditures relative to total turnover). Our empirical results indicate that the treated firms indeed show a significantly higher research activity measured in terms of R&D intensity and patent application. With respect to R&D intensity for instance this difference is estimated to vary between 4 to 5 percentage points. Our findings thus give support to earlier evidence for East Germany, which so far have been solely based on the Mannheim Innovation Panel (MIP) as the only database accessible for analyses on the role of public policy in the innovation process of German firms. Our empirical results for Thuringia pass a variety of robustness checks based on different estimation routines (Kernel, Mahalanobis distance) and additional matching criteria beyond the propensity score (such as same industry code as well as size group). We also perform sensitivity checks for subgroups of the sample, e.g. we include only those firms who regularly engage in R&D activity. All results hint at the positive stimulus given by public R&D subsidies to enhance the private sector innovativeness.
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.:
- 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.
- Michael Lechner, 2002.
"Some practical issues in the evaluation of heterogeneous labour market programmes by matching methods,"
Journal of the Royal Statistical Society Series A,
Royal Statistical Society, vol. 165(1), pages 59-82.
- Michael Lechner, 2005. "Some practical issues in the evaluation of heterogeneous labour market programmes by matching methods," Labor and Demography 0505006, EconWPA.
- Guido W. Imbens, 2003.
"Nonparametric Estimation of Average Treatment Effects under Exogeneity: A Review,"
NBER Technical Working Papers
0294, National Bureau of Economic Research, Inc.
- Guido W. Imbens, 2004. "Nonparametric Estimation of Average Treatment Effects Under Exogeneity: A Review," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 4-29, February.
- Xulia González & Jordi Jaumandreu & Consuelo Pazó, 2001.
"Barriers to innovation and subsidy e¤ectiveness,"
0112, Universidade de Vigo, Departamento de Economía Aplicada.
- Guellec, Dominique & Pottelsberghe de la Potterie, Bruno van, 2003.
"From R&D to Productivity Growth: Do The Institutional Setting and The Source of Funds of R&D Matter?,"
IIR Working Paper
03-26, Institute of Innovation Research, Hitotsubashi University.
- Dominique Guellec & Bruno Van Pottelsberghe de la Potterie, 2004. "From R&D to Productivity Growth: Do the Institutional Settings and the Source of Funds of R&D Matter?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 66(3), pages 353-378, 07.
- Bruno Van Pottelsberghe & Dominique Guellec, 2004. "From R&D to productivity growth: do the institutional settings and the sources of funds of R&D matter?," ULB Institutional Repository 2013/6207, ULB -- Universite Libre de Bruxelles.
- Dominique Guellec & Bruno Van Pottelsberghe, 2004. "From R&D to Productivity Growth: Do the Institutional Settings and the Source of Funds of R&D Matter?," Working Papers CEB 04-010.RS, ULB -- Universite Libre de Bruxelles.
- Aerts, Kris & Schmidt, Tobias, 2006. "Two for the price of one? On additionality effects of R&D subsidies: A comparison between Flanders and Germany," ZEW Discussion Papers 06-63, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- María Callejón & José García Quevedo, 2002. "Las ayudas a la I+D empresarial. Un an lisis sectorial," Working Papers 2002/6, Institut d'Economia de Barcelona (IEB).
- Dirk Czarnitzki & Georg Licht, 2006. "Additionality of public R&D grants in a transition economy," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 14(1), pages 101-131, 03.
- Levy, David M., 1990. "Estimating the impact of government R&D," Economics Letters, Elsevier, vol. 32(2), pages 169-173, February.
- Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
- Czarnitzki, Dirk & Licht, Georg, 2004. "Die Rolle der Innovationsförderung im Aufholprozess Ostdeutschlands," ZEW Discussion Papers 04-68, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Dominique Guellec & Bruno van Pottelsberghe de la Potterie, 2001.
"R&D and Productivity Growth: Panel Data Analysis of 16 OECD Countries,"
OECD Science, Technology and Industry Working Papers
2001/3, OECD Publishing.
- Dominique Guellec & Bruno van Pottelsberghe de la Potterie, 2003. "R&D and Productivity Growth: Panel Data Analysis of 16 OECD Countries," OECD Economic Studies, OECD Publishing, vol. 2001(2), pages 103-126.
- Bruno Van Pottelsberghe & Dominique Guellec, 2001. "R&D and productivity growth: a panel data analysis of 16 OECD countries," ULB Institutional Repository 2013/6219, ULB -- Universite Libre de Bruxelles.
- Maryann Feldman, 1999. "The New Economics Of Innovation, Spillovers And Agglomeration: Areview Of Empirical Studies," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 8(1-2), pages 5-25.
- Almus, Matthias & Czarnitzki, Dirk, 2001.
"The effects of public R&D subsidies on firms' innovation activities: the case of Eastern Germany,"
ZEW Discussion Papers
01-10, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- 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.
- James J. Heckman & Hidehiko Ichimura & Petra E. Todd, 1997. "Matching As An Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Oxford University Press, vol. 64(4), pages 605-654.
- José García-Quevedo, 2004. "Do Public Subsidies Complement Business R&D? A Meta-Analysis of the Econometric Evidence," Kyklos, Wiley Blackwell, vol. 57(1), pages 87-102, 02.
- 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, EconWPA.
- Arthur M. Diamond, 1999. "Does Federal Funding "Crowd In" Private Funding Of Science?," Contemporary Economic Policy, Western Economic Association International, vol. 17(4), pages 423-431, October.
- 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.
When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa10p1071. 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: (Gunther Maier)
If references are entirely missing, you can add them using this form.