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Effectiveness of public innovation support in Europe: Does public support foster turnover, employment and labour productivity?

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  • Becker, Lasse

Abstract

In the European Union (EU), twenty Member States offer public innovation support for private research and development (R&D) activities through either subsidies or a combination of tax cuts and subsidies. Existing studies show ambiguous results regarding the effectiveness of public innovation support in different countries. Accordingly, following a description of the current public innovation framework in Europe, this paper analyses data from the European Community Innovation Survey concerning the effectiveness of public support. The measures chosen relate to changes in turnover as well as the number of employees and labour productivity (measured as turnover per employee) between 2006 and 2008. The paper finds a positive influence of public innovation support on labour productivity in an innovating company, a negative influence on turnover changes and a negative yet not significant influence on the development of employment. The influences of these factors are very weak, whereas other coefficients such as the money spent on innovative activities clearly show positive effects for all three indicators.

Suggested Citation

  • Becker, Lasse, 2015. "Effectiveness of public innovation support in Europe: Does public support foster turnover, employment and labour productivity?," University of Göttingen Working Papers in Economics 236, University of Goettingen, Department of Economics.
    • Handle: RePEc:zbw:cegedp:236
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    Cited by:

    1. Anders Gustafsson & Andreas Stephan & Alice Hallman & Nils Karlsson, 2016. "The “sugar rush” from innovation subsidies: a robust political economy perspective," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 43(4), pages 729-756, November.
    2. Gustafsson, Anders & Gustavsson Tingvall, Patrik & Halvarsson, Daniel, 2017. "Subsidy Entrepreneurs," Ratio Working Papers 303, The Ratio Institute.
    3. Brüggemann Julia & Proeger Till, 2017. "The Effectiveness of Public Subsidies for Private Innovations. An Experimental Approach," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 17(4), pages 1-21, October.
    4. Konstantinos Panagiotakopoulos & Jose Maria Fernandez-Crehuet & José Molero Zayas, 2018. "Public Finance of R&D and the Obstacles to Innovation: The Case of Spain," International Journal of Social Science Studies, Redfame publishing, vol. 6(12), pages 1-21, December.
    5. James A. Cunningham & Albert N. Link, 2016. "Exploring the effectiveness of research and innovation policies among European Union countries," International Entrepreneurship and Management Journal, Springer, vol. 12(2), pages 415-425, June.
    6. Anders Gustafsson & Patrik Gustavsson Tingvall & Daniel Halvarsson, 2020. "Subsidy Entrepreneurs: an Inquiry into Firms Seeking Public Grants," Journal of Industry, Competition and Trade, Springer, vol. 20(3), pages 439-478, September.
    7. Daunfeldt, Sven-Olov & Halvarsson, Daniel & Gustavsson Tingvall, Patrik & McKelvie, Alexander, 2021. "Do Targeted R&D Grants Towards Potential Highgrowth Firms Increase Employment and Demand for High Human Capital Workers?," HFI Working Papers 23, Institute of Retail Economics (Handelns Forskningsinstitut).
    8. Brüggemann, Julia & Proeger, Till, 2017. "The effectiveness of public subsidies for private innovations: An experimental approach," University of Göttingen Working Papers in Economics 266, University of Goettingen, Department of Economics, revised 2017.
    9. Lewandowska Małgorzata Stefania & Weresa Marzenna Anna & Rószkiewicz Małgorzata, 2022. "Evaluating the impact of public financial support on innovation activities of European Union enterprises: Additionality approach," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 58(3), pages 248-266, September.
    10. Kärnä, Anders & Karlsson, Johan & Engberg, Erik & Svensson, Peter, 2020. "Political Failure: A Missing Piece in Innovation Policy Analysis," Working Paper Series 1334, Research Institute of Industrial Economics, revised 21 Apr 2022.
    11. Sonja Đuričin & Isidora Beraha & Olivera Jovanović & Marija Mosurović Ružičić & Marija Lazarević-Moravčević & Mihailo Paunović, 2022. "The Efficiency of National Innovation Policy Programs: The Case of Serbia," Sustainability, MDPI, vol. 14(14), pages 1-14, July.

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    More about this item

    Keywords

    innovation; innovation support; labor productivity; Europe; effectiveness;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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