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Research and development: financial constraints and the role of public funding for small and medium-sized enterprises

  • Czarnitzki, Dirk

This paper presents microeconometric evidence on financing con-traints for research and development activities in German small and medium?sized firms (SME). Special attention is paid to the role of public R&D subsidies. For this purpose SME in Western and East-ern Germany are compared because these regions are very different in their supply of public R&D funding. It turns out that Western German SME are financially constrained in their R&D activities by both internal and external resources. In Eastern Germany, firms are not sensitive to external constraints, possibly due to high public R&D subsidies. The results suggest that R&D in Eastern Germany is to a large extent driven by public subsidies since the German re?unification in 1990 and that the usual financial market mechanisms are repealed with respect to R&D in this region.

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 02-74.

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Date of creation: 2002
Date of revision:
Handle: RePEc:zbw:zewdip:531
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  1. repec:tpr:qjecon:v:115:y:2000:i:2:p:695-705 is not listed on IDEAS
  2. Harhoff, Dietmar, 1996. "Are there financing constraints for R&D and investment in German manufacturing firms?," ZEW Discussion Papers 96-28, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Bronwyn Hall, 2004. "The financing of research and development," Chapters, in: Financial Systems, Corporate Investment in Innovation, and Venture Capital, chapter 2 Edward Elgar.
  4. Steven Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1987. "Financing Constraints and Corporate Investment," NBER Working Papers 2387, National Bureau of Economic Research, Inc.
  5. 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), pages 783-832.
  6. Gourieroux,Christian, 2000. "Econometrics of Qualitative Dependent Variables," Cambridge Books, Cambridge University Press, number 9780521589857.
  7. Steven N. Kaplan & Luigi Zingales, 2000. "Investment-Cash Flow Sensitivities are not Valid Measures of Financing Constraints," NBER Working Papers 7659, National Bureau of Economic Research, Inc.
  8. Gourieroux,Christian, 2000. "Econometrics of Qualitative Dependent Variables," Cambridge Books, Cambridge University Press, number 9780521331494.
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