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Two for the price of one? On additionality effects of R&D subsidies: A comparison between Flanders and Germany

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  • Aerts, Kris
  • Schmidt, Tobias

Abstract

In this paper we empirically test whether public R&D subsidies crowd out private R&D investment in Flanders and Germany, using firm level data from the Flemish and German part of the Community Innovation survey (CIS III and IV). Both the non-parametric matching estimator and the conditional difference-in-difference estimator with repeated cross-sections (CDiDRCS) clearly indicate that the crowding-out hypothesis can be rejected: funded firms are significantly more R&D active than non-funded firms. In the domain of additionality effects of R&D subsidies, this paper is the first to apply the CDiDRCS method.

Suggested Citation

  • 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 06-063, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:5457
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. José Ángel Zúñiga-Vicente & César Alonso-Borrego & Francisco J. Forcadell & José I. Galán, 2014. "Assessing The Effect Of Public Subsidies On Firm R&D Investment: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 28(1), pages 36-67, February.
    2. Antonioli,Davide & Marzucchi,Alberto & Montresor,Sandro, 2012. "Regional innovation policy and innovative behaviours. A propensity score matching evaluation," INGENIO (CSIC-UPV) Working Paper Series 201205, INGENIO (CSIC-UPV).
    3. Pekka SALMI, 2012. "The Impact of Public R&D Funding on Open Innovation," Economia. Seria Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 15(1), pages 142-163, June.
    4. Mairesse, Jacques & Mohnen, Pierre, 2010. "Using Innovation Surveys for Econometric Analysis," Handbook of the Economics of Innovation, Elsevier.
    5. Silva Filipe & Carreira Carlos, 2017. "Financial Constraints: Do They Matter to Allocate R&D Subsidies?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 17(4), pages 1-26, October.
    6. LOPES BENTO Cindy & CZARNITZKI Dirk, 2012. "Value for money? New microeconomic evidence on public R&D grants in Flanders," LISER Working Paper Series 2012-19, LISER.
    7. Cantner, Uwe & Joel, Kristin & Schmidt, Tobias, 2011. "The effects of knowledge management on innovative success – An empirical analysis of German firms," Research Policy, Elsevier, vol. 40(10), pages 1453-1462.
    8. Janina Reinkowski & Timo Mitze & Björn Alecke & Gerhard Untiedt, 2011. "R&D Subsidies and Private Sector Innovativeness: New Empirical Evidence for East German Firms," ERSA conference papers ersa10p1071, European Regional Science Association.
    9. Erol Taymaz & Yeşim Üçdoğruk, 2009. "Overcoming the double hurdles to investing in technology," Small Business Economics, Springer, vol. 33(1), pages 109-128, June.
    10. Koehler, Mila & Peters, Bettina, 2017. "Subsidized and non-subsidized R&D projects: Do they differ?," ZEW Discussion Papers 17-042, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    11. Marino, Marianna & Parrotta, Pierpaolo & Sala, Davide, 2010. "New Perspectives on the Evaluation of Public R&D Funding," Working Papers 11-2, University of Aarhus, Aarhus School of Business, Department of Economics.
    12. Hoewer, Daniel & Schmidt, Tobias & Sofka, Wolfgang, 2011. "An information economics perspective on main bank relationships and firm R&D," ZEW Discussion Papers 11-055, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    13. Koehler, Mila, 2018. "Estimating the benefits of R&D subsidies for Germany," ZEW Discussion Papers 18-002, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    14. Hottenrott, Hanna & Lopes-Bento, Cindy, 2014. "(International) R&D collaboration and SMEs: The effectiveness of targeted public R&D support schemes," Research Policy, Elsevier, vol. 43(6), pages 1055-1066.
    15. Tobias Schmidt & Birgit Aschhoff, 2007. "Die Nutzung der Innovationsdaten des Mannheimer Innovationspanels für die Politikberatung," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 76(3), pages 17-28.
    16. Donja Darai & Jens Grosser & Nadja Trhal, 2009. "Patents versus Subsidies � A Laboratory Experiment," SOI - Working Papers 0905, Socioeconomic Institute - University of Zurich.
    17. Czarnitzki, Dirk & Lopes-Bento, Cindy, 2013. "Value for money? New microeconometric evidence on public R&D grants in Flanders," Research Policy, Elsevier, vol. 42(1), pages 76-89.
    18. Russell Thomson & Elizabeth Webster, 2012. "The Design of R & D Support Schemes for Industry," Economic Papers, The Economic Society of Australia, vol. 31(4), pages 464-477, December.
    19. Bernd Ebersberger, 2011. "Public funding for innovation and the exit of firms," Journal of Evolutionary Economics, Springer, vol. 21(3), pages 519-543, August.
    20. Aschhoff, Birgit, 2009. "The effect of subsidies on R&D investment and success: do subsidy history and size matter?," ZEW Discussion Papers 09-032, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

    More about this item

    Keywords

    R&D; Subsidies; Policy Evaluation; Conditional Difference-in-Difference;

    JEL classification:

    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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