Effectiveness of R&D subsidies during the crisis: firm-level evidence across EU countries. Issue 6 (18th August 2017)

• Record Type: Journal Article
• Authors: Aristei, David; Sterlacchini, Alessandro; Venturini, Francesco
• Is Part Of: Economics of innovation and new technology. Volume 26:Issue 6(2017)
• Page Start: 554
• Page End: 573
• Publication Date: 2017-08-18
• Subjects: R&D -- subsidies -- policy evaluation -- EU manufacturing firms; C21 -- D04 -- O32 -- O38; Technological innovations -- Economic aspects -- Periodicals; 338.06405
• DOI: 10.1080/10438599.2016.1249543
• Languages: English
• ISSNs: 1043-8599

Abstract

ABSTRACT: This paper is one of the first attempts in the literature to evaluate the effectiveness of R&D policies in Europe during the great crisis of the late 2000s. Using homogenous firm-level data for the largest EU Member States over the period 2007–2009, we test whether manufacturing firms receiving public subsidies spent more on R&D. The analysis is performed using both non-parametric techniques and parametric estimation methods accounting for the possible endogenous selectivity of R&D subsidies. The hypothesis of full crowding-out is rejected in all countries under exam as firms did not replace their own resources with public grants. However, these firms did not allocate additional funds to research and hence, differently from earlier works, we do not find evidence for additionality effects of R&D subsidies. Our estimates indicate that, albeit not expansive, public subsidies to R&D thwarted the reduction of firm R&D efforts in the aftermath of economic crisis.