The Effect of R&D Subsidies on Private R&D

2006/09/19 by HOLGER GÖRG, Holger Görg, Eric Strobl +1 · 14 citations
Economics, Econometrics and Finance · #Innovation Policy and R&D #Firm Innovation and Growth #Energy, Environment, Economic Growth

paper · doi:10.1111/j.1468-0335.2006.00547.x

Abstract

This paper investigates the relationship between government support for R&D and R&D expenditure financed privately by firms using a comprehensive plant level data set for the manufacturing sector in the Republic of Ireland. We find that for domestic plants small grants serve to increase private R&D spending, while too large a grant may crowd out private financing of R&D. In contrast, evidence for foreign establishments suggests that grant provision causes neither additionality nor crowding out effects of private R&D financing, regardless of the size of the subsidy.

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