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Comparative Analysis of State and Regional R&D Subsidies for Innovation

This symposium presentation evaluates the impact of public funds on private R&D, comparing state and regional subsidies. The study analyzes determinants of receiving subsidies, quantifies subsidy effects on firms' innovation efforts, and assesses additional effects. Main objectives include assessing the role of regional actors and examining differences in participation in regional and national innovation policies. Results suggest evidence of both common patterns and distinct characteristics in firm participation.

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Comparative Analysis of State and Regional R&D Subsidies for Innovation

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  1. Symposium on Business Dynamics and Innovation: The effects of agglomeration economiesBarcelona, 8 October 2008 “Assessing the impact of public funds on private R&D. A comparative analysis between state and regional subsidies” Sergio Afcha and Jose Garcia-Quevedo, University of Barcelona

  2. Outline of the presentation Motivation: increasing importance of regional innovation policies Objectives: evaluation of public policies Data and descriptive statistics Methodology and results Conclusions and future lines of research

  3. Motivationforthiswork • In the last two decades increasing interest has been putting in the relationship between geographical location and innovation (Storper, 1997; Audretsch&Feldman, 1999). • Emergence of different concepts about industrial agglomeration: Clusters, Industrial districts, Innovative Millieu, competitive regions etc. Has contributed to the awareness of regional dimension is a suitable level to promote innovation activity.

  4. Motivationforthiswork • More active role of regional actors (Government, Institutions, firms) • Regional governments: specific regional policies in order to promote regional innovation systems. • However... There is few evidence about: Evaluation studies in innovation policy at regional level, and comparisons between regional and central government interventions

  5. MainObjectives This work compares central and regional policies promoting R&D activities: • Analyzing determinants (firms characteristics) of receiving subsidies, both at regional and central level. • Quantifying the effect of central and regional R&D subsidies on firms’ Innovation effort (financial additionality).

  6. Data and descriptive statistics • Data: Survey on Business Strategy, ESEE (Encuesta de estrategias empresariales/FUNEP). • Period: 1998-2005. • Sample: Innovative manufacturing firms. R&D >0.

  7. Descriptive Statistics. Innovative Effort

  8. Results (Probit estimations)

  9. Main hypothesis • If coordination works, relevant variables should not be exactly the same in the Probit regressions. • Coincidence in significant variables could be indicating duplication of goals at different levels of government.

  10. Summary of results: firm characteristics

  11. Evaluation of central and regional R&D subsidies (additional effects?) • Non parametrical Technique: Propensity score Matching. Nearest neighbor matching algorithm. • Purpose: Establish a valid control group in order to compare innovative effort performed by subsidized and non subsidized firms. • Control Group: Innovative firms without subsidies.

  12. Results (Evaluation)

  13. Conclusions and future lines of research • Although some common patterns, evidence of differences (firm characteristics) in the participation in regional and national innovation policy. • Crowding out effect is rejected for central subsidies. Evidence of additionality (Herrera&Heijs, 2007; Fernandez&Pazó, 2008;) • ATT for regional subsidies are not statistically significant. • Regional effects should be estimated by region in order to take in account regional differences. • Regional innovation policy: Need to analyse other additional effects (behavioral)

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