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

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

Author(s) -

GÖRG HOLGER,

STROBL ERIC

Publication year - 2007

Publication title -

economica

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 1.532

H-Index - 65

eISSN - 1468-0335

pISSN - 0013-0427

DOI - 10.1111/j.1468-0335.2006.00547.x

Subject(s) - subsidy , additionality , crowding out , government (linguistics) , private sector , economics , business , finance , monetary economics , public economics , market economy , economic growth , linguistics , philosophy

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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