 Does public R&D funding crowd-in private R&D investment? Evidence from military R&D expenditures for US statesGianluca Pallante, Emanuele Russo and Andrea Roventini Research Policy, 2023, vol. 52, issue 8 Abstract: Defense R&D represents the largest component of US public R&D spending and historically has promoted a wide range of civilian innovations. However, the empirical evidence on the impact of defense R&D is scant and it does not provide conclusive results on the possible crowding-in (-out) effects on private R&D investment. Exploiting a longitudinal dataset linking public R&D obligations to private R&D expenditures for US states, we investigate the impact of defense R&D on privately-financed R&D. To address potential endogeneity in the allocation of funds, we use an instrumental variable identification strategy leveraging the differential exposure of US states to national shocks in federal military R&D. We document considerable crowding-in effects with elasticities in the 0.11–0.14 range. These positive effects extend also to the labor market, when focusing on employment in selected R&D intensive industries and especially for engineers. Keywords: R&D; Innovation policy; Defense R&D; Mission-oriented innovation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:52:y:2023:i:8:s0048733323000914 DOI: 10.1016/j.respol.2023.104807 Access Statistics for this article Research Policy is currently edited by M. Bell, B. Martin, W.E. Steinmueller, A. Arora, M. Callon, M. Kenney, S. Kuhlmann, Keun Lee and F. Murray More articles in Research Policy from Elsevier |
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