Subsidizing R&D in Germany: Direct and Spillover Effects

Knarik Poghosyan and Tobias Büscher

No 2183, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: This study estimates the effects of research and development (R&D) funding on firm performance and innovation activity in Germany for the period of 2000 to 2020. Since R&D collaborations between funded and non-funded firms can lead to positive externalities, our study accounts not only for the direct effects of the policy on funded firms but also for indirect (spillover) effects on non-funded firms. We use multiple databases (DAFNE, PATSTAT, Förderkatalog) and conduct empirical estimations on both firm and cluster levels. Our findings suggest that, in general, R&D funding has a positive impact on both funded and non-funded firms, which varies with the share of funded firms in the cluster. Interestingly, the indirect impact on innovation is larger than the direct impact. The latter finding points out the advantages of this broad type of R&D funding (no sectoral or regional concentration) in enforcing innovation spillovers, but also highlights its limitation in generating stronger direct effects.

Keywords: R&D funding; spillover effects; policy evaluation; regional innovation; patent data (search for similar items in EconPapers)
JEL-codes: O33 O38 (search for similar items in EconPapers)
Pages: 24 p.
Date: 2026
New Economics Papers: this item is included in nep-ppm and nep-sbm
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