The Interplay between Public Procurement of Innovation and R&D Grants: Empirical Evidence from Belgium

Dirk Czarnitzki and Malte Prüfer

No 746875, Working Papers of Department of Management, Strategy and Innovation, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Management, Strategy and Innovation, Leuven

Abstract: This paper investigates the impact of Public Procurement of Innovation (PPI) and Research and Development (R&D) grants on firms' R&D investment using data from Belgian R&D-active firms over the past decade. Our empirical analysis robustly reveals a non-negligible crowding-out effect between the two instruments, suggesting a substitutive relationship. While each policy individually positively influences R&D investment, their combined implementation diminishes their effectiveness. These results challenge prevailing evidence and emphasize the need for a careful policy implementation, raising policymakers’ awareness against a blanket increase in innovation policies without considering potential interactions.

Keywords: Public procurement of innovation; Research and Development; Econometric policy evaluation; Crowding-out (search for similar items in EconPapers)
Date: 2024-08-14
New Economics Papers: this item is included in nep-cse, nep-ent, nep-ino and nep-tid
Note: paper number MSI_2405
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Published in FEB Research Report MSI_2405, pages 1-34

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https://lirias.kuleuven.be/retrieve/771618 Published version (application/pdf)

Related works:
Working Paper: The Interplay between Public Procurement of Innovation and R&D Grants: Empirical Evidence from Belgium (2024)
Working Paper: The interplay between public procurement of innovation and R&D grants: Empirical evidence from Belgium (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:ete:msiper:746875

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