The Impact of EU Grants for Research and Innovation on Firms’ Performance

Gábor Kátay, Pálma Mosberger and Francesco Tucci

No 238, European Economy - Discussion Papers from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: The paper evaluates the impact of the European Commission’s Seventh Framework Pro-gramme (FP7) grants on profit-oriented firms’ post-treatment performance. Using a robust quasi-experimental design and a dataset covering applicants from 46 countries, we find that FP7 grants increase firms’ sales and labour productivity by about 18%. However, there is no significant impact on employment levels, pointing to potential growth barriers that prevent firms from scaling production despite improved productivity. The effectiveness of these grants varies significantly based on factors such as financial constraints, project risk profiles, market structure, and the innovation environment. Smaller, less productive firms with tighter financial constraints in technology-intensive sectors operating in concentrated markets and favourable innovation environments, particularly those undertaking longer and riskier projects, tend to benefit more.

JEL-codes: C31 G28 H57 O31 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2025-12
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Persistent link: https://EconPapers.repec.org/RePEc:euf:dispap:238

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