Spillover, public investment and innovation: the impact of public investment in R&D on business innovation

Leonardo Rocha (), Denis Sarmento (), Carlos Alano Almeida () and Napiê Silva ()
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Leonardo Rocha: Federal Rural University of the Semi-Arid (UFERSA)
Denis Sarmento: Adelmar Rosado College (FAR)
Carlos Alano Almeida: Federal Rural University of the Semi-Arid (UFERSA)
Napiê Silva: Federal Rural University of the Semi-Arid (UFERSA)

Economics Bulletin, 2020, vol. 40, issue 3, 2344-2360

Abstract: This research analyzes the impact of public investment on the relationship “private investment in research versus performance†of the top R&D investors. Taking a recent sample of the top investors, as well as different estimation techniques, the results show that public investments in research contribute to increase the elasticity coefficients of private investments in R&D, either linearly or nonlinearly. In the nonlinear pattern, optimal levels of public policy point to a share of total public investment of around 15.8%, thus maximizing the elasticity coefficient of private investment. Controlling the endogeneity of private investments in R&D, GMM estimates point to an underestimation of the parameters obtained by the OLS technique and robust regression, signaling an increase in the elasticity coefficient of the research. The results of this research converge with other recent studies, highlighting Azoulay et al. (2019) and Kwon and Kwon (2019).

Keywords: Innovation; R&D; spillover; robust regression; GMM (search for similar items in EconPapers)
JEL-codes: O1 O3 (search for similar items in EconPapers)
Date: 2020-08-24
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