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The impact of R&D subsidies during the crisis

Martin Hud and Katrin Hussinger ()

Research Policy, 2015, vol. 44, issue 10, 1844-1855

Abstract: This study investigates the impact of public R&D subsidies on R&D investment of small and medium-sized enterprises (SMEs) in Germany during the most recent economic crisis. Our analysis is based on firm-level data of the Mannheim Innovation Panel (MIP) covering the period 2006–2010. While we find an overall positive effect of R&D subsidies on SMEs’ R&D investment behavior, there is evidence for a crowding out effect for the crisis year 2009. In 2010, when the German economy started to recover, the subsidy effect is smaller than in the pre-crisis years, but positive and significant. Additional tests indicate that the temporary crowding out effect was caused by reluctant innovation investment behavior of the subsidy recipients rather than by Germany’s countercyclical innovation policy during the crisis.

Keywords: R&D; Subsidies; Policy evaluation; Economic crisis; Treatment effects (search for similar items in EconPapers)
JEL-codes: C14 C21 G01 H50 O38 (search for similar items in EconPapers)
Date: 2015
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Working Paper: The impact of R&D subsidies during the crisis (2014) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:44:y:2015:i:10:p:1844-1855

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