R&D subsidies in permissive and restrictive environment: Evidence from Korea

Yumi Koh and Gea M. Lee

Research Policy, 2023, vol. 52, issue 1

Abstract: This paper investigates the extent to which a regulatory environment for R&D subsidies shapes the magnitude and direction of R&D subsidies set by a government and consequent innovation paths. When the WTO adopted a permissive regulatory environment, we find that the Korean government increased R&D subsidies significantly (89.21%) and selectively so for firms and industries with higher returns. Recipient firms conducted less basic research and more development research. Improvements in innovations were mostly incremental and minor. However, such changes did not persist once the WTO switched to a restrictive regulatory environment. Our findings show that the regulatory environment imposed by the WTO largely affects allocation of R&D subsidies and suggest that a permissive regulatory environment may not necessarily maximize the potential for breakthrough innovations.

Keywords: R&D subsidy; Regulatory environment; WTO subsidy rules; Innovations; Patent; Utility model (search for similar items in EconPapers)
JEL-codes: F13 H25 O32 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:52:y:2023:i:1:s0048733322001421

DOI: 10.1016/j.respol.2022.104620

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