Estimating the additionality of R&D subsidies using proposal evaluation data to control for research intentions

Morten Henningsen (), Torbjørn Hægeland and Jarle Møen

The Journal of Technology Transfer, 2015, vol. 40, issue 2, 227-251

Abstract: Empirical examination of whether R&D subsidies crowd out private investments has been hampered by selection problems. A particular worry is that project quality and research intentions may be correlated with the likelihood of receiving subsidies. Using proposal evaluation data to control for research intentions, we do not find strong evidence suggesting that this type of selection creates a severe bias. Proposal evaluation grades strongly predict R&D investments and reduce selection bias in cross-sectional regressions, but there is limited variation in grades within firms over time. Hence, in our sample, unobserved project quality is largely absorbed by firm fixed effects. Our best estimate of the short-run additionality of R&D subsidies is 1.15, i.e., a one-unit increase in subsidy increases total R&D expenditure in the recipient firm by somewhat more than a unit. We demonstrate, however, that there is measurement error in the subsidy variable. Additionality is therefore likely to be underestimated. Copyright Springer Science+Business Media New York 2015

Keywords: Technology policy; R&D subsidies; Input additionality; Selection; Proxy variables; O38; O32; L53; H25; H32 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://hdl.handle.net/10.1007/s10961-014-9337-z (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Estimating the additionality of R&D subsidies using proposal evaluation data to control for research intentions (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jtecht:v:40:y:2015:i:2:p:227-251

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/10961/PS2

DOI: 10.1007/s10961-014-9337-z

Access Statistics for this article

The Journal of Technology Transfer is currently edited by Albert N. Link, Donald S. Siegel, Barry Bozeman and Simon Mosey

More articles in The Journal of Technology Transfer from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().