The Interplay between Public Procurement of Innovation and R&D Grants: Empirical Evidence from Belgium

Dirk Czarnitzki and Malte Prüfer

No 746875, Working Papers of ECOOM - Centre for Research and Development Monitoring from KU Leuven, Faculty of Economics and Business (FEB), ECOOM - Centre for Research and Development Monitoring

Abstract: This paper investigates the impact of Public Procurement of Innovation (PPI) and Research and Development (R&D) grants on firms' R&D investment using data from Belgian R&D-active firms over the past decade. Our empirical analysis robustly reveals a non-negligible crowding-out effect between the two instruments, suggesting a substitutive relationship. While each policy individually positively influences R&D investment, their combined implementation diminishes their effectiveness. These results challenge prevailing evidence and emphasize the need for a careful policy implementation, raising policymakers’ awareness against a blanket increase in innovation policies without considering potential interactions.

Keywords: Public procurement of innovation; Research and Development; Econometric policy evaluation; Crowding-out (search for similar items in EconPapers)
Date: 2024-08-14
New Economics Papers: this item is included in nep-sbm
Note: paper number MSI_2405
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Published in FEB Research Report MSI_2405, pages 1-34

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https://lirias.kuleuven.be/retrieve/771618 Published version (application/pdf)

Related works:
Working Paper: The Interplay between Public Procurement of Innovation and R&D Grants: Empirical Evidence from Belgium (2024)
Working Paper: The interplay between public procurement of innovation and R&D grants: Empirical evidence from Belgium (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:ete:ecoomp:746875

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