Financial Constraints: Do They Matter to R&D Subsidy Attribution?

Filipe Silva () and Carlos Carreira ()

No 2012-18, GEMF Working Papers from GEMF, Faculty of Economics, University of Coimbra

Abstract: Even though innovation subsidies and financial constraints are two closely related lines of research, the link between them is rather unexplored. This paper is, to our knowledge, the first to explicitly analyse both the allocation of innovation subsidies and their role in alleviating firms’ financial constraints. It is not the purpose of the paper to question whether subsidies foster innovation, but rather if: a) subsidies are being correctly allocated to financially constrained firms; b) they effectively reduce financial constraints. We argue that, in addition to the usual “public good” arguments behind the allocation of innovation subsidies, the extent to which firms are able to obtain external funding should not be overlooked. Overall, our results question the allocation and effectiveness of subsidies in alleviating financial constraints of firms willing to innovate. Accordingly, these findings have serious implications on the design of future innovation policy actions.

Keywords: R&D Subsidies; Innovation; Financial constraints; Firm-level analysis; Portugal. (search for similar items in EconPapers)
JEL-codes: D92 G32 L20 O38 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2012-11
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Related works:
Journal Article: Financial Constraints: Do They Matter to Allocate R&D Subsidies? (2017)
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