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Effects of multilevel policy mix of public R&D subsidies: Empirical evidence from Japanese local SMEs

Hiroyuki Okamuro and Junichi Nishimura

No 70_v2, CCES Discussion Paper Series from Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University

Abstract: Regional innovation policies have been implemented in several countries. In Japan, the controlled decentralization of traditionally centralized innovation policy is ongoing. Thus, we can observe the multilevel policy mix of public R&D (research and development) subsidies by national, prefecture, and city governments. However, empirical studies on multilevel R&D support, using panel data and considering the municipality level, are scarce. Based on original survey data and on the financial data for manufacturing SMEs (small and medium sized enterprises), we estimate their TFP (total factor productivity) and we empirically investigate the effects of public R&D subsidies by national, prefecture, and city governments. We employ firm-level fixed effect panel estimation to control for the effects of any unobservable time-invariant factors. We find that, with a two year lag, city and prefecture subsidies show positive and significant effects on TFP, which also persisted after the subsidy period. However, multilevel subsidies, especially those involving city subsidies, additionally and persistently increase recipients’ TFP. These results suggest significant advantages for the multilevel policy mix, especially those involving the city subsidy.

Keywords: R&D subsidy; local authority; multilevel policy mix; SMEs; policy evaluation (search for similar items in EconPapers)
JEL-codes: H71 O38 R58 (search for similar items in EconPapers)
Date: 2020-01
New Economics Papers: this item is included in nep-cse, nep-ent, nep-sbm, nep-tid and nep-ure
Note: First Draft:March 2019; This Version:January 2020
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https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/30939/070ccesDP_70.pdf

Related works:
Working Paper: Effects of multilevel policy mix of public R&D subsidies: Empirical evidence from Japanese local SMEs (2019)
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