Complementarity between Hard and Soft Support? The Effects of Place-based R&D Policy Instrument Mix on Local Innovation

Hiroyuki Okamuro and Junichi Nishimura

No HIAS-E-158, Discussion paper series from Hitotsubashi Institute for Advanced Study, Hitotsubashi University

Abstract: Public R&D support attracts both academic and practical attention. Recent studies investigate the combination of different R&D policy instruments (policy mix), focusing on R&D subsidies and tax credits (“hard support”), despite the variety of actual instruments covering “soft support,” such as matching, mediation, and consultation services. Moreover, despite the decentralization of R&D policies in several countries, few studies have addressed place-based (city-level) R&D support with a variety of policy instruments. This study fills these gaps by estimating the effects of the local R&D policy mix, covering both hard and soft instruments, based on unique panel data of 146 Japanese cities for 18 years. Using panel fixed-effects estimations, we find that hard support has positive and significant effects on patent applications per person, while soft support significantly increases productivity. Finally, the coefficient of the interaction term of hard and soft support, estimated by the system GMM, suggests their complementarity

Keywords: R&D; policy mix; place-based policy; municipality; innovation (search for similar items in EconPapers)
Pages: 21 pages
Date: 2026-03-24
New Economics Papers: this item is included in nep-pbe, nep-sbm and nep-tid
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