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Public Support to Firm-Level Innovation: An Evaluation of the FONTEC Program

Jose Miguel Benavente, Gustavo Crespi () and Alessandro Maffioli ()

No 507, OVE Working Papers from Inter-American Development Bank, Office of Evaluation and Oversight (OVE)

Abstract: In this paper, we analyzed the effectiveness of a Chilean TDF, the FONTEC program. We found that FONTEC’s subsides partially crowded-out private investments in innovation and they more effectively promoted technological upgrades and process innovations, rather than radical product innovations. In the empirical analysis, we considered four levels of potential impact: input additionality, behavioral additionality, innovative output, and performances. In terms of input additionality, although FONTEC increased the overall R&D budget of the firms, it did not stimulate additional private investment in innovation activities. In terms of behavioral additionality, FONTEC effectively promoted process innovation and induced changes in the innovation strategy of the firms. In terms of innovative outputs, FONTEC did not significantly foster patenting activities and had no significant impact on the creation and adoption of new products. In terms of performances, although FONTEC increased the sales, employment and export, it did not significantly foster productivity. In the absence of randomized experiments, we estimated these impacts through a quasi-experimental approach that combines difference-in-difference and propensity score matching techniques.

Keywords: FONTEC; Chile; Research and Development; Matching Grants; Policy Evaluation. (search for similar items in EconPapers)
JEL-codes: O30 O38 H43 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ipr, nep-pr~ and nep-ppm
Date: 2007-12
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