Additionality of public R&D grants in a transition economy |
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Authors: | Dirk Czarnitzki Georg Licht |
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Institution: | Catholic University of Leuven (KUL), Department of Applied Economics and Steunpunt O&O Statistieken, Dekenstraat 2, 3000 Leuven, Belgium and ZEW, Mannheim, Germany. E-mail:; Centre for European Economic Research (ZEW), Industrial Economics and International Management, PO Box 10 34 43, 68034 Mannheim, Germany. E-mail: |
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Abstract: | This paper examines the input and output additionality of public R&D subsidies in Western and Eastern Germany. We estimate the impact of public R&D grants on firms’ R&D and innovation input. Based on the results of this first step we compare the impact of publicly funded private R&D on innovation output with the output effect of R&D funded out of firms’ own pockets. We employ microeconometric evaluation methods using firm‐level data derived from the Mannheim Innovation Panel. Our results point towards a large degree of additionality in public R&D grants with regard to innovation input measured as R&D expenditures and innovation expenditures, as well as with regard to innovation output measured by patent applications. Input additionality has been more pronounced in Eastern Germany during the transition period than in Western Germany. However, R&D productivity is still larger for the established Western German innovation system than for Eastern Germany. Hence, a regional redistribution of public R&D subsidies might improve the overall innovation output of the German economy. |
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Keywords: | R&D innovation subsidies evaluation of public policy |
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