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National or international public funding? Subsidies or loans? Evaluating the innovation impact of R&D support programmes

Huergo, Elena and Moreno, Lourdes (2014): National or international public funding? Subsidies or loans? Evaluating the innovation impact of R&D support programmes.

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Abstract

The objective of this study is to compare the effect of different types of public support for R&D projects on firms’ technological capabilities. We distinguish be-tween low-interest loans and subsidies and between national and European sup-port. Using data on 2,319 Spanish firms during the period 2002-2005, we estimate a multivariate probit to analyse the determinants of firms’ participation in public R&D programmes and, later, the impact of this participation on firms’ technologi-cal capabilities using different indicators. The results provide evidence of the ef-fectiveness of all treatments for improving firms’ innovative performance. Specif-ically, although the three kinds of public aid stimulate the intensity of R&D in-vestment, the highest impact corresponds to soft credits. In addition, national sub-sidies have a higher impact on internal R&D intensity than EU grants, but the op-posite relation is found as regards total R&D intensity. With respect to innovation outputs, apart from the indirect effect of public support by stimulating R&D in-tensity, we also find evidence of a direct effect of participation in the CDTI credit system and in the European subsidy programme on the probability of obtaining product innovations and applying for patents.

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