R&D subsidies and private R&D expenditures: evidence from Italian manufacturing data

TitleR&D subsidies and private R&D expenditures: evidence from Italian manufacturing data
Publication TypeJournal Article
Year of Publication2011
AuthorsCarboni, OA
JournalInternational Review of Applied Economics
Volume25
Issue4
Pagination419-439
Abstract

This paper uses a comprehensive firm level data set for the manufacturing sector in Italy to investigate the effect of government support on privately financed R&D expenditure. Estimates from a non‐parametric matching procedure suggest that public assistance has a positive effect on private R&D investment in the sense that the recipient firms achieve more private R&D than they would have without public support. This indicates that the possibility of perfect crowding out between private and public funds can be rejected. Furthermore, in this sample of Italian firms, tax incentives appear to be more effective than direct grants. The paper also examines whether public funding affects the financial sources available for R&D and finds that grants encourage the use of internal sources. The results also show some evidence of positive effects on credit financing for R&D.

URLhttp://www.tandfonline.com/doi/abs/10.1080/02692171.2010.529427
DOI10.1080/02692171.2010.529427
Keywordsnon‐parametric estimation, public subsidies, r&d investment