Title: Additionality of public R&D funding for business R&D - a dynamic panel data analysis

Authors: Carter Bloch; Ebbe Krogh Graversen

Addresses: Danish Centre for Studies in Research and Research Policy (CFA), Department of Political Science, Aarhus University, Finlandsgade 4, DK–8200 Aarhus N., Denmark. ' Danish Centre for Studies in Research and Research Policy (CFA), Department of Political Science, Aarhus University, Finlandsgade 4, DK–8200 Aarhus N., Denmark

Abstract: An important issue in R&D policy is whether publicly funded R&D is a substitute or a complement to privately funded R&D. However, measuring the impact of R&D policies has proven a difficult task, complicated by simultaneity and selection bias. We utilise a dynamic panel data approach to examine the effect of public funding that takes account of both these potential biases, using R&D data for Danish firms from 1995 to 2005. We find robust evidence of significant complementary effects, with a 1% increase in public funding yielding around a 0.12% increase in privately funded R&D. For predicted values of public funding for both R&D active firms that have and have not received public funding, estimates are slightly lower, at around 0.09%.

Keywords: additionality; public R&D funding; R&D funding; public funding; crowding out; selection bias; R&D policy; research and development; Denmark; research funding.

DOI: 10.1504/WRSTSD.2012.047688

World Review of Science, Technology and Sustainable Development, 2012 Vol.9 No.2/3/4, pp.204 - 220

Published online: 18 Sep 2014 *

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