Title: Public funds additionality in R&D expenditure in presence of essential heterogeneity: an empirical investigation using the Italian CIS3 data

Authors: Gianluca Papa

Addresses: Université Libre de Bruxelles, Avenue F.D. Roosevelt 50, 1050 Bruxelles, Belgium

Abstract: This paper undertakes an empirical estimation of the additionality of public funding on both the propensity to initiate R&D activity and the intensity of R&D spending of Italian enterprises for the period 1998-2000, using data from the Third Community Innovation Survey and from firms' financial accounts. The chosen methodology (Endogenous Switching Type II-Tobit) takes into account the possibility that decisions about both starting an R&D activity (sample selection effect) and applying for/obtaining public funding (essential heterogeneity) are influenced by private knowledge of enterprises' idiosyncratic propensities in R&D spending. The present analysis shows that both these effects are indeed important and that they contribute to explain most of the additionality found with less sophisticated models.

Keywords: public funding; additionality; R&D expenditure; Community Innovation Survey; CIS; Italy; Heckman selection models; endogenous treatment; essential heterogeneity; research and development; research spending.

DOI: 10.1504/WRSTSD.2012.047689

World Review of Science, Technology and Sustainable Development, 2012 Vol.9 No.2/3/4, pp.221 - 253

Published online: 18 Sep 2014 *

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