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The Interplay between Public Procurement of Innovation and R&D Grants: Empirical Evidence from Belgium

Author

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  • Dirk Czarnitzki
  • Malte Prüfer

Abstract

This paper investigates the impact of Public Procurement of Innovation (PPI) and Research and Development (R&D) grants on firms' R&D investment using data from Belgian R&D-active firms over the past decade. Our empirical analysis robustly reveals a non-negligible crowding-out effect between the two instruments, suggesting a substitutive relationship. While each policy individually positively influences R&D investment, their combined implementation diminishes their effectiveness. These results challenge prevailing evidence and emphasize the need for a careful policy implementation, raising policymakers’ awareness against a blanket increase in innovation policies without considering potential interactions.

Suggested Citation

  • Dirk Czarnitzki & Malte Prüfer, 2024. "The Interplay between Public Procurement of Innovation and R&D Grants: Empirical Evidence from Belgium," Working Papers of Department of Management, Strategy and Innovation, Leuven 746875, KU Leuven, Faculty of Economics and Business (FEB), Department of Management, Strategy and Innovation, Leuven.
    • Handle: RePEc:ete:msiper:746875
    Note: paper number MSI_2405
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    File URL: https://lirias.kuleuven.be/retrieve/771618
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    Keywords

    Public procurement of innovation; Research and Development; Econometric policy evaluation; Crowding-out;
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