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The Effects of Public R&D Subsidies on Private R&D Activities in Mexico

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  • Emmanuel Chavez

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

This paper analyses the impact of a public research and development (R&D) subsidyto private firms in Mexico. My estimates suggest that the subsidy has a positive im-pact on personnel allocated to innovation activities, but it does not have an effect onother measures of R&D performance, such as research personnel, patents or privateR&D spending. I argue that awarded firms would have performed their planned R&Dprojects in case they were not granted the public funds. Additional public funds seemto be invested in allocating more personnel on already planned projects, but not oncarrying out additional ones. Specifically, I analyze thePrograma de Est ́ımulos a laInnovaci ́on(PEI) subsidy. The program's rules set a grade threshold below which noR&D projects get the grants and above which some projects are granted. This grant-ing process allows to use a fuzzy regression discontinuity approach to identify causalinference.

Suggested Citation

  • Emmanuel Chavez, 2020. "The Effects of Public R&D Subsidies on Private R&D Activities in Mexico," PSE Working Papers halshs-02355106, HAL.
    • Handle: RePEc:hal:psewpa:halshs-02355106
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02355106v3
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    1. Benavente, Jose Miguel & Zuniga, Pluvia, 2021. "The effectiveness of innovation policy and the moderating role of market competition: Evidence from Latin American firms," MERIT Working Papers 2021-025, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    Keywords

    Innovation; Public Policy; Regression; R&D; Discontinuity; Regression Discontinuity;
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