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R&D Financing Constraints of Young and Old Innovation Leaders in the EU and the US

Author

Listed:
  • Michele Cincera
  • Julien Ravet
  • Reinhilde Veugelers

Abstract

Using firm level information on the world leading R&D investors, this paper investigates through a system GMM estimation of the investment error correction model, whether younger innovators face more severe or no financing constraints, as opposed to older innovators, and whether this would hold more for European young firms relative to the US. The analysis indeed confirms that over the last decade young leading innovators appear to be more affected by financing constraints compared to their older counterparts and that particularly EU young innovators exhibit higher sensitivities of R&D investment to cash-flow, particularly in medium and high tech sectors.

Suggested Citation

  • Michele Cincera & Julien Ravet & Reinhilde Veugelers, 2014. "R&D Financing Constraints of Young and Old Innovation Leaders in the EU and the US," Working Papers TIMES² 2014-008, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:ict:wpaper:2013/157281
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    References listed on IDEAS

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    Cited by:

    1. Hottenrott, Hanna & Lopes-Bento, Cindy & Veugelers, Reinhilde, 2014. "Direct and cross-scheme effects in a research and development subsidy program," ZEW Discussion Papers 14-107, ZEW - Leibniz Centre for European Economic Research.
    2. Michel Dumont & Chantal Kegels, 2016. "Working Paper 06-16 - Young Firms and Industry Dynamics in Belgium," Working Papers 1606, Federal Planning Bureau, Belgium.
    3. Michel Dumont, 2015. "Working Paper 05-15 - Evaluation of federal tax incentives for private R&D in Belgium: An update," Working Papers 1505, Federal Planning Bureau, Belgium.

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    Keywords

    EU-US R&D gap; young innovators; financing constraints;
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