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The elusive impact of R&D grants on firm productivity

Author

Listed:
  • Fernando Alexandre

    (NIPE/Center for Research in Economics and Management, University of Minho, Portugal)

  • Diogo Ferreira

    (NIPE/Center for Research in Economics and Management, University of Minho, Portugal)

  • Sandro Mendonça

    (Business Research Unit (BRU-IUL), University Institute of Lisbon; Research Unit on Complexity and Economics (UECE), Research in Economics and Mathematics (REM), Lisbon School of Economics & Management (ISEG), University of Lisbon; Science Policy Research Unit (SPRU), University of Sussex.)

  • Miguel Portela

    (NIPE/Center for Research in Economics and Management, University of Minho, Portugal; IZA, Bonn)

Abstract

This paper evaluates the effectiveness of R&D subsidies, provided by the European Regional Development Funds, on firms’ productivity. Using detailed longitudinal firm-level data covering the period 2007-2019, we employ state of the art differences-in-differences estimators to evaluate the impacts of R&D grants. Positive causal effects on gross value added and labour productivity are discernible for micro- and small-sized firms participating in co-promotion but not in individual projects. However, these effects seem to be elusive. No evidence of a positive effect of these grants on firm performance for medium- and large-sized firms or for individual R&D projects is found. This investigation contributes to a more comprehensive understanding of the relative effectiveness of productivity enhancement programs.

Suggested Citation

  • Fernando Alexandre & Diogo Ferreira & Sandro Mendonça & Miguel Portela, 2023. "The elusive impact of R&D grants on firm productivity," NIPE Working Papers 08/2023, NIPE - Universidade do Minho.
    • Handle: RePEc:nip:nipewp:08/2023
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    File URL: https://repositorium.sdum.uminho.pt/handle/1822/86154
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    More about this item

    Keywords

    R&D grants; productivity; European funds; co-promotion;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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