IDEAS home Printed from https://ideas.repec.org/p/zbw/cegedp/236.html
   My bibliography  Save this paper

Effectiveness of public innovation support in Europe: Does public support foster turnover, employment and labour productivity?

Author

Listed:
  • Becker, Lasse

Abstract

In the European Union (EU), twenty Member States offer public innovation support for private research and development (R&D) activities through either subsidies or a combination of tax cuts and subsidies. Existing studies show ambiguous results regarding the effectiveness of public innovation support in different countries. Accordingly, following a description of the current public innovation framework in Europe, this paper analyses data from the European Community Innovation Survey concerning the effectiveness of public support. The measures chosen relate to changes in turnover as well as the number of employees and labour productivity (measured as turnover per employee) between 2006 and 2008. The paper finds a positive influence of public innovation support on labour productivity in an innovating company, a negative influence on turnover changes and a negative yet not significant influence on the development of employment. The influences of these factors are very weak, whereas other coefficients such as the money spent on innovative activities clearly show positive effects for all three indicators.

Suggested Citation

  • Becker, Lasse, 2015. "Effectiveness of public innovation support in Europe: Does public support foster turnover, employment and labour productivity?," University of Göttingen Working Papers in Economics 236, University of Goettingen, Department of Economics.
    • Handle: RePEc:zbw:cegedp:236
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/108877/1/821246348.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gene M. Grossman & Elhanan Helpman, 1994. "Endogenous Innovation in the Theory of Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 23-44, Winter.
    2. Uwe Cantner & Sarah Kösters, 2012. "Picking the winner? Empirical evidence on the targeting of R&D subsidies to start-ups," Small Business Economics, Springer, vol. 39(4), pages 921-936, November.
    3. Koski, Heli & Pajarinen, Mika, 2013. "Subsidies, Shadow of Death and Productivity," ETLA Working Papers 16, The Research Institute of the Finnish Economy.
    4. Czarnitzki, Dirk & Hanel, Petr & Rosa, Julio Miguel, 2011. "Evaluating the impact of R&D tax credits on innovation: A microeconometric study on Canadian firms," Research Policy, Elsevier, vol. 40(2), pages 217-229, March.
    5. González, Xulia & Pazó, Consuelo, 2008. "Do public subsidies stimulate private R&D spending?," Research Policy, Elsevier, vol. 37(3), pages 371-389, April.
    6. Blanes, J. Vicente & Busom, Isabel, 2004. "Who participates in R&D subsidy programs?: The case of Spanish manufacturing firms," Research Policy, Elsevier, vol. 33(10), pages 1459-1476, December.
    7. Emmanuel Duguet, 2004. "Are RαD subsidies a substitute or a complement to privately funded RαD ?. An econometric analysis at the firm level," Revue d'économie politique, Dalloz, vol. 114(2), pages 245-274.
    8. Dirk Czarnitzki & Bernd Ebersberger & Andreas Fier, 2007. "The relationship between R&D collaboration, subsidies and R&D performance: Empirical evidence from Finland and Germany," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(7), pages 1347-1366.
    9. Francesco Bogliacino & Mariacristina Piva & Marco Vivarelli, 2014. "Technology and employment: the job creation effect of business R&D," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 126(3), pages 239-264.
    10. Klette, Tor Jakob & Moen, Jarle & Griliches, Zvi, 2000. "Do subsidies to commercial R&D reduce market failures? Microeconometric evaluation studies1," Research Policy, Elsevier, vol. 29(4-5), pages 471-495, April.
    11. Isabel Busom, 2000. "An Empirical Evaluation of The Effects of R&D Subsidies," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 9(2), pages 111-148.
    12. Atkinson, Robert D., 1991. "Innovation policy making in a federalist system: Lessons from the states for U.S. federal innovation policy making," Research Policy, Elsevier, vol. 20(6), pages 559-577, December.
    13. Clausen, Tommy H., 2009. "Do subsidies have positive impacts on R&D and innovation activities at the firm level?," Structural Change and Economic Dynamics, Elsevier, vol. 20(4), pages 239-253, December.
    14. Czarnitzki, Dirk & Fier, Andreas, 2002. "Do Innovation Subsidies Crowd Out Private Investment? Evidence from the German Service Sector," ZEW Discussion Papers 02-04, ZEW - Leibniz Centre for European Economic Research.
    15. Francesco Bogliacino & Mariacristina Piva & Marco Vivarelli, 2014. "Technology and employment: the job creation effect of business R&D," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 122(3), pages 239-264.
    16. Katrin Hussinger, 2008. "R&D and subsidies at the firm level: an application of parametric and semiparametric two-step selection models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(6), pages 729-747.
    17. Oskar Krohmer, 2010. "Zur Verdrängungswirkung staatlicher FuE-Förderung," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 17(04), pages 49-51, 08.
    18. Levy, David M., 1990. "Estimating the impact of government R&D," Economics Letters, Elsevier, vol. 32(2), pages 169-173, February.
    19. Almus, Matthias & Czarnitzki, Dirk, 2003. "The Effects of Public R&D Subsidies on Firms' Innovation Activities: The Case of Eastern Germany," Journal of Business & Economic Statistics, American Statistical Association, vol. 21(2), pages 226-236, April.
    20. Giovanni Cerulli, 2010. "Modelling and Measuring the Effect of Public Subsidies on Business R&D: A Critical Review of the Econometric Literature," The Economic Record, The Economic Society of Australia, vol. 86(274), pages 421-449, September.
    21. Lang, Guenter, 2009. "Measuring the returns of R&D--An empirical study of the German manufacturing sector over 45 years," Research Policy, Elsevier, vol. 38(9), pages 1438-1445, November.
    22. Aerts, Kris & Czarnitzki, Dirk, 2004. "Using Innovation Survey Data to Evaluate R&D Policy: The Case of Belgium," ZEW Discussion Papers 04-55, ZEW - Leibniz Centre for European Economic Research.
    23. Busom, Isabel & Corchuelo, Beatriz & Martinez Ros, Ester, 2012. "Tax incentives or subsidies for R&D?," MERIT Working Papers 2012-056, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    24. Andrea Fernández-Ribas, 2009. "Public support to private innovation in multi-level governance systems: An empirical investigation," Science and Public Policy, Oxford University Press, vol. 36(6), pages 457-467, July.
    25. Scott J. Wallsten, 2000. "The Effects of Government-Industry R&D Programs on Private R&D: The Case of the Small Business Innovation Research Program," RAND Journal of Economics, The RAND Corporation, vol. 31(1), pages 82-100, Spring.
    26. Holger Görg & Eric Strobl, 2007. "The Effect of R&D Subsidies on Private R&D," Economica, London School of Economics and Political Science, vol. 74(294), pages 215-234, May.
    27. Hall, Bronwyn & Van Reenen, John, 2000. "How effective are fiscal incentives for R&D? A review of the evidence," Research Policy, Elsevier, vol. 29(4-5), pages 449-469, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anders Gustafsson & Andreas Stephan & Alice Hallman & Nils Karlsson, 2016. "The “sugar rush” from innovation subsidies: a robust political economy perspective," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 43(4), pages 729-756, November.
    2. Gustafsson, Anders & Gustavsson Tingvall, Patrik & Halvarsson, Daniel, 2017. "Subsidy Entrepreneurs," Ratio Working Papers 303, The Ratio Institute.
    3. Brüggemann Julia & Proeger Till, 2017. "The Effectiveness of Public Subsidies for Private Innovations. An Experimental Approach," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 17(4), pages 1-21, October.
    4. Konstantinos Panagiotakopoulos & Jose Maria Fernandez-Crehuet & José Molero Zayas, 2018. "Public Finance of R&D and the Obstacles to Innovation: The Case of Spain," International Journal of Social Science Studies, Redfame publishing, vol. 6(12), pages 1-21, December.
    5. James A. Cunningham & Albert N. Link, 2016. "Exploring the effectiveness of research and innovation policies among European Union countries," International Entrepreneurship and Management Journal, Springer, vol. 12(2), pages 415-425, June.
    6. Anders Gustafsson & Patrik Gustavsson Tingvall & Daniel Halvarsson, 2020. "Subsidy Entrepreneurs: an Inquiry into Firms Seeking Public Grants," Journal of Industry, Competition and Trade, Springer, vol. 20(3), pages 439-478, September.
    7. Daunfeldt, Sven-Olov & Halvarsson, Daniel & Gustavsson Tingvall, Patrik & McKelvie, Alexander, 2021. "Do Targeted R&D Grants Towards Potential Highgrowth Firms Increase Employment and Demand for High Human Capital Workers?," HFI Working Papers 23, Institute of Retail Economics (Handelns Forskningsinstitut).
    8. Brüggemann, Julia & Proeger, Till, 2017. "The effectiveness of public subsidies for private innovations: An experimental approach," University of Göttingen Working Papers in Economics 266, University of Goettingen, Department of Economics, revised 2017.
    9. Lewandowska Małgorzata Stefania & Weresa Marzenna Anna & Rószkiewicz Małgorzata, 2022. "Evaluating the impact of public financial support on innovation activities of European Union enterprises: Additionality approach," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 58(3), pages 248-266, September.
    10. Kärnä, Anders & Karlsson, Johan & Engberg, Erik & Svensson, Peter, 2020. "Political Failure: A Missing Piece in Innovation Policy Analysis," Working Paper Series 1334, Research Institute of Industrial Economics, revised 21 Apr 2022.
    11. Sonja Đuričin & Isidora Beraha & Olivera Jovanović & Marija Mosurović Ružičić & Marija Lazarević-Moravčević & Mihailo Paunović, 2022. "The Efficiency of National Innovation Policy Programs: The Case of Serbia," Sustainability, MDPI, vol. 14(14), pages 1-14, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Becker, Lasse & Bizer, Kilian, 2015. "Federalism and innovation support for small and medium-sized enterprises: Empirical evidence in Europe," University of Göttingen Working Papers in Economics 245, University of Goettingen, Department of Economics.
    2. Thomas H. W. Ziesemer, 2021. "The Effects of R&D Subsidies and Publicly Performed R&D on Business R&D: A Survey," Hacienda Pública Española / Review of Public Economics, IEF, vol. 236(1), pages 171-205, March.
    3. Hud, Martin & Hussinger, Katrin, 2015. "The impact of R&D subsidies during the crisis," Research Policy, Elsevier, vol. 44(10), pages 1844-1855.
    4. Dai, Xiaoyong & Cheng, Liwei, 2015. "The effect of public subsidies on corporate R&D investment: An application of the generalized propensity score," Technological Forecasting and Social Change, Elsevier, vol. 90(PB), pages 410-419.
    5. José Ángel Zúñiga-Vicente & César Alonso-Borrego & Francisco J. Forcadell & José I. Galán, 2014. "Assessing The Effect Of Public Subsidies On Firm R&D Investment: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 28(1), pages 36-67, February.
    6. Syoum Negassi & Jean-Francois Sattin, 2014. "Evaluation of Public R&D Policy: A Meta-Regression Analysis," Working Papers 14-09, University of Delaware, Department of Economics.
    7. Spyros Arvanitis, 2013. "Micro-econometric approaches to the evaluation of technology-oriented public programmes: a non-technical review of the state of the art," Chapters, in: Albert N. Link & Nicholas S. Vonortas (ed.), Handbook on the Theory and Practice of Program Evaluation, chapter 3, pages 56-88, Edward Elgar Publishing.
    8. 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.
    9. Özçelik, Emre & Taymaz, Erol, 2008. "R&D support programs in developing countries: The Turkish experience," Research Policy, Elsevier, vol. 37(2), pages 258-275, March.
    10. Bronzini, Raffaello & Piselli, Paolo, 2016. "The impact of R&D subsidies on firm innovation," Research Policy, Elsevier, vol. 45(2), pages 442-457.
    11. Vlasova, Valeriya, 2021. "Industry-science cooperation and public policy instruments utilization in the private sector," Journal of Business Research, Elsevier, vol. 124(C), pages 519-528.
    12. Brüggemann, Julia & Proeger, Till, 2017. "The effectiveness of public subsidies for private innovations: An experimental approach," University of Göttingen Working Papers in Economics 266, University of Goettingen, Department of Economics, revised 2017.
    13. Antonelli, Cristiano & Crespi, Francesco, 2013. "The "Matthew effect" in R&D public subsidies: The Italian evidence," Technological Forecasting and Social Change, Elsevier, vol. 80(8), pages 1523-1534.
    14. Guerzoni, Marco & Raiteri, Emilio, 2015. "Demand-side vs. supply-side technology policies: Hidden treatment and new empirical evidence on the policy mix," Research Policy, Elsevier, vol. 44(3), pages 726-747.
    15. González, Xulia & Pazó, Consuelo, 2008. "Do public subsidies stimulate private R&D spending?," Research Policy, Elsevier, vol. 37(3), pages 371-389, April.
    16. Emmanuel Chavez, 2020. "The Effects of R&D Tax Credits and Subsidies onPrivate R&D in Mexico (Chapter 2)," PSE Working Papers halshs-02652063, HAL.
    17. Takalo, Tuomas & Tanayama, Tanja & Toivanen, Otto, 2013. "Market failures and the additionality effects of public support to private R&D: Theory and empirical implications," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 634-642.
    18. Marino, Marianna & Lhuillery, Stephane & Parrotta, Pierpaolo & Sala, Davide, 2016. "Additionality or crowding-out? An overall evaluation of public R&D subsidy on private R&D expenditure," Research Policy, Elsevier, vol. 45(9), pages 1715-1730.
    19. Aiello, Francesco & Albanese, Giuseppe & Piselli, Paolo, 2017. "Public R&D support in Italy. Evidence from a new firm-level patent data set," MPRA Paper 77955, University Library of Munich, Germany.
    20. Bettina Becker, 2013. "The Determinants of R&D Investment: A Survey of the Empirical Research," Discussion Paper Series 2013_09, Department of Economics, Loughborough University, revised Sep 2013.

    More about this item

    Keywords

    innovation; innovation support; labor productivity; Europe; effectiveness;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:cegedp:236. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/cdgoede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.