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Do Innovation Subsidies Crowd Out Private Investment? Evidence from the German Service Sector

Year: 2002

Type: preprint

Abstract: This paper analyses the impact of public innovation subsidies on private innovation expenditure. In the empirical economic literature there is still no common support for the hypothesis of either a complementary or a substitutive relationship between public funding and private investment. We investigate whether firms of the German service sector increase their innovation effort when participating in public policy schemes. Cross-sectional data at the firm level are used to estimate the effect of subsidisation. Applying a non-parametric matching approach we find evidence that the hypothesis of complete crowding-out effects between public and private funds can be rejected.

Source: RePEc: Research Papers in Economics

Authors: Dirk Czarnitzki, Andreas Fier

Institutions: Centre for European Economic Research, KU Leuven, Deutsche Telekom (Germany)

Language: English

Topic: Innovation Policy and R&D

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Industry, innovation and infrastructure, Decent work and economic growth

Open Access status: green

OpenAlex ID: W2167075895

Cites: 16

Cited by: 162

Related to: 10