Additionality of Public R&D Grants in a Transition Economy: The Case of Eastern Germany

Posted: 9 Nov 2009

See all articles by Kirk Czarnitzki

Kirk Czarnitzki

affiliation not provided to SSRN

Georg Licht

ZEW - Leibniz Centre for European Economic Research

Date Written: 2006

Abstract

The effectiveness and efficiency of publicly-fundedresearch and development (R&D) grants for private sector R&D projectsare studied, comparing Eastern to Western Germany, as well as the effect ofpublicly- versus privately-funded R&D on innovation output. Data were obtained from the Mannheim Innovation Panel and the German PatentOffice on 735 supported firms from Eastern Germany and 638 from WesternGermany. Data on a control group of 265 nonsupported firms were used forcomparison. A selection bias in those that receive public R&D funds wasdetected, in which those that received funds more often were larger, hadalready-established R&D departments, at least one patent, and internationalbusiness activities. As firms age in Eastern Germany, subsidies decline,whereas this is not the case in Western Germany. Both R&D intensity andinnovation intensity were higher in supported firms. This result was morepronounced for Eastern than Western Germany. During the transition period,input additionality in the form of R&D and innovation expenditures has beenhigher in Eastern than in Western Germany. However, R&D productivity isstill larger for Western German established firms. Hence, a regionalredistribution of public subsidies may improve the overall innovation output ofthe German economy. (LKB)

Keywords: Transition economies, R&D, Innovations, Subsidies, Public financing, Private financing, Grants, Public policies, Government-industry relations

Suggested Citation

Czarnitzki, Kirk and Licht, Georg, Additionality of Public R&D Grants in a Transition Economy: The Case of Eastern Germany (2006). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1502026

Kirk Czarnitzki (Contact Author)

affiliation not provided to SSRN

No Address Available

Georg Licht

ZEW - Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
222
PlumX Metrics