Additionality of Public R&D Grants in a Transition Economy

31 Pages Posted: 8 May 2006

See all articles by Dirk Czarnitzki

Dirk Czarnitzki

Centre for European Economic Research (ZEW); Catholic University of Leuven (KUL)

Georg Licht

ZEW - Leibniz Centre for European Economic Research

Abstract

This paper examines the input and output additionality of public R&D subsidies in Western and Eastern Germany. We estimate the impact of public R&D grants on firms' R&D and innovation input. Based on the results of this first step we compare the impact of publicly funded private R&D on innovation output with the output effect of R&D funded out of firms' own pockets. We employ microeconometric evaluation methods using firm-level data derived from the Mannheim Innovation Panel. Our results point towards a large degree of additionality in public R&D grants with regard to innovation input measured as R&D expenditures and innovation expenditures, as well as with regard to innovation output measured by patent applications. Input additionality has been more pronounced in Eastern Germany during the transition period than in Western Germany. However, R&D productivity is still larger for the established Western German innovation system than for Eastern Germany. Hence, a regional redistribution of public R&D subsidies might improve the overall innovation output of the German economy.

Suggested Citation

Czarnitzki, Dirk and Licht, Georg, Additionality of Public R&D Grants in a Transition Economy. Economics of Transition, Vol. 14, No. 1, pp. 101-131, January 2006, Available at SSRN: https://ssrn.com/abstract=878805 or http://dx.doi.org/10.1111/j.1468-0351.2006.00236.x

Dirk Czarnitzki (Contact Author)

Centre for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
Mannheim, 68034
Germany

Catholic University of Leuven (KUL) ( email )

Faculty of Economics and Business
Naamsestraat 69
Leuven, 3000
Belgium
+32 16 326906 (Phone)
+32 16 325799 (Fax)

HOME PAGE: http://www.econ.kuleuven.be/msi/faculty_members.htm

Georg Licht

ZEW - Leibniz Centre for European Economic Research ( email )

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

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