Author(s): Dirk Czarnitzki and Otto Toivanen
This paper establishes theoretically a link between investments in economic growth and investments in R and D. This raises the importance of innovation policies as they are designed to narrow the gap between the socially optimal and the privately optimal levels of R and D. As innovation policies may be subject to crowding-out effects, we, second, empirically test whether R and D subsidies stimulate private investment in two countries of the European economic area. We employ Belgian and German firm level data for estimating treatment effects models. It turns out that public R and D grants stimulate private investments in both countries. Furthermore, the estimated treatment effects vary with the innovation experience of firms and their past labor productivity.
|ISBN 978-92-79-28564-6 (online)|
|doi: 10.2765/42480 (online)|
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