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A micro-econometric analysis of public support to private R&D in Argentina

Binelli, Chiara and Maffioli, Alessandro (2007) A micro-econometric analysis of public support to private R&D in Argentina [in special issue: The Evaluation Challenge: Lessons from Regional and Industrial Development Policies] International Review of Applied Economics, 21, (3), pp. 339-359. (doi:10.1080/02692170701390320).

Record type: Article


This paper investigates the relationship between government interventions to promote investments in innovation and firm?financed R&D. Merging a unique panel data set on Argentinean firms in the 1990s with a data base on different types of public support received through the FONTAR (Fondo Tecnólogico Argentino) program, we estimate a fixed effects model and find evidence of a significant positive impact of FONTAR on private R&D. A 1 per cent increase in the amount received through FONTAR induces an average increase of 547.6 real pesos in annual R&D expenditures. The result is robust to the use of an instrumental variable estimator that controls for the potential bias induced by changes in the structure of the program. An analysis by type of financial support reveals that the impact is mainly due to targeted and fiscal credit with no evidence that funding received through matching grants has an additionality effect on private investments. This result is in line with the predictions of a simple theoretical model that investigates the impact of different policy interventions to promote investments in R&D. When firms’ preferences are not directly observable, the provision of direct subsidies is more likely to incur the risk of adverse selection attracting firms that would have invested in innovation even in the absence of public support or dismiss some of the non-financed projects, thus leaving unchanged or decreasing the overall level of expenditures in R&D.

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e-pub ahead of print date: 22 June 2007
Published date: July 2007
Keywords: innovation and r&d, policy evaluation, panel data
Organisations: Economics


Local EPrints ID: 339285
ISSN: 0269-2171
PURE UUID: e93f6d90-ee5d-4c0c-8c1d-bd733aeebf98

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Date deposited: 29 May 2012 13:13
Last modified: 18 Jul 2017 05:53

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Author: Chiara Binelli
Author: Alessandro Maffioli

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