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Business research and development (R&D) expenditures in the UK is low by international standards. To encourage investment, the UK government has been providing both direct and indirect support. The aim of this paper is to address four inter-related and policy-relevant questions: (i) what do we know about the UK regime for direct grant schemes? (ii) is the UK subsidy complementary or substitute for privately-funded R&D? (iii) does the UK funding regime differ from the EU regime in terms of selection and effect? (iv) does the scope for complementarity/additionality differ between different rates of funding? We address these questions using a rich dataset for more than 44 thousand UK firms from 1998-2012; and a range of treatment-effect estimators with and without control for selection. We report that the EU selection regime is more likely to support firms with long-term R&D plans. In addition, the UK subsidy is not associated with additionality, but the EU subsidy is. Finally, leverage estimations indicate that targeting a particular rate of subsidy is not likely to make a difference to private R&D effort in the UK subsidy case; but an increase in EU subsidy intensity does create leverage among firms that fall between the median and 75 th percentile of the subsidy intensity distribution.

The volume of work on productivity effects of research and development (R&D) investment has expanded significantly following the contributions of Zvi Griliches and others to microeconometric work in late 1970s and early 1980s. This study aims to meta-analyse the research findings based on OECD firm and industry data, with a view to establish where the balance of the evidence lies and what factors may explain the variation in reported evidence. Drawing on 1,262 estimates from 64 primary studies, we report that the average effect of R&D capital on productivity and the average rate of return on R&D investment are both positive, but smaller than the summary measures reported in previous narrative reviews and meta-analysis studies. We also report that a range of moderating factors have significant effects on the variation among productivity and rates-of-return estimates reported in primary studies. Moderating factors with significant effects include: (i) measurement of inputs and output; (ii) model specifications; (iii) estimation methods; (iv) levels of analysis; (v) countries covered; and (vi) publication type among others. JEL Classification: D24, O30, O32, C49, C80

This data article is related to the research article entitled “Inverted-U relationship between R&D intensity and survival: Evidence on scale and complementarity effects in UK data” (Ugur et al., In press) [1]. It describes the trends in R&D expenditures, employment of R&D personnel and firm entry and exit rates in the UK from 1998 to 2012. We also provide statistics on net employment creation and net R&D investments due to firm entry and exits. In addition, we compute the correlation coefficients between entry and exit rates at the two digit industry level so as to examine whether the correlations are contemporaneous or inter-temporal. Finally, we provide information about the underlying dataset to which secure access is available through UK Data Service Archive 7716 at http://dx.doi.org/10.5255/UKDA-SN-7716-1.