Effectiveness of Public Innovation Support in Europe. Does Public Support Foster Turnover, Employment and Labour Productivity?

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. With these three factors, this paper expands the analysis of effectiveness of public innovation support, evaluating the supported companies regarding competitiveness in Europe. Terms of use: Documents in EconStor mayAn overview on the existing landscape of public innovation support within the EU is provided in the first part of section two, which shows that the vast majority of twenty European countries offer either subsidies or tax cuts and subsidies for private R&D investment. Nonetheless, in terms of those countries using both instruments simultaneously, differences in the relation become visible (see Busom et al. 2012: 38).3 Additionality of public innovation support in EuropeCzarnitzki et al. ( ), Duguet (2004 and Grossman et al. (1994: 37-8) Busom (2000: 133) for Spain and Görg and Strobl (2007: 17)) for Ireland stress that crowdingout can be ruled out at least for several companies -e.g. domestic firms that received small grants in Ireland -while these two studies do not completely rule out crowding-out. Krohmer's (2010: 51) meta-analysis of 57 studies focusing on R&D support in Germany also shows no general crowding-out of private investments. Thus, this paper assumes at least partial additionality and at most partial crowding-out in the EU. A recent study by Radicic and Pugh (2013: 18) shows that public institutions face a selection problem, which reduces the positive effect of public innovation support. Public institutions have a tendency towards a 'picking the winner' strategy to evade information problems about the firms applying for innovation support, as Cantner and Kösters (2012: 932-3) outline. These factors reduce additionality and thus lead to a greater degree of crowding-out.Nonetheless, regarding additionality, the empirical results in Europe present a clear picture that public innovation support induces additional private innovative activities and crowding-out is at least not a general problem.3 Despite not always being synonymously used, for this study R&D spending and innovation spending can be while he highlights a positive effect at the industry level, the observations of one period had to be removed as outliers before finding a positive effect.SMEs particularly benefit from industry-specific R&D support (Maliranta 2000a: 117). Job creation is only supported for private R&D, while the effect for publicly-financed R&D is 'ambiguous ' (Maliranta 2000a: 117). A recent paper by Pajarinen and Rouvinen (2014) 4 summarizes that ...

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