Evaluation of public R&D policies: A cross-country comparison

This study focuses on the effect of public funding on internal R&D investment and on total innovation intensity on a cross-country comparative level. Using harmonisedmicro data from five different countries, this study analyzes the heterogeneity of the useof policy instruments. Applying a nonparametric matching method to identify thetreatment effect, we find that on average firms would have invested significantly less ifthey would not have received subsidies. On similar grounds, our estimation also takesinto account the ?treatment effects on the untreated?. This estimation enables us toassess whether or not governments could further foster R&D activities by extendinginnovation policies to currently not supported firms. With the exception of one country,all the governments of the sample would benefit from an extension of their subsidypolicies. Finally, these two matching results can be combined in order to test formisallocation of public funds. Our analysis does not uncover any systematicmisallocation of public funding for the countries under review.