Assessing the policy mix of public support to business R&D

Abstract

This paper investigates whether the effectiveness of public support to business R&D increases or decreases when firms benefit from different support schemes. Data on the amount received by individual firms in the available support schemes in Belgium, over the period 2003–2011, are matched with other firm-level data. Estimations of this panel of firms permit to account for the time dimension and selection mechanism in public support as well as for observed and unobserved firm heterogeneity. Results on the impact of public support appear to depend on the econometric specification and estimation procedure that is considered. Robust results indicate that the effectiveness of R&D support decreases when firms benefit from different schemes at the same time, especially when firms combine subsidies with several tax benefits.