TY - JOUR
T1 - Do R & D subsidies stimulate or displace private R & D? Evidence from Israel
AU - Lach, Saul
PY - 2002/12
Y1 - 2002/12
N2 - In evaluating the effect of an R & D subsidy we need to know what the subsidized firm would have spent on R & D had it not received the subsidy. Using data on Israeli manufacturing firms in the 1990s we find evidence suggesting that the R & D subsidies granted by the Ministry of Industry and Trade greatly stimulated company financed R & D expenditures for small firms but had a negative effect on the R & D of large firms, although not statistically significant. One subsidized New Israeli Shekel (NIS) induces 11 additional NIS of own R & D for the small firms. However, because most subsidies go to the large firms a subsidy of one NIS generates, on average, a statistically insignificant 0.23 additional NIS of company financed R & D.
AB - In evaluating the effect of an R & D subsidy we need to know what the subsidized firm would have spent on R & D had it not received the subsidy. Using data on Israeli manufacturing firms in the 1990s we find evidence suggesting that the R & D subsidies granted by the Ministry of Industry and Trade greatly stimulated company financed R & D expenditures for small firms but had a negative effect on the R & D of large firms, although not statistically significant. One subsidized New Israeli Shekel (NIS) induces 11 additional NIS of own R & D for the small firms. However, because most subsidies go to the large firms a subsidy of one NIS generates, on average, a statistically insignificant 0.23 additional NIS of company financed R & D.
UR - http://www.scopus.com/inward/record.url?scp=0036946547&partnerID=8YFLogxK
U2 - 10.1111/1467-6451.00182
DO - 10.1111/1467-6451.00182
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AN - SCOPUS:0036946547
SN - 0022-1821
VL - 50
SP - 369
EP - 390
JO - Journal of Industrial Economics
JF - Journal of Industrial Economics
IS - 4
ER -
