Working Paper: NBER ID: w21479
Authors: Adam B. Jaffe; Trinh Le
Abstract: This paper examines the impact of government assistance through R&D grants on innovation output for firms in New Zealand. Using a large database that links administrative and tax data with survey data, we are able to control for large number of firm characteristics and thus minimise selection bias. We find that receipt of an R&D grant significantly increases the probability that a firm in the manufacturing and service sectors applies for a patent during 2005–2009, but no positive impact is found on the probability of applying for a trademark. Using only firms that participated in the Business Operation Survey, we find that receiving a grant almost doubles the probability that a firm introduces new goods and services to the world while its effects on process innovation and any product innovation are relatively much weaker. Moreover, there is little evidence that grant receipt has differential effects between small to medium (<50 employees) and larger firms. These findings are broadly in line with recent international evidence from Japan, Canada and Italy which found positive impacts of public R&D subsidy on patenting activity and the introduction of new products.
Keywords: RD subsidy; innovation; New Zealand firms; government assistance
JEL Codes: O31; O34; O38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Receipt of RD grant (H81) | Probability of applying for a patent (C11) |
| Receipt of RD grant (H81) | Probability of introducing new goods and services (O35) |
| Receipt of RD grant (H81) | Process innovation (O31) |
| Receipt of RD grant (H81) | General product innovation (O35) |
| Receipt of RD grant (H81) | Innovation impact consistent across firm sizes (L25) |