Do Public R&D Expenditures Foster Business R&D Investments?

Tomasz Kijek, Anna Matras-Bolibok, Elwira Rycaj


Purpose – The aim of the paper was to assess the relationship between public R&D expenditures and business R&D investments in EU regions.
Design/Methodology/Approach – The data for the analysis were retrieved from the Regional Innovation Scoreboard (RIS) 2016. The generalized structural equation model – GSEM was adopted to verify the formulated hypothesis. The research sample covered 214 regions of 22 EU Member States and Norway.
Findings – The results of research indicate that public R&D are additional to business R&D investments in EU regions. Moreover, innovative productivity is positively related to public financial support for R&D.
Originality/Value – So far, most of the available empirical literature has focused on the relationship between public financial support policies for R&D activities and business R&D expenditures either at the macro or micro level. The present paper attempts to fill this gap by providing an insight into this matter at the regional level.
Article type – Research paper.


R&D activity, R&D expenditures, innovation, public subsidies, UE regions

Full Text:



Alonso-Borrego, C., Forcadell, F. J., Galán-Zazo, J. I. and Zúñiga-Vicente, J. A. (2012). Assessing the Effect of Public Subsidies on Firm R&D Investment: A Survey, Working Paper 12–15 Economic Series, Universidad Carlos III de Madrid, Madrid.

Arrow, K. J. (1962). Economic Welfare and the Allocation of Resources to Invention, [in:] R. R. Nelson (Ed.), The Rate and Direction of Inventive Activity: Economic and Social Factors, Princeton University Press, Princeton, pp. 609–625.

Ali-Yrkkö, J. (2005). Impact of Public R&D Financing on Private R&D. Does Financial Constraint Matter?, Working Paper, No. 30, ENEPRI, Brussels.

Bagozzi, R. and Yi, Y. (2012). Specification, Evaluation, and Interpretation of Structural Equation Models, Journal of the Academy of Marketing Science, Vol. 40, No. 1, pp. 8–34.

Cabrer-Borrás, B. and Serrano-Domingo, G. (2007). Innovation and R&D Spillover Effects in Spanish Regions: A Spatial Approach, Research Policy, Vol. 36, No. 9, pp. 1357–1371.

Catozzella, A. and Vivarelli, M. (2011). Beyond Additionality: Are Innovation Subsidies Counterproductive?, IZA Discussion Paper, No. 5746.

Clausen, T. H. (2009). Do Subsidies Have Positive Impacts on R&D and Innovation Activities at the Firm Level?, Structural Change and Economic Dynamics, Vol. 20, No. 4, pp. 239–253.

Czarnitzki, D. and Bento, C. L. (2012). Evaluation of Public R&D Policies: A Cross-Country Comparison, World Review of Science, Technology and Sustainable Development, Vol. 9, No. 2–4, doi: 10.1504/WRSTSD.2012.047690.

Czarnitzki, D., Hottenrott, H. and Thorwarth, S. (2011). Industrial Research Versus Development Investment: The Implications of Financial Constraints, Cambridge Journal of Economics, Vol. 35, No. 3, pp. 527–544.

David, P. A., Hall, B. H. and Toole, A. A. (2000). Is Public R&D a Complement or Substitute for Private R&D? A Review of the Econometric Evidence, Research Policy, Vol. 29, No. 4, pp. 497–529.

European Commission (2010). Communication from the Commission. Europe 2020. A Strategy for Smart, Sustainable and Inclusive Growth, COM(2010) 2020 final, Brussels, 3 March.

Eurostat (2016). Retrieved from _%26_D_expenditure

Garcia-Quevedo, J. (2004). Do Public Subsidies Complement Business R&D? A Meta-Analysis of the Econometric Evidence, Kyklos, Vol. 57, pp. 87–102.

González, X. and Pazó, C. (2008). Do Public Subsidies Stimulate Private R&D Spending?, Research Policy, Vol. 37, No. 3, pp. 371–389.

Görg, H., and Strobl, E. (2007). The Effect of R&D Subsidies on Private R&D, Economica, Vol. 74, No. 294, pp. 215–234.

Greene, W. H. (2008). Econometric Analysis, Pearson Education, New Jersey.

Guellec D. and van Pottelsberghe de la Potterie, B. (2004). From R&D to Productivity Growth: Do the Institutional Settings and the Source of Funds of R&D Matter?, Oxford Bulletin of Economics and Statistics, Vol. 66, No. 3, pp. 353–378.

Hall, B. H. and Lerner, J. (2010). Financing R&D and Innovation, [in:] B. H. Hall and N. Rosenberg (Eds.), Handbook of the Economics of Innovation, Vol. 1, Elsevier, Oxford, p. 611.

Hall, B. H., Mairesse, J. and Mohnen, P. (2010). Measuring the Returns to R&D, [in:] B. H. Hall and N. Rosenberg (Eds.), Handbook of the Economics of Innovation, Vol. 2, Elsevier, Oxford, pp. 1033–1082.

Jones, C. I. (1995). R&D-Based Models of Economic Growth, The Journal of Political Economy, Vol. 103, No. 4, p. 759.

Mandl, U., Dierx, A. and Ilzkovitz, F. (2008). The Effectiveness and Efficiency of Public Spending, European Economy Economic Papers 301, European Communities, Brussels.

Martin, M. (2014). Effectiveness of Business R&D in Emerging Economies. The Review of Research Evidence, Business and Economics Journal, Vol. 5, p. 116, doi: 10.4172/2151-6219.1000116.

Radicic, D., Pugh, G., Hollanders, H., Wintjes, R. and Fairburn, J. (2016). The Impact of Innovation Support Programs on Small and Medium Enterprises Innovation in Traditional Manufacturing Industries: An Evaluation for Seven European Union Regions, Environment and Planning C: Government and Policy, Vol. 34, No. 8, pp. 1425–1452.

Romer, P. (1990). Endogenous Technological Change, Journal of Political Economy, Vol. 98, No. 5, pp. 71–102.

Shaw, G. K. (1992). Policy Implications of Endogenous Growth Theory, The Economic Journal, Vol. 102, No. 412, pp. 611–621.

Solow, R. M. (1957). Technical Change and Aggregate Production Function, The Review of Economic Statistics, Vol. 39, No. 3, pp. 312–320.

Data publikacji: 2017-05-23 10:49:45
Data złożenia artykułu: 2017-05-23 10:44:20


  • There are currently no refbacks.

Copyright (c) 2017 Tomasz Kijek, Anna Matras-Bolibok, Elwira Rycaj

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.