A THREE PART ESSAY ON THE ROLE OF GOVERNMENT SUBSIDIES ON FIRM LEVEL INNOVATIVE CAPACITY A SYNTHESIS OF EFFECT, PRODUCTIVITY AND PROFITABILITY.

Our analysis contains three essay that look to the effect of innovations given a diverse set of measures. The purpose of the first chapter, which is divided into two levels, is two-fold. First, via a Probit model, we assess the effect subsidies have on firm level innovation and determine if these effects impound in firm level performance given these subsidies. Second, we seek to determine the extent subsidies promote learning and hence positively impact outcomes associated with innovation. We do so by employing the theory of absorptive capacity to guide efforts to isolate the effects that the combination or interaction of investments in research and development and foreign technology have on firm level performance. We adopt Ordinary Least Squares in this endeavor. In the second chapter, we measure, evaluate, and assess whether external infrastructures allow firms to exploit their resources in order to gain maximum efficiency and effectiveness. In this regard, we review the impact infrastructures have on the capacity of a firm to innovate when those infrastructures are viewed as key to the operations of a firm. In doing so, our goal is to assess the impact of these infrastructures components on firm performance. We do so through a Probt model. The purpose of third chapter is to determine the role innovation has in firm performance. Our approach, in essence, seeks to assess the role innovation and subsidies, individually and collectively, have on firm performance. Our study makes use of ordinary least squares regression to investigate this query