There is increasing political pressures on universities to
raise research
funding
from
industry
and
contribute
actively
to
economic
development.
However,
whether
or
not
promotion
of
the
so
called
third
mission
in
universities,
of
interacting
with
industry,
is
effective
without
government
funding
remains
an
open
question,
and
we
do
not
know
whether
government
funding
\u2018crowds-\uad\u2010out\u2019
or
\u2018crowds-\uad\u2010in\u2019
business
funding.
In
this
paper
we
argue
that
government
funding
provides
universities
with
the
vital
resources
to
carry
out
research
activities
whose
results
can
be
transferred
at
a
later
stage
to
industry,
leveraging
private
funding.
It
is
inevitable,
therefore,
that
without
government
support
to
academic
institutions
knowledge
transfer
activities
will
be
hampered,
and
financial
cuts
to
universities
may
reduce
rather
than
foster
their
self-\uad\u2010financing
capability.
The
empirical
analysis
presented
in
this
paper
is
based
on
financial
data
for
the
whole
population
of
Italian
university
departments
engaged
in
research
in
the
Engineering
and
Physical
Sciences.
Based
on
a
set
of
probit
and
tobit
cross-\uad\u2010
section
and
panel
data
models
this
paper
investigates
the
impact
of
different
forms
of
public
funding
to
university
departments,
on
their
abilities
to
attract
private
funding