Hewitt-Dundas, Nola

Roper, Stephen

In many countries significant amounts of public funding are devoted to supporting firms’ R&amp;D and innovation projects. Here, using panel data on the innovation activities of Irish manufacturing firms we examine the legacy effects of public subsidies for new product development and R&amp;D. We examine five alternative mechanisms through which such effects may occur: input additionality, output additionality, and congenital, interorganisational and experiential behavioural additionality. Tests suggest contrasting legacy effects with R&amp;D subsidies generating legacy output additionality effects while new product development subsidies have legacy congenital and inter-organisational behavioural additionality effects. Our results have implications for innovation policy design and evaluation.

The legacy of public subsidies for innovation: input, output and behavioural additionality effects

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