Page 8 - IDEA Study 8 2017 Direct subsidies and R&D output in firms

ante and interim programme evaluations (TA CR 2015, 2016 and 2017a); thus, there is a good chance that there will be rigorous ex-post evaluations after some of their programmes expire. Other major providers of R&D programmes, such as the Ministry of Industry and Trade of the Czech Republic (MIT), lag far behind in this respect. Therefore, this line of research is of great public importance both for improving evaluation methodology and for promoting evidence-based decision making in public policy. A previous IDEA study on this topic by Palguta and Srholec (2016) showed one way in which this can be done. Using a regression discontinuity approach on rich micro data for participants in the 3rd call for proposals in the TA CR's ALFA programme, the study examined input additionality effects of direct subsidies for business R&D expenditures. The results indicate that the government subsidies had a positive impact on private R&D expenditure. Private R&D spending grew faster in subsidized firms just above the ranking threshold than in unsubsidized firms just below the threshold, even though there was no difference in their spending growth before the subsidies were received. Themost significant difference was recorded for small enterprises. Nevertheless, the study could not strictly speaking infer on causal relationships, as there were also other differences between the firms close to the ranking threshold. The aim of this paper is to bring fresh evidence on output additionality effects of direct R&D subsidies to business enterprises. Using a non-parametric propensity score matching estimator on a large firm-level database combined from ISVaV (Office of the Government of the Czech Republic 2016), PATSTAT (EPO 2016a) and Amadeus (Bureau Van Dijk 6), we examine whether subsidy programme participants generated applications for formal intellectual property (IP) protection that would not have been made otherwise. More specifically, we compare the effects of three major public R&D support programmes, namely IMPULS and TIP administered by the MIT and ALFA launched by the TA CR, the combined budget of which is nearly 30 billion CZK over the period 2004–2017. All three programmes were funded exclusively from the Czech national budget.3 Our main finding is that the subsidy programmes significantly stimulated firms to apply for Czech IP protection but did not make a difference to the firms' propensity to apply for international IP protection. From this follows that the programmes' additionality effects 3 ALFA was superseded by EPSILON at the TA CR in 2015 and TIP was replaced by TRIO at the MPO in 2016, but the output additionality effects of these follow-up programmes are not considered in this study due to delays in data availability. 6