ESRI Discussion Paper Series No.222
The Impact of Public R&D Subsidies on Firm's R&D Activities:
Evidence from Japanese firm-level data

Banri Ito
Lecturer, School of Economics, Senshu University
Satoshi Nakano
Research Fellow, Keio Economic Observatory, Keio University

The full text is written in Japanese.

Abstract

This paper examines the impact of public R&D subsidies on firm's R&D activities using micro-data on Japanese manufacturing firms from 1995 to 2005. We focus on two effects.

One is the quantitative impact of whether the public R&D subsidies crowed out firm's own R&D investment or not. The other one is qualitative impact of whether the subsidized firms increase R&D investment into the fields where social returns are large.

In the empirical analysis, we examine the causal effects of public R&D subsidies using propensity score matching and difference-in-differences technique. The results suggest that the level of firm's own R&D investments is not affected by public R&D subsidies and the public R&D subsidies encourage firm's R&D activity in specific fields such as environment and ICT which are expected as socially influential.

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