The Impact of Public R&ampD Expenditure on Business R&ampD

         This document attempts to quantify the aggregate net effect of government funding on business R&ampD in 17 OECD Member countries over the past two decades. Grants, procurement, tax incentives and direct performance of research (in public laboratories or universities) are the major policy tools in the field. The major results of the study are the following:                     Direct government funding of R&ampD performed by firms (either grants or procurement) has a positive effect on business financed R&ampD (one dollar given to firms results in 1.70 dollars of research on average).            Tax incentives have a positive (although rather short-lived) effect on business-financed R&ampD.            Direct funding as well as tax incentives are more effective when they are stable over time: firms do not invest in additional R&ampD if they are uncertain of the durability of the government support.            Direct government funding and R&ampD tax incentives are substitutes: increased intensity of one reduces the effect of the other on business R&ampD.            The ...               