Public Selection and Financing of R&D Cooperative Projects: Credit versus Subsidy Funding Articles uri icon

publication date

  • May 2010

start page

  • 549

end page

  • 563

issue

  • 4

volume

  • 39

international standard serial number (ISSN)

  • 0048-7333

electronic international standard serial number (EISSN)

  • 1873-7625

abstract

  • In this article we develop an analytical model of the selection process for R&D cooperative projects, to study the factors that motivate public project selection and corresponding funding, using two different
    financial instruments: subsidies and credits. For this purpose, we
    propose a three stage empirical strategy to analyse the differential
    individual effects of several factors on the decisions taken by the
    public agency. This analysis is based on project level data from
    cooperative R&D project calls under the Spanish PROFIT initiative,
    for the period 2000-2003. The main results show that the public agency
    uses the two financial instruments to address different objectives.
    First, some projects close to the market are well supported through
    credits, while basic research projects receive only selective support in
    the form of subsidies. Second, there is significant diversity in the
    selection and funding of technological areas. Third, regarding the
    explicit goal of fostering cooperation, the public agency selectively
    favours partnerships with universities and technology institutes through
    the award of subsidies. However, there seems to be less incentive for
    large consortia. Fourth, there are significant regional differences
    among financed projects and, also, our data show sharp yearly
    fluctuations.