The Effects of R&D Subsidies and Publicly Performed R&D on Business R&D: A Survey*

This literature review shows that a majority of studies find complementarity between R&D subsidies and private R&D expenditures. A minority finds incomplete crowding out. Full crowding out is found only for small parts of the respective samples or small sub-sectors of the economies considered. Publicly performed R&D stimulates private R&D. The exceptions from these dominant results concern firm size, interaction of policy instruments, and effectiveness of parts of publicly performed R&D. Important suggestions for future research derived from the literature review are use of dynamic models with time lags and taking into account the effects of country and firm heterogeneity.