IMF Working Papers

Promoting Innovation: The Differential Impact of R&D Subsidies

By Reda Cherif, Fuad Hasanov, Christoph Grimpe, Wolfgang Sofka

September 23, 2022

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Reda Cherif, Fuad Hasanov, Christoph Grimpe, and Wolfgang Sofka. Promoting Innovation: The Differential Impact of R&D Subsidies, (USA: International Monetary Fund, 2022) accessed October 7, 2024

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Summary

We investigate the effect of R&D subsidies on firms’ innovation by ownership, industry, and firm size using German firm-level data. The impact of R&D subsidies is heterogeneous across industries for multinational corporations (MNCs) and domestic firms while it does not differ substantially by firm size. Domestic firms have a larger response in R&D spending in low-tech manufacturing, knowledge-intensive services, and technological services while the response of domestic and foreign MNCs is broadly similar and is greater in medium-tech and high-tech manufacturing. Foreign MNC subsidiaries’ response in terms of patents is greater than that of domestic MNCs in most industries.

Keywords: Innovation, Investment, Multinationals, Patents, R&D, Research and development, Subsidies, Technology policy

Publication Details

  • Pages:

    41

  • Volume:

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  • DOI:

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  • Issue:

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  • Series:

    Working Paper No. 2022/192

  • Stock No:

    WPIEA2022192

  • ISBN:

    9798400217968

  • ISSN:

    1018-5941