R&D Policies in France: New Evidence from a NUTS3 Spatial Analysis

The French Policy-mix for R&D and innovation has deeply evolved in recent years and is nowadays, one of the most generous and market-friendly system in the world. This paper investigates the (evolutive) effects of this policy-mix by using a unique database containing information on the amount of R&D tax credit, regional, national and European subsidies received by firms in all French metropolitan NUTS3 regions over the period 2001-2011. By estimating a Spatial Durbin model with regimes and fixed effects, we provide new evidence on the efficiency of the French Policy-mix. First, a yardstick competition between NUTS3 regions for R&D investment driven by negative spatial spillovers is found. Second, it seems that national subsidies are the only instrument able to generate a significant leverage effect on privatelyfinanced R&D. Third, the three other policies studied (Tax Credit, Regional and European subsidies) do not generate significant leverage or crowding-out effect due to spatial effects. Fourth, we highlight the presence of structural breaks in our data that correspond to the last two important reforms of the French tax credit. Consequently, the effect of R&D policies and especially R&D tax credit are likely to change over time and influence ex-post evaluation results.

[1]  Cpb,et al.  A study on R&D tax incentives: Final Report , 2015 .

[2]  Sergio J. Rey,et al.  Specification Searches in Spatial Econometrics: The Relevance of Hendry's Methodology , 2003 .

[3]  Andrew A. Toole,et al.  Is Public R&D a Complement or Substitute for Private R&D? A Review of the Econometric Evidence , 1999 .

[4]  Ester Martínez-Ros,et al.  Tax incentives… or subsidies for business R&D? , 2014 .

[5]  Oliver Falck,et al.  Industrial innovation: Direct evidence from a cluster-oriented policy , 2010 .

[6]  Lung-fei Lee,et al.  Estimation of spatial autoregressive panel data models with fixed effects , 2010 .

[7]  J. D. Howe,et al.  The Determinants of R & D Expenditures , 1976 .

[8]  Marcos Herrera,et al.  Internal and External Effects of R&D Subsidies and Fiscal Incentives: Empirical Evidence Using Spatial Dynamic Panel Models , 2015 .

[9]  Federico Belotti,et al.  XSMLE: Stata module for spatial panel data models estimation , 2017 .

[10]  Benjamin Montmartin Intensité de l'investissement privé en R&D dans les pays de l'OCDE : Impact et complémentarité des mesures de soutien financier , 2012 .

[11]  L. Anselin Spatial Econometrics: Methods and Models , 1988 .

[12]  Tanja Tanayama,et al.  Market Failures and the Additionality Effects of Public Support to Private R&D: Theory and Empirical Implications , 2013 .

[13]  Nadine Massard,et al.  Knowledge Diffusion and Innovation Policies within the European Regions: Challenges Based on Recent Empirical Evidence , 2010 .

[14]  Daniel J. Wilson Beggar Thy Neighbor? The In-State, Out-of-State, and Aggregate Effects of R&D Tax Credits , 2007, The Review of Economics and Statistics.

[15]  P. Mohnen,et al.  Tax incentives and firm size: effects on private R&D investment in Spain , 2014 .

[16]  J. Mairesse,et al.  The R&D Tax Credit in France: Assessment and Ex-Ante Evaluation of the 2008 Reform , 2013 .

[17]  Ayoe Hoff,et al.  The Linear Approximation of the CES Function with n Input Variables , 2004, Marine Resource Economics.

[18]  Vincent Dortet-Bernadet,et al.  L'impact de la participation aux pôles de compétitivité sur les PMe et les eTi , 2014 .

[19]  J. Paul Elhorst,et al.  On spatial econometric models, spillover effects, and W , 2013 .

[20]  H. Folmer,et al.  A comment on specification searches in spatial econometrics: The relevance of Hendry's methodology: A reply , 2006 .

[21]  C. Gotway,et al.  Combining Incompatible Spatial Data , 2002 .

[22]  Emmanuel Duguet The Effect of the R&D Tax Credit on the Private Funding of R&D: An Econometric Evaluation on French Firm Level Data , 2010 .

[23]  J. Nishimura,et al.  Subsidy and networking: The effects of direct and indirect support programs of the cluster policy , 2011 .

[24]  J. LeSage Introduction to spatial econometrics , 2009 .

[25]  J. García‐Quevedo Do Public Subsidies Complement Business R&D? A Meta-Analysis of the Econometric Evidence , 2004 .

[26]  H. Overman,et al.  Mostly Pointless Spatial Econometrics? , 2012 .

[27]  Reinhilde Veugelers,et al.  Undercutting the Future: European research spending in times of fiscal consolidation. Bruegel Policy Contribution 2014/06, June 2014 , 2014 .

[28]  Cheng Hsiao,et al.  Analysis of Panel Data , 1987 .

[29]  David F. Hendry,et al.  A comment on “Specification searches in spatial econometrics: The relevance of Hendry's methodology” , 2006 .

[30]  Stan Openshaw,et al.  A geographical solution to scale and aggregation problems in region-building, partitioning and spatial modelling , 1977 .

[31]  M. Dumont The impact of subsidies and fiscal incentives on corporate R&D expenditures in Belgium (2001-2009) , 2013 .

[32]  J. A. Zúñiga-Vicente,et al.  Assessing the Effect of Public Subsidies on Firm R&D Investment: A Survey , 2014 .

[33]  A. Varga,et al.  Metropolitan Edison and cosmopolitan Pasteur? Agglomeration and interregional research network effects on European R&D productivity , 2014 .

[34]  J. Elhorst 1 MATLAB SOFTWARE FOR SPATIAL PANELS , 2012 .

[35]  Bruno Van Pottelsberghe,et al.  The impact of public R&D expenditure on business R&D* , 2003 .

[36]  M. Pesaran General diagnostic tests for cross-sectional dependence in panels , 2004, Empirical Economics.

[37]  Jesús Mur,et al.  Model selection strategies in a spatial setting: Some additional results , 2009 .

[38]  Bruno Van Pottelsberghe,et al.  Does government support stimulates private R&D , 1999 .

[39]  Antoine Bozio,et al.  Impact of Research Tax Credit on R&D and Innovation: Evidence from the 2008 French Reform , 2014 .

[40]  David F. Hendry,et al.  Predictive failure and econometric modelling in macroeconomics: the transactions demand for money , 2005 .

[41]  Pierre Mohnen,et al.  Are Firms that Receive R&D Subsidies More Innovative? , 2009 .

[42]  Olivier Brossard,et al.  The French cluster policy put to the test with differences-in-differences estimates , 2014 .

[43]  Daniel Felsenstein,et al.  Spatial Vector Autoregressions , 2007 .