Impact of R&D subsidies on enterprise performance in the Czech Republic

Abstract

The attention and support that R&D receives from economists and politicians reflects its importance as a key element of competitiveness and growth in advanced economies. But the real effect of policy upon public support depends on the technological level and structure of the economy and on the ability of beneficiaries to use the support effectively. We should also ask whether the current measurement of R&D outcomes and their subsequent assessment actually reflects real-world situations. The paper presents results of a research focused on the effectiveness of R&D subsidies on the performance of private enterprises in the Czech Republic. We deliberately focus on financial data and compare beneficiaries with unsuccessful applicants using techniques of counterfactual analysis. Although supported actors exhibit higher values of certain variables like assets, personnel expenditures or value added, these cannot be claimed to be the result of R&D support. These findings suggest the very limited effectiveness of R&D support to private actors in the Czech Republic, at least in the short run.