The Impact of Public R&D Funding

This study investigates the effects of public R&D funding on the funded firms in Finland. It focuses on the input additionality, the output additionality of public funding and the effect an increase of innovation effort has on the innovation output of firms. The data set for this analysis is taken from the Community Innovation Survey which allows us to compare the results obtained with results obtained for other countries. For reasons discussed in the study the Finnish results are checked against results obtained for analyses of the Community Innovation Survey in Germany. Concerning the overall effects of public funding in Finland we can draw quite positive conclusions based on our empirical analysis: First, on average, public funding increases the private innovation effort of funded firms, in both nominal and real terms. Second, on average, public funding increases the innovation output of funded firms. Public funding yields the largest effects when it stimulating collaborative innovation activities. Finally, an increased private innovation effort increases innovation output on average.