R&D policy evaluation: the effects of R&D subsidies in Italy

Abstract

In a context of scarce resources, exacerbated by the economic crisis, financing investment and structural changes in slowly growing economies, such as Italy, is very challenging. It becomes fundamental to engage in evaluation exercises in order to understand what policies are working and for whom. The paper offers an evaluation exercise on the major instruments used to promote R&D and innovation activities of Italian firms. We concentrate in particular on the incentives provided by Law 46/82 (and revisions) and we look at the effects they have on firms expenditures on R&D and on new employment generation. Unlike previous studies, we consider the effects of such incentives also when other similar policies are at work. We also look at the effects for different subgroups of firms. Results suggest that a rethinking of the system of incentives would be appropriate to limit an inefficient overlapping of instruments. They also highlight that the additionality of R&D investment is verified for some categories of firms. Starting from these results, further and continuous research is needed on this subject, in order to build a robust set of evidence to inform the policy making process.