Testing a model of UK growth: A role for R&D subsidies

Abstract

R&D is a main driver of growth, whether by generating new ideas for production or increasing technological transfer. However, R&D itself is risky and faces numerous barriers which may reduce its marginal return. Direct R&D subsides are intended to counteract such barriers, but whether they lead empirically to increased economic growth is unclear. In our structural model of the UK, subsidies o¤set the frictional costs associated with R&D, incentivising innovation and so stimulating productivity growth. We estimate and test this structural model by indirect inference, a method not previously used in work on R&D. We …nd that even temporary cuts to R&D funding have long-lasting impacts on UK economic growth. The power of the test allows us to calculate tight accuracy bounds for our results and for policy reform impacts calculated using the model. These …ndings are of high relevance to the ongoing debate around the future UK innovation environment.

The Relationship between Environmental Regulation and Green Total Factor Productivity in China: An Empirical Study Based on the Panel Data of 177 Cities

“… and have a positive influence, while and have a negative influence. Our results support the views of Hamamoto [ 10 ], Soete et al [ 23 ], Minford and Meegagh [ 24 ] and Arnold et al [ 39 ]. They also supports the pollution paradise hypothesis in China’s rapid industrialization process.…”

“…Soete et al [ 23 ] found that, for the Netherlands, for the period 1968–2014, extra investment in public and private R&D had a clear positive effect on TFP growth and GDP. Minford and Meenagh [ 24 ] found that subsidies offset the frictional costs associated with R&D, incentivizing innovation and thereby stimulating productivity growth. Thursby and Thursby [ 25 ] applied nonparametric programming techniques to survey data from 64 universities to calculate TFP growth in each stage.…”

State-Business Relations from the Perspective of the Companies' Preparedness for the Changes Related to the Implementation of the Industry 4.0 Elements: A Case of the Czech Republic

“…The number of research efforts is dedicated to government financial support to businessperformed R&D in subsidies. It is believed that it can incentivize innovations and stimulate productivity growth in terms of innovations in production, acquisition of new production equipment, or increased technological transfer (Minford & Meenagh, 2019).…”

“…R&D expenditures, the number of patents (Minford & Meenagh, 2019), and R&D employment intensity (Czarnitzki & Delanote, 2015) most commonly measure innovation performance. Ravšelj and Aristovnik (2018) proved a positive link between tax incentives, R&D expenditures, and corporate growth.…”

Ex-post evaluation of public funding programs on innovation in chilean firms

“…Innovation positively depends on R&D expenditure, the absorption capacity of firms, and a strong institutionality provided by the State (Bianchini et al, 2019). Therefore, it is not surprising that many studies show that public funding fosters R&D, innovation and/or productivity (Kim, 2020;Aiello et al, 2019;Minford & Meenagh 2019;Liu et al 2016;Yu et al, 2016;Bronzini & Piselli, 2016;Becker, 2015;Guan & Yam, 2015;King & Wooley, 2014). Public funding can also contribute to improving innovation networks and ecosystems (Edler & Fagerberg, 2017;Oh et al, 2016).…”