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http://dx.doi.org/10.14386/SIME.2020.28.2.63

TFP Measurement to Analyze the Effectiveness of Government Supported R&D Projects for SMEs  

Han, Ju-Dong (NICE평가정보)
Jin, Young-Hyun (한국과학기술기획평가원)
Kim, Hongbum (한국생산기술연구원)
Lee, Sang-Heon (KIS채권평가)
Publication Information
Journal of Technology Innovation / v.28, no.2, 2020 , pp. 63-100 More about this Journal
Abstract
This study analyzes the effectiveness of government supported R&D program for SMEs by measuring TFP improvements. We estimate TFP for Korean companies from 2011 to 2018 using Levinsohn and Petrin (2003) method which reduces endogenous problem. Then government R&D beneficiary companies were extracted from the NTIS and linked to TFP estimates. The empirical results are as follows. First, as a result of estimating production function, the contribution of TFP to value-added is more important than in the past. Second, the TFP gap between large firms and SMEs continues to wide and there is no sign of easing.(from 3.72 times in 2011 to 5.23 times in 2018). Third, SMEs beneficiaries show higher TFP level than non-beneficiaries. However their TFP was on the decline until government support. After government supported R&D program, it reverses upward. Fourth, although one-year TFP improvement of beneficiaries is bigger than non-beneficiaries, it is smaller than the control group through PSME. Because SMEs participating in government R&D programs had showed downward trend of TFP until R&D program, it is necessary to examine whether there is a fundamental discordance between the demand of SMEs for R&D program and governments policy goal. More sophisticated program design will be required to escape the recognition that government R&D programs for SMEs are just charity.
Keywords
TFP; Government R&D grants; Policy evaluation;
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