• Title/Summary/Keyword: Government R&D Subsidy

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The effects of Government R&D subsidies on Private R&D investment - The case of Korean industry after 2000 - (정부 연구개발 보조금의 기업자체 R&D투자에 대한 효과 분석 - 2000년 이후 국내기업 사례를 중심으로 -)

  • Choi, Seok-Joon;Kim, Sang-Shin
    • Journal of Korea Technology Innovation Society
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    • v.10 no.4
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    • pp.706-726
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    • 2007
  • This study attempts to empirically investigate the effects of government R&D subsidies on private firm's R&D investment in Korean industry. The R&D subsidy effect is defined as the average percentage change in firm's R&D expenditures between what was actually observed among firms that received a subsidy and what these firms would have spent had the subsidy not been received. To measure the effect we use Difference-in-Differences (DID) model which sign as to whether the relationship between government subsidies and private R&D investments is on stimulating or displacing private R&D expenditures. The differences between this study and previous studies are that we tries to measure the effect of Government R&D across various sited firm groups such as large, small & medium, and venture firms and we add one lag of the subsidy indicator in order to capture the effect of the subsidies on private R&D during 2 consecutive period. Empirically, a firm with government R&D subsidy increases its own R&D investment by 13.9%. Also on average, 1% of government R&D subsidy leads to 0.031% of private R&D increase. The main results of this study are as follows : First, Government R&D subsidies stimulate private firm's R&D expenditures. Second, Government R&D subsidies greatly increase (statistically significant) company financed R&D expenditures only for large firms but had no effect on the R&D expenditures of small & medium sized firms and venture firms.

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The Impact of Government Innovation Subsidies on the Survival of SMEs in Korea

  • Kim, Sangsin
    • STI Policy Review
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    • v.9 no.1
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    • pp.55-76
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    • 2018
  • This study analyzed the effect of the government R&D subsidy program on long-term firm survival. In order to estimate the average treatment effect for the treated group, we used the survival analysis and matching method by constituting a comprehensive dataset of more than 90,000 observations. The analysis results show that the government R&D subsidy has a negative impact on long-term firm survival. In particular, not only the subsidy does not have a statistically significant effect on firm survival in the relatively short-term, the survival probability of the subsidized firms is statistically significantly lower than the non-subsidized firms after six years. These results can be seen as weakening the justification of government R&D support. There may be problems in the subsidy policy itself and the process of selection of subsidy awardees; however, the more fundamental problem is that the subsidy policy is concluded as the one-time event. Admittedly, it would be difficult for the government to precisely manage the subsidized projects over a long term period. However, in the case of a project in which short-term performance is detected, it would be necessary to provide a step-by-step support to strengthen the firm's competitiveness through further support and continuous development of performance. Of course, mid- and long-term evaluations of subsidy support policy should be performed in parallel with such phased support.

A Study on the Effectiveness of Government's Subsidy for SMEs' R&D Activities (중소기업 R&D출연·보조금 지원정책의 효과에 관한 연구)

  • Yu, Cheon;Kim, Hag-Min
    • International Commerce and Information Review
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    • v.16 no.5
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    • pp.51-66
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    • 2014
  • The relationship study between SMEs' R&D and business performance is important research subject. The objective of this paper is to evaluate whether the effectiveness of government's R&D subsidy for SMEs is supported. The positive perspective is that the support policy stimulates the SMEs innovation activities including R&D and thus contributes to the performance, but the negative view is that the support policy rather decreases the firm's own R&D investment and thus the result is not necessarily promising. This paper is to evaluate the effectiveness of government subsidy on SMEs' R&D. This study suggested DID and Random Effect Models for analysis using the panel data of 2,807 SMEs in manufacturing sector. The data was collected from the 'Survey on SMEs Technology & R&D 2011' conducted by Korea Federation of Small and Medium Business. The results are as follows. First, government's subsidy has crowded out 4.7% of beneficiary's internal R&D investment. Second, government's subsidy has increased 27.3% of beneficiary's R&D intensity in spite of 4.7% internal R&D investment reduction. Third, government's subsidy didn't have a relationship with firm performance but the R&D intensity made positive influence on the firm performance. Finally, R&D intensity has increased the 6.7% of firm performance. These results mean that government's subsidy give a positive impact on SMEs' performance through R&D intensity with relatively small crowding-out effect.

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Who Gets Government SME R&D Subsidy? Application of Gradient Boosting Model (Gradient Boosting 모형을 이용한 중소기업 R&D 지원금 결정요인 분석)

  • Kang, Sung Won;Kang, HeeChan
    • The Journal of Society for e-Business Studies
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    • v.25 no.4
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    • pp.77-109
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    • 2020
  • In this paper, we build a gradient Boosting model to predict government SME R&D subsidy, select features of high importance, and measure the impact of each features to the predicted subsidy using PDP and SHAP value. Unlike previous empirical researches, we focus on the effect of the R&D subsidy distribution pattern to the incentive of the firms participating subsidy competition. We used the firm data constructed by KISTEP linking government R&D subsidy record with financial statements provided by NICE, and applied a Gradient Boosting model to predict R&D subsidy. We found that firms with higher R&D performance and larger R&D investment tend to have higher R&D subsidies, but firms with higher operation profit or total asset turnover rate tend to have lower R&D subsidies. Our results suggest that current government R&D subsidy distribution pattern provides incentive to improve R&D project performance, but not business performance.

Strategic Trade Policies under International Process R&D Competition with or without Market Leaders

  • Yang, Il-Seok
    • Journal of Korea Trade
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    • v.24 no.2
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    • pp.53-67
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    • 2020
  • Purpose - The purpose of this paper is to study strategic trade policies under international process research and development (R&D) competition with or without market leaders for free trade and a subsidy regime and compare the effects of R&D subsidies and export subsidies on the equilibrium levels of firm profit and social welfare. Design/methodology - For the analysis, we use previous work by Haaland and Kind (2008) and construct a differentiated goods duopoly model, wherein two firms compete via quantity in a third-country market for free trade and the subsidy regime. We consider simultaneous-move quantity competition when the two firms choose their quantities simultaneously and sequential-move quantity competition when they choose their quantities sequentially. The results are compared to those of Balboa, Daughety and Reinganum (2004), who studied export subsidies. Findings - The following are the findings. First, the results of firm preference orderings regarding firm position from Dowrick (1986) and Balboa, Daughety and Reinganum (2004) may not hold in our model when the firms' strategies are strategic substitutes under free trade. Second, the preference rankings under Cournot competition for free trade and a subsidy regime are the same as those in the strategic trade policy of export subsidy. Third, except for the cases of too close substitutes and complements, the results of firm and government preferences regarding firm position are different from those of Balboa, Daughety and Reinganum (2004) in that Stackelberg leadership in a subsidy regime is advantageous when the goods are substitutes but is disadvantageous when the goods are complements. Moreover, the equilibrium level of firm profit is the highest in the Cournot-Nash play when the goods are substitutes in a subsidy regime. Fourth, except for the cases of too close substitutes and complements, the results of firms' and their respective governments' trade regime preferences are similar to those of Balboa, Daughety and Reinganum (2004) in that a Stackelberg leader firm and government prefer free trade if the goods are substitutes and prefer a subsidy regime if the goods are complements. Furthermore, a Stackelberg follower firm and government strongly prefer a subsidy regime to free trade. Originality/value - By analyzing the effects of R&D subsidies and export subsidies in international markets, we can find similarities and differences between them in international markets.

Does the R&D Subsidy of Developing Countries Overcome the First Mover Advantage of Foreign Firm? (후발국의 보조금정책은 외국기업의 선도자의 이익을 극복하는가?)

  • Li Kim;Sang-Kee Kim
    • Korea Trade Review
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    • v.47 no.5
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    • pp.305-319
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    • 2022
  • The Chinese government has been promoting core industries in accordance with the 'Made in China 2025'. As a result of injecting huge subsidies to develop core industries, a great success has been achieved in the electric vehicle and battery industry, however, the semiconductor industry has almost no performance. This study aims to examine whether the subsidy policy of a developing country helps their own domestic firm to overcome the first mover advantage of an advanced country's firm. From the game theoretical analysis, the results have shown that the subsidy policy of the developing country's government creates the profits shifting effect which arises from the developed country's firm to the developing country's firm. When there exists R&D efficiency gap between the two firms, however, most of these profit shifting effects are offset, which implies that the subsidy policy of developing countries is likely to fail.

The Analysis for effect on Government R&D Subsidies by using PSM (성향점수 매칭을 이용한 정부 연구개발 보조금 효과분석)

  • Choi, Seok-Joon;Kim, Sang-Sin
    • Journal of the Korea Academia-Industrial cooperation Society
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    • v.10 no.1
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    • pp.200-208
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    • 2009
  • Trend of R&D expenditure in Korea during the last 10 years, the R&D expenditure has been constantly increasing at an average rate of 10%. The government R&D ekpenditures or subsidies are increasing rapidly But the studies of evaluating impact of government R&D subsidies are few. This study attempts to empirically investigate the effects of government R&D subsidies on private firm's R&D investment in Korean industry by using Propensity score matching method which sign as to whether the relationship between government subsidies and private R&D investments is on stimulating or displacing private R&D expenditures. Empirically, a firm with government R&D subsidy are 733 million dollar more expenditure then don't receive any government R&D funding. Also Government R&D subsidies greatly increase (statistically significant) company financed R&D expenditures only for large firms but had no effect on the R&D expenditures of small & medium sized firms and venture firms.

The Empirical Study on Relationship between CT R&D Subsidy Program and R&D Performance in S.korea (문화기술(CT)개발지원정책이 기업 R&D성과에 미치는 영향에 관한 연구)

  • Seo, You-Hwa;Yang, Dong-Woo
    • Journal of Technology Innovation
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    • v.19 no.2
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    • pp.53-76
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    • 2011
  • This study analysed empirically the relationship between the CT R&D subsidy program and R&D performance of received company. According to the result, the CT R&D subsidy program is a significant factor to encourage R&D performance. Especially, the CT R&D subsidy program based on validity and reasonable system affects significantly the progress of R&D performance. Otherwise, the reasonable CT R&D subsidy program has a important role to play on company growing from a step of R&D to a step of the commercialisation performance. Thus, government should make an effort on researching data on market demand before implementing policy and communicating with company continually.

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Comparative Analysis on the Effectiveness of Employment Subsidy for R&D Personnel and R&D Subsidy (연구인력 고용보조금 지원과 R&D자금 출연 지원의 효과성 비교 분석)

  • Noh, Meansun;Kim, Sukpil;Lee, Ki Jong
    • Journal of Technology Innovation
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    • v.21 no.3
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    • pp.73-94
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    • 2013
  • The prinary cause of the decreasing SME's competitiveness in technology is the intensifying human resource shortages. The government supports a part of labor costs for SMEs as a means of policy. There are two ways of supporting labor costs for R&D personnel. One is to hire R&D personnel first then support their partial labor costs. The other is to support labor costs first for R&D personnel in national R&D programs then hire R&D personnel. This study analyzes the effectiveness of two different ways by classifying sales, no. of employees, R&D expenditure, no. of researchers, and no. of MA/Ph.D. researchers. In terms of employing researchers with MA or Ph.D., the effectiveness on employment subsidy is significantly higher than that of R&D subsidy. Its effect has been relatively high in non-metropolitan areas and manufacturing industry.

Empirical Analysis on the Relationship between R&D Inputs and Performance Using Successive Binary Logistic Regression Models (연속적 이항 로지스틱 회귀모형을 이용한 R&D 투입 및 성과 관계에 대한 실증분석)

  • Park, Sungmin
    • Journal of Korean Institute of Industrial Engineers
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    • v.40 no.3
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    • pp.342-357
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    • 2014
  • The present study analyzes the relationship between research and development (R&D) inputs and performance of a national technology innovation R&D program using successive binary Logistic regression models based on a typical R&D logic model. In particular, this study focuses on to answer the following three main questions; (1) "To what extent, do the R&D inputs have an effect on the performance creation?"; (2) "Is an obvious relationship verified between the immediate predecessor and its successor performance?"; and (3) "Is there a difference in the performance creation between R&D government subsidy recipient types and between R&D collaboration types?" Methodologically, binary Logistic regression models are established successively considering the "Success-Failure" binary data characteristic regarding the performance creation. An empirical analysis is presented analyzing the sample n = 2,178 R&D projects completed. This study's major findings are as follows. First, the R&D inputs have a statistically significant relationship only with the short-term, technical output, "Patent Registration." Second, strong dependencies are identified between the immediate predecessor and its successor performance. Third, the success probability of the performance creation is statistically significantly different between the R&D types aforementioned. Specifically, compared with "Large Company", "Small and Medium-Sized Enterprise (SMS)" shows a greater success probability of "Sales" and "New Employment." Meanwhile, "R&D Collaboration" achieves a larger success probability of "Patent Registration" and "Sales."