Paper/Speech Details of Conference Program for the 27th NISPAcee Annual Conference Program Overview WG5: Public Finance and Public Financial Management Author(s) Dejan Ravšelj University of Ljubljana Ljubljana Slovenia Aristovnik Aleksander, Aleksander Aristovnik, University of Ljubljana, Faculty of Public Administration, Ljubljana, Slovenia Title The Impact of Public Support on Firms’ R&D Investment: Evidence from Slovenia File Paper files are available only for conference participants, please login first. Presenter Abstract Private R&D investment in the business sector is often subject to the market failures, asymmetric information and risk, which makes their level lower than socially desirable level. This constitutes the main reason why many modern governments around the world provide different R&D public policy instruments for stimulating firms’ R&D investment. Accordingly, the main aim of this paper is to establish the impact of public support on firm’ R&D investment in Slovenia. The research will take into the account R&D subsidies as a way of direct funding and R&D tax incentives as a way of indirect funding. The paper therefore takes advantages of the unique database of Slovenian companies for the period 2012-2016. The empirical results of the multiple linear regression models on a sample of 3,113 company-year observations show that public support for R&D investment plays an important role in terms of firms’ R&D expenditures. For R&D subsidies, the empirical results show that they are in general not effective since they displace firms’ R&D expenditures. However, they are effective when they are used in a combination with R&D tax incentives and when growing companies receive them. Moreover, the empirical results reveal that R&D tax incentives are effective in any case, when companies have sufficient tax base. The findings are beneficial especially for policymakers in terms of designing R&D public support policies for R&D investment in the future.
