Essays in Regional and Innovation Economics

Abstract

This dissertation studies the impacts of research and development (R&D) funding on firm performance and innovation outcomes, focusing on both targeted regional policies and broader R&D initiatives in Germany. Comprising three essays, it explores the direct and spillover effects of these policies at the firm level, using a range of empirical techniques and extensive datasets. The first essay investigates the German Leading-Edge Cluster Competition, finding significant positive effects on innovation and firm performance, especially for small and medium-sized enterprises (SMEs), but limited spillover benefits to non-funded neighboring firms. In the second essay, I analyze R&D funding trends from 1970 to 2020, revealing positive effects on SME performance but minimal impact on innovation, suggesting factors beyond funding may drive these results. The third essay employs a potential outcome model, showing that while R&D funding generates direct benefits, spillover effects play a crucial role in stimulating the total effect. The study also reveals that despite the positive effects of R&D funding, once the concentration of funded firms surpasses a certain threshold, the positive effects begin to diminish. The dissertation offers valuable insights into how different R&D funding types impact firm-level outcomes, contributing to the policy debate on fostering economic growth through R&D investment.