Influence of R&D subsidies on efficiency: the case of Spanish manufacturing firms

Abstract

This study provides new evidence about the effects of subsidies for research and development (R&D) on technical efficiency in a sample of Spanish manufacturers during the period 1993-2002. The results suggest two issues to consider. Firstly, the beneficiary firms of subsidies are less efficient; to avoid this effect, this result should serve to as a guide to authorities, with the aim of improving the allocation of these resources. Secondly, less efficient firms are those that are unable to obtain resources to fund R&D or obtain credit and are therefore those that apply for subsidies. In light of these results, the subsidies received by Spanish manufacturing firms may be insufficient or may fail to arrive when required, hampering the fulfilment of their objectives.