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Survey of the impact of private R&D operations and the related public funding

Government Communications Department
Publication date 1.12.2016 11.38 | Published in English on 1.12.2016 at 11.42
Press release 521/2016

The report, published on Thursday 1 December, presents the first comprehensive survey of the findings in the microeconometric research literature concerning the impact of public funding targeted to private research and development (R&D) operations in Finland. The general opinion on the public funding in the literature is quite positive. However, due to variations in the results and shortcomings in the data more research of a high standard is needed in order to support the planning of policy measures and decision-making even better than before.

Even if the general opinion of the public aid for innovation is positive rather than negative, many of the key factors that motivate policies and important practical issues are often overlooked. This is the conclusion of the main findings of the research group of Etlatieto Oy in a report published as part of the implementation of the Government plan for analysis, assessment and research 2016.

The researchers compiled the findings concerning the impact of public aid for the private R&D operations in the microeconomic literature. The majority of the studies, which as such are of a high standard, give no opinion on the achievement on the general objectives of innovation policy, such as reducing financial market deficiencies, nor do they address the key issues for policy makers, such as the appropriate level of the aid.  

In the future, research touching upon these matters should focus on the capacity of public interventions to solve the key problems that motivate them – finding answers to the following questions: What are the externalities created and do these constitute sufficient motivation for the current policies? How could the policies be directed in a way that they would more specifically target operations which are unprofitable for operators in the private sector but important and attractive for the society?

In terms of economics, the aid for R&D operations rests on a solid foundation. The challenges raised in the evaluation study should not lead to the wrong conclusion that the policies would have been useless or that they should not have been introduced. The challenges and shortcomings in the data found in the research literature mean that more research along these lines is needed. More microeconometric evidence of a high standard is needed in support of decision-making.

The possibilities to conduct a reliable impact assessment should be taken into account already in the design stage of policy measures. Ministries and financing organisations responsible for the public funding for companies together with researchers should conduct a follow-up assessment on the need for new data and materials and the possibilities to incorporate factors into the funding scheme that promote a reliable impact assessment of the measures. 

The project on the impact of private R&D operations and the related public funding was implemented as part of the Government plan for analysis, assessment and research 2016. The project was carried out by Etlatieto Oy, headed by CEO Petri Rouvinen (PhD). The other members of the research group were Researcher Ilkka Ylhäinen (DSc, Economics and Business Administration) and Researcher Tero Kuusi (PhD). 

Report on the survey of the impact of private R&D operations (in Finnish)

Further information about the Government’s analysis, assessment and research at tietokayttoon.fi/en

Inquiries:

Petri Rouvinen, CEO, head of the project at Etlatieto Oy [email protected], tel. +358 50 367 3474.

Kai Husso, Chief Planning Officer, chair of the steering group of the project, Ministry of Economic Affairs and Employment, tel. +358 295 063 683, [email protected]